- Benefit and premium changes
Benefit and premium changes
Benefits get better from April 2016.
We’re always on the lookout for better value for you. Meaningful extras benefits that help to keep you well. Hospital cover that gives you real choice. And other programs and resources to support your health.
The premium and benefit changes that relate to you are in a letter and flyer that we will post to you shortly. You can also view your updated product guide here under the heading 'From 1 April 2016'.
Here’s a list of common questions you might have about the premium and benefit changes that take effect from 1 April. If you have any other questions, just give us a call on 1800 335 425.
Premium changes - with added value
1. Why has my hospital premium increased again?
The amount we pay in hospital benefits is increasing because of the rising cost of health care and medical technology in hospitals.
Also, there’s a greater frequency and number of people going to hospital.
2. Why is my increase more than the inflation rate?
Australian health funds paid over $18 billion in benefits in 2015 – the growth in benefits is far in excess of the 1.5% inflation rate for the period. Payments to health fund members increased by:
- 6.5% for treatment in private hospital
- 9.3% for treatment in a public hospital
- 6.1% for private day surgery treatment
- 6.7% for medical specialists
- 8.9% for prostheses
- 5.4% for extras treatment.
Source: APRA, Private Health Insurance Membership and Benefits, Sept 2015.
3. Why are health costs increasing?
The agreements we have with private hospitals help to keep hospital accommodation and theatre fees reasonably stable. However, the cost of prostheses – the pins, pacemakers, stents and artificial joints that are components of many operations – are increasing rapidly.
There is also an increase in patients in public hospitals agreeing to be treated as private patients. This saves money for the government, but shifts the cost to private insurers without providing any additional value for the patient.
Because we are not-for-profit and here to serve the Defence community, we’ve done whatever we can to absorb some of the increase in cost. Our premium adjustment is lower than many other funds.
Our premiums have increased by 5.48% on average, compared with the industry weighted average of 5.59%.
4. Why is my increase higher than the published average increase?
The published average is measured across all levels of cover, type of policy and premiums from around the country. It also does not include the Rebate or a Lifetime Health Cover loading, which if applicable, will impact the final amount you pay.
Because the government is gradually reducing the rate of the rebate on private health insurance, the actual amount each individual member contributes to their premium is increasing.
5. How does Defence Health's increase compare with other funds?
Historically we’ve had significantly lower premium adjustments than the bigger for-profit funds. Our increase this year is once again lower than many of these funds and below the industry average. Your product continues to represent excellent value and provides competitive benefits.
Fund 2010 average increase 2011 average increase 2012 average increase 2013 average increase 2014 average increase 2015 average increase 2016 average increase Defence Health 4.90% 3.98% 3.93% 4.02% 5.34% 5.62% 5.48% Bupa Australia 5.39% 5.14% 4.91% 5.80% 6.35% 5.59% 5.69% Medibank Private 5.74% 5.35% 4.70% 6.20% 6.49% 6.59% 5.64% Industry average 5.78% 5.56% 5.06% 5.60% 6.20% 6.18% 5.59%
Over the five years to 2016, Defence Health’s compound increase has been 5.22% lower than the industry average.
6. How does the government freeze on the Medicare Benefit Schedule affect me?
The freeze on the MBS saves money for the government but contributes to higher health care costs for consumers.
Despite the government freezing the amount it pays doctors through Medicare, Defence Health is continuing to index our contribution for doctors who use our Access Gap cover. This encourages doctors to use Access Gap when treating our members in hospital – and leaves you with no-gap or a small known-gap to pay. Not all funds are doing it, but it’s another step we’ve taken to maintain the value of your cover.
7. Can I pay my premium in advance?
Yes. Any amount you pay before 1 April 2016 will be applied at the old premium rate. However, we can only accept payments up to 12 months in advance.
8. I have extras only. Why has my premium increased?
The extras benefits we pay for non-hospital treatment like dental, physio, chiro and optical are increasing also. This is because more people are claiming and many people are claiming more frequently.
