Switching health insurance and waiting periods – what’s waived and what’s not

If you’re considering changing your cover, switching to a new fund is easier than you think. In many cases you won’t need to worry about re-serving hospital or extras waiting periods.

 

If you’re switching health insurance to a policy that includes services comparable to your old cover, the waiting periods you’ve already completed are waived by your new health fund. This is known as “portability”.

Switching health insurance is common at this time of year thanks to the annual rate increase. Receiving the notification that their premium is going up after April 1 prompts many people to review their cover and look for a better deal. Reviewing your cover every couple of years is the right thing to do: your fund could have introduced new products or your health needs may have changed over time. Or you might be switching health insurance from a for-profit fund to a member-owned one. There’s nothing wrong with seeking out better coverage, more benefits and good old-fashioned customer service.

Waiting periods are designed to protect fund members

When you start a new private health insurance policy, you’ll need to serve hospital and extras waiting periods or benefit limitation periods before you can make a claim. These are designed to prevent people from claiming shortly after joining and then cancelling their policy once they’ve received treatment. This hit-and-run behaviour would drive up health premiums overall and negatively affect members.

Typical waiting periods before you can claim include:

Hospital treatment type
  • Pre-existing conditions – 12 months
  • Pregnancy and birth-related services – 12 months
  • Joint reconstructions – 12 months
  • Eye surgery – 2 months
  • Psychiatric care – 2 months
  • Rehabilitation or palliative care – 2 months
  • Emergency treatment due to an accident – usually no waiting period.
Extras treatment type
  • Major dental – 12 months
  • General dental, optical, physiotherapy and other Extras services – 2 months

Health funds sometimes have different waiting periods or conditions for these services, so it pays to check them carefully.

When you switch to comparable cover, waiting periods are waived

If you’re switching health insurance to a policy that includes services comparable to your old cover, the waiting periods you’ve already completed are waived by your new health fund. This is known as “portability” and is a rule set down by the Australian Government in the Private Health Insurance Act 2007. The portability rule only applies to hospital cover, but health funds usually waive the extras cover waiting periods too.

For example, if you are 9 months into a policy and decide to switch to comparable cover from a Members Own fund, your new fund will recognise the 9 months. This would mean that you’d still have 3 months to serve on hospital services such as pregnancy and joint reconstructions or for any pre-existing conditions. But the 2 month waiting periods for services like general dental and optical would be waived because you’ve already served them.

When you switch to a higher level of cover, you’ll have to serve new waiting periods

If you’re switching health funds to a policy that includes a service that wasn’t included on your old cover, has a lower hospital excess, or has higher annual limits, you’ll need to serve whatever waiting periods apply to a service before you can make a claim.

For example, say your old policy didn’t include pregnancy cover but your new one does. Even if you held that old policy for 5 years and served all your waiting periods, you’ll have to serve the 12 month waiting period before you can make a claim for pregnancy. This is the same as if you were upgrading your cover with your current fund, so it isn’t a barrier to switching but it is something to be aware of.

Benefit limitation periods

Benefit limitation periods (BLPs) only apply when you first buy health insurance. If you have served your waiting periods with a fund that has no BLPs and then switch to a policy from a different fund that includes BLPs, the new fund’s BLPs will not apply to you.

The benefits that portability provides when you’re switching health funds

Portability means that you can be more certain when switching health funds. In health insurance there are no penalties or exit fees, like the kind you might find if you’re switching home loans or breaking a mobile phone contract.

So don’t hesitate if you’re thinking about switching your health insurance. If you’re not happy with your current fund or level of cover, comparing the policies on offer from the Members Own health funds is the ideal first step. It’s really easy to find something better. You can use our online comparison service to compare policies, or during business hours you can contact one of the Members Own experts on 1300 34 34 36. We’ll listen to your needs and help you choose the ideal health cover for you and your family.