PrivateHealth.gov.au

How health insurers work

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Corporate structure

If a health insurer is listed 'not-for-profit', this means it is a mutual organisation, with the premiums paid into the fund used to operate the business and cover benefits for members.

'For-profit' insurers aim to return a profit to their owners (which may be another health insurer or corporation) or shareholders. They are still required to maintain sufficient funds to operate the company and pay benefits to their members.

Open or restricted?

A health insurer is registered as either an Open or a Restricted membership organisation.

Open membership organisations provide policies to the general public.

A restricted membership organisation provides policies only through specific employment groups, professional associations or unions.

States and Territories

Many insurers operate mainly in a particular state or regional market. This means they may have a wider network of Agreement hospitals and health providers within that state or region. This is very important, because you are more likely to be covered for hospital fees if your hospital has an agreement with your fund.

Most larger insurers will offer different policies for different states, or the same policies at different premiums. Differences in price are based on the variations in cost and benefit between states, and in some cases state government health arrangements.

You should make sure the health insurer you select provides adequate cover in the state or region where you live. If you are considering moving interstate, you should check with your insurer about your cover in your new area.

Community rating

Private health insurance is 'community-rated'. This means that everyone is entitled to buy the same product, at the same price, and is guaranteed the right to renew their policy. A health insurer cannot refuse to insure you, or refuse to sell you any policy you want to buy.

Lifetime Health Cover (LHC) is an exception to community rating - you will have to pay a higher premium if you have a LHC loading. The cost of premiums for similar cover may vary between insurers.

Private health insurance is different from life, trauma and disability insurance. These insurances are 'risk-rated' rather than 'community-rated' and generally offer lump-sum payments in the event of specific illness or loss. They are not a substitute for private health insurance.

Notifying members of changes to rules

Health insurers change their rules and premium prices from time to time. They are required to tell their members about any change that might be detrimental to the interests of an insured person; and requires an update to the Standard Information Statement.

Regulation

Private health insurance is provided through organisations registered under the Private Health Insurance Act 2007. The financial performance of registered health insurers is monitored by the Private Health Insurance Administration Council (PHIAC), an independent Australian Government body, to ensure solvency and capital adequacy requirements are met.