9. I don't claim much. Why should I pay more?
All funds must charge their members the same premium for the same level of cover. We do not discriminate or offer preferential pricing based on your health, age or history of claiming.
Like any insurance, your premium provides you with peace of mind that you will have the cover you need, perhaps when you least expect it.
10. I'm a concession card holder and eligible for an ambulance levy exemption. Why is my premium increasing?
Your ambulance levy exemption helps to reduce unnecessary costs to the fund. However, the rising cost of health care outstrips the savings we make through the levy exemption.
1. Is Defence Health reducing benefits to cut costs?
No, in fact we're improving your benefits.
2. What are the improvements?
- Increase in most dental item benefits. And a guaranteed 15% off the usual dental treatment fee if you visit one of our network dentists.
- Introduction of health screening benefits to help you manage your health.
- Introduction of a new ‘accessories’ benefit for members who depend on certain medical appliances.
- Reduction in the initial waiting period for hearing aids from 36 to 12 months.
- All ‘policy limits’ have now been removed so that everyone on a family membership can take advantage of their individual benefits.
- Boost to benefits available for members who are operated on by an accredited podiatric surgeon. We’ll now pay the theatre fees in addition to the agreement hospital accommodation charge and 25% of the surgeon’s fee.
- And we’ve added ‘Step Forward’ and ‘Foot Leveler’ branded orthotics to the benefit list.
We’ve also planned to launch further benefit improvements in September this year.
All benefit improvements are detailed in the brochure and product guide that will be mailed with your premium change letter. You can also view your updated product guide here under the heading 'From 1 April 2016'.
3. How can you say Defence Health provides better value?
- Lower out-of-pocket expenses - in the last financial year 92.1% of our members had no out-of-pocket expense for their medical treatment. That’s better cover than the industry average of 88.3%.
- Being a Members Own Health Fund means there’s more for members. In the last financial year we returned $0.95 in benefits to members for every $1.00 we received in premiums. And our management expense (staff and business costs) continues to be one of the lowest in the industry – just 6.2% of premium revenue (compared with the industry average of 8.5%).
- Some funds have pressure to return dividends to shareholders. Although we’ve had to increase your premium, we’ve also made significant investments to enhance the value of your cover and the wellness of all our members.
- Our focus is always to keep our premiums as low as possible and this year we priced our products to maximise the return to you, while still reinvesting in new benefits.
4. Tell me more about the changes to extras.
We’re giving more back to increase the value of extras cover and provide more ways to benefit from your cover.
We’ve increased most dental item benefits to help maintain their value; introduced some new benefits for members who need to maintain their health appliances; and launched new programs and resources to support health and wellbeing.
Another significant change is the recent introduction of a dental network to make quality dental care more affordable for all extras members. So far, our members who’ve visited a network dentist have saved more than $550,000 on their treatment (or $79 on average per visit).
5. Do you still have your quit smoking benefits?
Yes, and we’ve added to our Health and Wellbeing services with new benefits for screening tests undertaken without a payment from Medicare. This includes bowel cancer screening, KidneyCheck, mole mapping, heart tests, mammograms, bone density tests and specialist eye tests. These benefits are available to members with most combined hospital and extras cover.
6. What are you doing to support people with mental health issues?
We’ve recently launched a mental health support program called MindStep. It’s the first program of its kind in Australia and provides additional support for people who’ve been hospitalised for anxiety or depression. Members who are eligible will be invited directly to participate, at no additional cost to them.
Benefits for intensive support programs will be introduced through South Pacific Private Hospital in New South Wales. The dedicated programs are available to the family of people hospitalised for psychiatric treatment. Again, there is no additional cost to the members who participate and it’s another way we’re tailoring our benefits to meet the specific needs of the Defence community.
