Want to understand and find the best Private Health Insurance for your visa application?
Understanding and finding the right private health insurance is not easy. Read this easy guide for purchasing insurance to meet your visa needs.
Private health insurance is one of the many requirements for visa holders and migrants to Australia. This requirement is often misunderstood by many visa applicants, particularly from those who come from countries with very little or no insurance products. Countries that are developing countries with limited financial services framework and infrastructure, will have residents that are unfamiliar with private health insurance, let alone insurance.
What is insurance?
Insurance is a transfer of risk from yourself to someone else. The transfer of risk is implemented through paying a “premium”. Premium is an insurance term which means the price tag for transferring the risk. The premium is paid to an insurance company, who will accept the risk, and pay you if you suffer loss against what you have insured. The premium is paid to cover a period of time. If the event of loss occurs within the period that is covered by the premium, then the insurer will pay a claim. If the event of loss occurs outside the period of cover then the insurer is not obliged to pay the claim.
As an example you may be familiar with car insurance. You pay a premium to an insurance company to protect your car from damages. If damages do occur to your car AND it is within the period of cover, you can submit a claim to the insurance company. The insurance company will then pay you for the damages that you have suffered to your car.
Insurance is therefore a way or protecting yourself from large losses. These larges losses may or may not eventuate. But if they do, you will be protected from the large losses.
In a similar way to car insurance, you can purchase health insurance in Australia. Health insurance will protect you from paying the excessive fees, should you need to go to hospital, have surgery, see a doctor, need an ambulance, and other health costs. As an example, if you have high blood pressure and you begin to suffer dizzy spells, should you go to the hospital to see a doctor it may cost up to $300 for a simple check in Australia. With health insurance, nearly all the costs can be paid for by the insurance company.
The are many other types of insurance, such as:
- General Insurance which includes motor vehicle, home and contents and business.
- Life Insurance which includes Death, Total and Permanent Disability (TPD), Income Protection (or Disability Income), Critical Illness and Trauma.
- Travel Insurance which includes luggage, travel cancellations, and hospital cover.
Medicare – The Public Health Insurance Scheme
In Australia, there is a form of public health insurance called Medicare. The people of Australia must pay in the form of an annual levy, an amount to the Australian government to support the Medicare costs. In doing so permanent residents and Australian citizens are entitled to a mostly free public health care. The provision for this service is through public hospitals and other medical practitioners. If you are not a permanent resident or an Australian Citizen then you are not entitled to any free hospital or medical services.
Private Health Insurance
Private health insurance is therefore hospital, medical, doctor services that are insured by a private health insurer. That is, health insurance that is not through Medicare – remember Medicare is for permanent residents and Australian citizens only.
However, many permanent residents and Australian citizens purchase private health insurance in addition to Medicare. They do this, because private hospital may perform a better service and have shorter waiting lists. Private hospitals have the option of choosing your own doctor and having your own room in the hospital. There are many other benefits, but suffice to say, private health insurance provide coverage of potential health expenses.
In purchasing private health insurance, may people shop around for the best price premium and the best benefits. Often the cheapest premium doesn’t mean the best insurance deal. It may mean that very little coverage is provided, and therefore making the purchase of the health insurance almost useless.
(Just recently a Royal Commission was conducted to investigate junk insurance offered to the Australian public. Junk insurance is premium paid by customers but is almost impossible for any claim to be paid).
It is therefore very important to analyse the premium and the benefits of each private health insurance provider.
When a policy (a policy is a contract with the private health insurer) is entered into, the private health insurer must provide details of the policy. These details are in essence the terms and conditions of the contract. These details are provided to you in the form of a Product Disclosure Statement (PDS). The private health insurer must explain to you the details of the PDS, and ensure that you acknowledge that you have received a PDS.
Many Australian Visas will require you to purchase Private Health Insurance
Now that you understand what private health insurance is, you may be asking, why would the Australian government require me to purchase private health insurance, when I am not an Australian.
The Australian government, understands that providing hospital and medical services to people is very expense in Australia. These services are by no means free, and therefore if a visitor or temporary resident need medical services when in Australia it could cost a lot. Medicare cannot cover visitors and temporary residents, and therefore (even at a public hospital) a charge will be incurred.
By purchasing private health insurance, the costs are covered and there won’t be a burden on the government’s Medicare to support the medical fees.
But you may say “I am fit and healthy, I don’t need to see a doctor or go to hospital”. Unfortunately, in life there is always a risk that you may need to see a doctor or go to hospital. You may be involved in an accident, you may suffer a terrible flu, you may suddenly have dizziness that requires medical attention. These events are highly unlikely, but they do happen and the Australian Government wants to protect you against any large medical expenses. By purchasing private health insurance your medical expenses will be reduced and the private health insurance company will need to pay some of the medical costs.
