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What to do if your health insurer won't pay out on a claim

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What's the difference between an excess and a co-payment?

Daniel Graham, Choice finance journalist

An excess is a charge you pay to your insurer to be admitted to hospital as a private patient.

Typically these are charged once per person per year. An excess might be anywhere from $100 to $1000.

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A co-payment is a smaller charge you might pay for hospital accommodation as a private patient. It's usually charged on a daily basis and might be capped, for example after seven days.

It's possible to get policies with no excess or co-payment.

These can be worthwhile if you're likely to need hospital treatment in the next couple of years, as you'll avoid that upfront out-of-pocket cost. The upside to taking a policy with an excess is that it is a lot cheaper than an equivalent policy without. Health funds usually offer a range of excess options.

Is it better to combine hospital and extras with one insurer?

Laura Crowden, iSelect Health spokesperson

Not necessarily. It's not always cheaper to have your hospital and extras policies with the same fund, although it is generally less hassle (one fund, one policy number and just one premium to pay).

Your focus should always be on choosing the hospital and extras policies that are best suited to your individual health needs and budget - and the best value could be from two different funds.

Speaking to a private health insurance expert who can compare a range of policies from different funds will allow you to tailor your cover to best suit your personal circumstances.

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Is locking in my premium for an entire year worth it?

Laura Crowden, iSelect Health spokesperson

Yes, if you can afford it, paying your annual premium upfront makes good financial sense.

Paying a full year's worth of premiums upfront in late March before rates increase on April 1 will lock in your current rates for another year and help you avoid paying higher premiums for another 12 months.

But don't just automatically lock yourself in with your current fund for another year.

First, take the time to make sure you are still getting the best deal. If not, you can switch to a better-value policy before April 1 and lock in current prices with your new fund for the next 12 months. Not only can paying annual premiums upfront save you money but you won't have to think about it for another year!

I am an international student. Do I need health insurance?

Josh Callaghan, Canstar general manager of wealth,

Students coming to Australia from a country that has a reciprocal healthcare arrangement with Australia qualify for Medicare and therefore don't need to have private health insurance.

For all other countries, private health insurance is a condition of entry for all student visas and therefore needs to be held by those students entering the country.

These students will need private health insurance to pay for any medical expenses incurred during their time here.

Health funds have a specific range of products designed for international students that align with the length of your study and visa.

It's important to note that you need to prepay this insurance for the duration of your stay before coming into the country. If you're coming to Australia with family members, they too will need private health insurance.

international student health insurance

What if my insurer won't pay a claim?

Josh Callaghan, Canstar general manager of wealth,

The disclosure on what is and isn't covered in a policy is pretty clear these days. Every fund has a dispute resolution process and it's best to follow that through to the end before escalating your claim.

If, after going through the process, you still believe that you have the right to a claim then you can escalate it to the Private Health Insurance Ombudsman (PHIO).

Your fund will be able to give you these details or you can lodge a dispute online on the ombudsman's website.

The ombudsman operates as an independent party to assist in the resolution of claim disputes and closely monitors the complaints across the industry at a fund level. This information is available publicly and you can see the aggregated details of these complaints in the ombudsman's annual "State of the health funds" report.

There are new extras policies hitting the market. How do I know which one to choose?

Josh Callaghan, Canstar general manager of wealth,

A number of funds now offer more flexibility in their extras policies that allow users to tailor the type of cover they want. For example, some providers offer you the option to build the cover you need from a list of services.

However, it's important to note that these types of policies will still have some restrictions and the out-of-pocket expense may be higher than with other more traditional products.

Specifically, these products enable greater flexibility on "benefit limits", meaning there's more to claim. However, it's the "benefit paid", which is your return on a claim, that makes a difference in the value of an extras policy.

Generally, higher benefits paid are what drives up the price of a policy, as this represents the amount you get back at each claim. Consumers need to understand the interplay of limits and benefits paid in the policy they choose to ensure they're not paying for something they won't or can't use.

health insurance rebates premiums

What rebates can I get on health insurance?

Abigail Koch, comparethemarket.com.au spokesperson

Most Australians with private hospital cover will receive a rebate from the federal government to help them with the cost of their insurance.

The government subsidises health insurance as it relies on the private system to take pressure off public hospitals and reduce waiting times for elective surgery. The rebate - known as the Australian government private health insurance rebate - is calculated based on your income, age and the number of dependent children you may have.

You can choose to claim your rebate as a reduction in your health insurance premium, or it can be a tax offset when you lodge your annual tax return. Typically, if you earn more than $140,000 as a single or $280,000 as a couple then you will not be eligible for the rebate.

Is there anything I can do to reduce gap fees?

Abigail Koch, comparethemarket.com.au spokesperson

The best way to reduce or avoid gap fees is through research and preparation ahead of any hospital treatment. Informed financial consent entitles you to find out how much your treatment will cost and if you will have to pay anything out of your own pocket.

The first step is to contact your insurer to check whether your doctor and hospital participate in the fund's gap cover arrangement.

If they do, then your policy may cover all or most of your doctor's fees, as well as the costs relating to your hospital accommodation. If you have chosen a policy with an excess, then you will have to pay this amount regardless of whether or not your hospital has an agreement with your fund.

For more on health insurance, check out the September issue of Money, on sale September 7.

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Maria Bekiaris is editorial campaigns manager for Canstar and former deputy editor of Money. She holds a Bachelor's degree in business.
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