7. Will I have to serve a waiting period before claiming the new benefits?
On 1 April all members will be able to claim the higher benefits immediately, provided they have served the relevant waiting periods. New members or upgrades after 1 April will have normal waiting periods.
However, we’ll recognise waiting periods already served with another fund if you’ve switched to Defence Health.
Timing and rebate adjustment
1. When does the increase take effect?
Your premiums will change from 1 April 2016. Any payments you make before this date will be treated under the old premium structure.
If you have a payment due before 31 March, it is important that we receive it before then to ensure it is processed under the old rates.
2. How is the rebate calculated?
The government adjusts the rebate on 1 April each year, using a factor linked to the Consumer Price Index. As premiums tend to rise more than the inflation rate (because of higher health care costs) the percentage of rebate you receive will decrease each year.
3. Can I elect a different tier of rebate?
Yes. The level of rebate you are eligible for depends on your age and annual ‘income for surcharge purposes’. The government has frozen the income thresholds until June 2018 and this could force you into a higher income tier and reduce your rebate entitlement.
You can change your rebate tier according to your income or age bracket through your Online Member Services account on our website. Or you can call us and we’ll make the change for you.
4. My monthly payment on 15 March was not processed. Can I pay the same amount now (post 1 April)?
If you miss a payment in March, the amount you will need to pay to cover the same period of cover will be slightly higher in April.
What's Defence Health doing to keep private health insurance affordable?
1. What’s Defence Health doing to keep premiums manageable?
Our focus is always to keep our premiums as low as possible and this year we priced our products to maximise the return to you, while still reinvesting in new benefits.
We responded to the Minister’s request to re-submit our pricing submission in February as a sign of good faith in the government’s commitment to reform prostheses pricing. Meaningful reform of this highly inflated area of health care will ultimately deliver savings for members.
‘Prostheses’ include the pins, pacemakers, stents and artificial joints that are components of many operations. The cost insurers pay for these medical devices is rising up to five times higher for private patients compared with the cost in the public sector.
In most cases we are paying an inflated price for exactly the same pacemaker or replacement hip.
We whole heartedly support reform of this area of health care because it’s estimated around $800 million per annum can be saved across all funds.
2. Should I shop around for a cheaper premium?
We recommend a regular review of your cover to ensure you’re on the right level of cover for your age and stage of life. We’re happy to help you with a review of your current cover and needs.
The comparison tool at privatehealth.gov.au is useful if you’d like to do some research yourself – but the new premiums for all funds won’t be updated until 1 April. When comparing different cover, the Ombudsman advises consumers to give priority to good quality hospital cover. And he also recommends that you keep in mind your Lifetime Health Cover status and the Medicare Levy Surcharge when making decisions about your hospital cover.
3. What else are you doing to improve affordability and value of health insurance?
- Despite the government freeze on the Medicare Benefit Schedule, we have increased the amount we pay doctors who bill our members through Access Gap. Not all funds are doing this, but our aim is to give doctors greater incentive to use Access Gap for our members and reduce the out-of-pocket medical expense for members.
- Comprehensive and competitive contracts with more than 500 private hospitals to ensure value and medical cover at an affordable premium.
- Expanded Health Programs to improve the wellness of the chronically ill and help reduce their visits to hospital, as well as piloting a ground-breaking program for people with mental illness. And a new benefit for health screening to help members manage their health. All of these initiatives help to reduce the cost pressures on premiums.
- Deliver the overall health benefits of affordable dental care to all members with extras cover through our dental network – and avoid more costly major dental work down the track.
- We made a detailed contribution to the government’s private health insurance review, which made the case for prostheses reform as well as the amount specialist medical practitioners can charge the privately insured. If a doctor will not use Access Gap cover, we have no control of what that doctor may charge our members.
- We continue to cover 100% for pathology or radiology tests in hospital – some of the for-profit funds have introduced co-payments.
- We aim for price stability so that members do not incur unpleasant rate change surprises to make up for premiums being set unsustainably low the previous year.