Therefore many visas will required the applicant to purchase Private Health Insurance. Many visas will require you to show evidence in the visa application to the Australian Government, that you have purchased private health insurance to at least cover the basic medical, hospital and ambulance costs.
Types of Private Health Insurance for Visitors and Temporary Visa applications
Overseas Student Health Cover
If you are intending to study in Australia, then you will need to have private health insurance. The type of private health insurance for overseas students is called Overseas Student Health Cover (OSHC). The insurance must be purchased for yourself AND your spouse (husband, wife or de-facto) and children.
At all times during your stay (and your family) you must have private health insurance. If you do not have cover for your entire duration, then you will be in breach of your visa requirements. Do not let this occur, because the Australian Government is extremely strict.
Please note that are some countries, NOT many, that have an agreement to reciprocate medical expenses between Australia and them. This means, OSHC is not a requirement to be purchased, but in the majority of cases, you will need to purchase OSHC.
The few countries that are exempt of OHSC, which at the time of writing are Sweden, Norway, or Belgium. Please make sure and double check when you are reading this, as the Australian Government often changes their immigration rules and regulations regularly and quickly.
Reciprocal Health Care Agreement
Some countries have a Reciprocal Health Care Agreement with Australia. They are:
- United Kingdom
- New Zealand
If you are residents from the above countries it means that you are entitled to some benefits of the Medicare pubic health care system. This DOES NOT mean that you are exempt from purchasing OSHC. It means, however, you have some benefits which may be supplemented through Medicare and the country from which you are from will reimburse the Australian Government for those medical costs.
The benefits of purchasing OSHC include hospital, medical treatment and ambulance services.
There is a minimum that is required to be offered by private health insurance companies and these are documented in an OSHC Deed. The deed is an agreement between the Australian Government and the Private Health Insurer.
Per the deed the bare minimum cover must include the below:
(a) out-of-hospital medical services – the benefit amount as listed in the Medicare Benefits Schedule;
(b) in-hospital medical services – 100% of the Medicare Benefits Schedule fee;
(c) public hospital – admitted patient in shared ward hospital accommodation, same day services, accident and emergency and outpatient medical and post-operative services – the rate determined by State and Territory health authorities for services charged to a patient who is not an Australian resident;
(d) surgically implanted prostheses – no gap prostheses and gap permitted prostheses as listed in the Prostheses Rules;
(e) private hospital/registered day hospital facility – 100% of the charges for all insurable costs raised by a contracted hospital with a minimum of shared ward accommodation;
(f) benefits for expenses exceeding the equivalent of the current Pharmaceutical Benefits Scheme patient contribution for general beneficiaries, up to $50 per pharmaceutical item, prescribed and dispensed by a registered practitioner recognised by the health fund with a maximum benefit of $300 per calendar year per single membership and $600 per family membership; and
(g) ambulance services – 100% of the charge for transport by an ambulance provided by or under an arrangement with an approved ambulance service when medically necessary for admission to hospital or for emergency treatment.
The above is written as per the deed. And in most ways, what this covers is the equivalent of Medicare offered to permanent residents and Australian Citizens. Therefore, the Government is asking Students to pay a form of Medicare Levy, but instead to Private Health Insurers.
I have not covered all the terms and conditions per the deed, but there is one point to be aware of.
Pre-existing medical conditions will NOT be covered. This means, if you have suffered an event that already meets the benefits offered before arriving in Australia, you will not be covered. You must therefore be honest with communicating with the Private Health Insurance company, because they have the ability to decline any claim should it be discovered that you had a pre-existing condition that a reasonable person should have been aware of.
OSHC Insurance Providers
Insurance in Australia is a highly regulated and governed industry. Therefore, OSHC Insurance cannot be offered freely by any company. The insurance companies that are permitted to offer OSHC have entered into the Deed with the Australian Government. These private health insurance companies are also required to ensure that there is a sustainable business and sufficient capital is available to meet future claim payments.
You can therefore rest assured that Private Health Insurance companies that offer OSHC provide a valuable service and will meet paying claims should they be valid and legitimate.
The following are the Private Health Insurance companies that are permitted to sell OSHC to you:
- Allianz Global Assistance
- BUPA Australia
- CBHS International Health
- Medibank Private
ahm health insurance is a predominantly a private health insurance provider but they also offer life insurance, travel insurance and pet insurance. The health insurance offerings are underwritten by Medibank Private, the parent entity, whilst the other insurance products they offer are underwritten by Zurich. Essentially ahm is an insurance provider that white labels products. This means that ahm is mostly a brand only.
The parent entity, Medibank Private is listed on the Australian Stock Exchange (ASX) and is one of the most highly priced shares at a Price to Earnings ratio of 20.2, which means it would take 20 years for the yearly earning to pay back the share purchase price. Many construe a high Price to Earnings ratio as a company with high growth prospects or increased future earnings.
ahm offers to overseas students their version of ahm OSHC cover.
The cover includes:
• Visiting a GP (General Practitioner / