The tiers help to compare the range and cost of different levels of insurance. The differences in premium costs between the tiers can amount to thousands of dollars year, so it will pay to choose carefully.
Having decided on approximately the range of services you want cover for, it may be that your preferred choices are across different tiers.
There is a solution provided by an additional mechanism in the new system that can help you to refine your choice, and possibly reach a more economic premium.
The mechanism is the 'plus' option. Funds can modify the cover they offer in the tiers to meet individual needs, with potential for savings on premiums.
The 'plus' offerings will vary between funds. But the sort of 'mix and match' options available could include having a Silver level policy providing coverage for Gold level benefits like cataracts and joint replacements, but not for pregnancy and childbirth.
It is important to note that even top levels of insurance including Gold may not provide total cover for doctors’ costs. Some funds do provide information about the no-gap or known gap arrangements they have with specified doctors.
At the other end of the scale, Basic cover may offer limited benefits, such as ambulance costs and restricted public hospitals services which may suit some people whose main aim is to avoid paying the Medicare levy surcharge.
In a separate benefit, insured patients requiring psychiatric care in a private hospital will be able to upgrade their cover to access higher benefits without serving a waiting period.
Another important change in the new system giving consumers more flexibility is the increase in excess limits. These are being stepped up from $500 to $750 for singles and from $1,000 to $1,500 for couples and families.
Increasing your excess, particularly when you are in good health, can save you hundreds of dollars a year in premiums which after a year or two would make up for any excess.
Another potential saving for young adults will be a new provision allowing insurers to offer people aged 18 to 29 discounts of up to 10 per cent off private hospital insurance premiums. That discount gradually reduces after age 41.
Health funds will also be able to offer travel and accommodation benefits as part of their hospital cover to those who need to travel long distances to have specialised hospital treatment.
However, one area where coverage has been tightened concerns natural therapies. Sixteen therapies which have been deemed not to be evidence-based will no longer be eligible for health insurance subsidies.