Health Insurance
In Australia, healthcare costs are paid for in three ways; by the Australian government through Medicare, by an individual’s insurance (private health or critical illness) or by the patient.
Private Health Insurance
Millions of Australians use the private health system and choose to take out private health insurance because, while Medicare is acknowledged as one of the world’s best public health systems, it still doesn’t cover things such as hospital and accommodation costs at private hospitals. Private health insurance is available for those who wish to cover some of the costs of becoming a private patient. All levels of private hospital insurance cover help pay for inpatient treatments provided that:
- You receive the services while you have been formally admitted in a hospital
- It is a treatment for which Medicare pays a benefit
- It is not an excluded Service on your level of cover and
- You have met all the standard conditions of your membership (like serving the relevant waiting periods)
Your private health insurance will usually cover almost entirely the majority of the costs associated with private hospital treatment with the exception of the medical practitioners’ charges. This is because MBS fees have failed to keep pace with the costs of running a medical practice. (See Fee Policy)
- The Medicare Benefits Schedule Fee (‘MBS’) is the amount determined by the Commonwealth Government for the purpose of paying Medicare Benefits. For eligible in-patient services, Medicare pays for 75% of the MBS. Your private health fund pays the remaining 25%
- Medicare provides benefits based on a government set schedule of fees listed in the Medicare Benefits Schedule, this is known as the MBS fee. MBS fees are not the fees doctors charge, they are set by the government to manage the benefits paid by Medicare. Doctors’ fees are not regulated, like all other businesses they can set their own prices. Many doctors refer to the AMA List of Medical Services and Fees to guide them in setting their fees
- Most specialist doctors charge above the MBS, creating a ‘gap’ – an amount the patient has to pay
- Health funds do not pay any amount charged by your doctor above the MBS unless there is an agreement in place between your doctor and the fund. This agreement is known as a Gap Cover Scheme
Some funds have created “Gap Cover Schemes” to help reduce gaps paid by members. Doctors who participate in this scheme have agreed to accept the benefit arbitrarily determined by the health fund as full payment for your treatment. If a doctor has agreed to treat you under a Gap Cover Scheme there will be no ‘gap’ to pay for that doctor’s charge. These schemes are great in theory, however as the benefits paid are based on MBS fees, which have not kept pace with inflation, the costs of running a practice and medical indemnity, and not on the “AMA list of Medical Services and Fees”, they will often not reflect reasonable and appropriate fees for the services provided. Doctors are independent of health funds and can decide whether or not to treat you under a gap scheme. Gap cover is only available if your doctor has agreed to participate in this arrangement with the fund. Even if they have signed up to participate in your fund’s gap scheme, it’s up to the individual doctor in each case to decide whether to use the scheme for that patient. For example, some doctors may use the gap scheme for pensioners but not other patients.
Self Insurance/Self Funding
The concept behind insurance is to cover you for unexpected large costs that might otherwise cause financial difficulty. For this, you pay a price. Health funds by and large, like any business, need to make a surplus to cover future expenses and investment. They generate more in premiums than they pay in claims – if they didn’t, they’d soon go out of business. Even non-profit funds generally pay only 85 to 90 per cent of premiums back to policy holders; the other 10 to 15 per cent covers administration and costs. In other words, for every hospital bill your fund covers, you are paying an additional 10 to 15 per cent in premiums. In the case of some funds it could be more.
What if, instead of paying these premiums to the health fund, you saved them and paid the costs of any hospital and medical treatment from these accumulated savings? This is the concept of self insurance – regularly putting aside an amount towards your own ‘fund’ to cover that unexpectedly large bill. Most people would be financially better off doing this.
Self-funding may be a potentially attractive option for the wealthy, and self-insurance for those who see themselves as essentially healthy. In most years, most people in this group will not have an in-hospital episode. If they put aside even part of amount of health insurance premiums, they can be well placed to build quite substantial savings to meet future health needs. In the event of a calamitous health episode, they can always choose to be public patients.
Crtical Illness/Trauma Insurance
Critical Illness or Trauma insurance pays a lump sum benefit if the life insured suffers one of the defined Critical Illness events. The most common claims under these policies are for: cancer, heart attack, coronary bypass and stroke, although other conditions can be covered. Recent claims experience from one insurance company showed the cause of claims to be about 62% for cancer, 13% for heart attacks, 11% for coronary artery disease and bypass surgery, 9% for strokes and the remaining 5% spread amongst the other conditions.
- Critical Illness orTrauma insurance is, in essence, a particular type of sickness insurance. It can be seen as an adjunct to private health insurance. In the case of a major medical catastrophe, substantial loss of income is a concern. These products seek to tap into patients’ points of view and to provide cover for important costs of ill-health which are proscribed in the traditional private health insurance framework. Trauma insurance is especially useful for self-employed people. There is nothing to stop a patient using trauma insurance benefits as funds to pay health costs. It can be used by the insured to pay for treatments not fully covered by their policies eg breast reconstruction.
Critical Illness Insurance was developed by Dr. Marius Barnard (the brother of Christian Barnard, the doctor who performed the first successful open heart transplant surgery) in South Africa in 1983. Dr. Barnard saw a need for insurance that paid a “living benefit” to those who survived a major illness to offset lost income and pay additional expenses. Trauma Insurance was first introduced into Australia in 1986.
Sometimes even the healthiest people are diagnosed with illnesses they have little chance of preventing – like breast cancer. Critical Illness benefits are paid regardless of the life insured’s ability to work. Critical illness insurance offers help paying costs associated with life-altering illnesses. If you become sick with an illness covered by your policy and survive the waiting period, you receive a lump sum cash payment – you decide how to spend the money.The funds can be used for any purpose the policy owner chooses, whether for the reduction of debts, to seek specialist or alternative medical treatment, or make lifestyle changes (such as reducing working hours).
Breast cancer (and sometimes also preinvasive breast malignancy if mastectomy is required) is an eligible diagnosis covered under virtually all critical illness policies. As critical illness insurance is often arranged as part of a life insurance package, many women may not be aware either that they have a policy, or that a diagnosis of breast cancer makes them eligible for a large, lump sum claim. This is worth checking, as especially for the uninsured, the lump sum payment may make a wider range of breast cancer treatment options available to them.
Through your superannuation you may be eligible for superannuation disablity benefits. See Breast Cancer Action Group booklets for more information.
Superannuation And Insurance For People With Cancer
Work, Superannuation and Cancer
Uninsured Patients
If you are uninsured, and choose not to self fund, you are best served by the public hospital system. Public hospitals have all the appropriate support services available for individuals with limited financial resources.
Although it is possible to change between the private and public sectors at any time, it is generally preferable if possible, to start in the system in which you plan to have your treatment, as this allows centralisation of your records and avoids the potential delays associated with transfer. Being seen in the private sector and then electing to have your surgery in the public sector does not allow you to “jump the queue” and have your surgery performed any sooner. In fact, if you intend to have your surgery in the public system, you are better served by your GP referring you directly to a public hospital breast clinic.
Travel Insurance
Some people find that they have difficulty getting travel insurance following their breast cancer diagnosis. If you do have problems, it can be frustrating and may make you feel that you are being penalised for something beyond your control.
Points to bear in mind
- Your travel insurance will not cover you for any claim relating to your breast cancer or any other pre-existing medical condition if you don’t tell the insurance company about it when you buy the policy.
- It may be worthwhile checking on the cost of travel insurance before booking your holiday in case the cost of insurance means you are unable to take the particular trip you want.
- It can be easier to get travel insurance cover for some countries than for others (e.g. USA).
Most travel insurance is sold for overseas trips. Some policies cover domestic travel within Australia. These don’t include hospital and medical expenses because these are already covered by Medicare and/or your private health insurance.
- You may need a doctor’s letter confirming that you have had a diagnosis of breast cancer but that you are fit to travel
- You may be asked for medical details and information about your treatment. If you are, the following reminders may help:
- Surgery: what type, e.g. mastectomy, wide local excision?
- Chemotherapy: do you know what drug combination was given to you?
- Hormone therapy: which drug was prescribed, e.g. tamoxifen, Arimidex?
- Radiotherapy: have you had or are you having radiotherapy?
- Some companies may not be able to offer you cover if you have only just finished a course of treatment or recently come out of hospital.
- If you have secondary breast cancer some general insurers may be unable to offer you cover.
- Most insurers base their decision to offer cover on individual circumstances, so while one person may be offered cover another may not.
- You may be asked a series of questions about your cancer and any other medical conditions you may have. This is known as medical screening. Some people find some of the questions quite personal and sometimes insensitive. It is important to remember that medical screening is neccessary for the insurer to work out if they are able to offer you a policy.
- Always ensure you understand exactly what you are covered for. If you are in any doubt, ask your insurer to confirm your cover for you.
- Shop around as premiums and terms vary widely.
- BCNA (Breast Care Network Australia) have several very useful travel insurance factsheets on their website. www.bcna.org.au
- Breast Cancer Action Group NSW also have a good information booklet. www.bcagnsw.org.au
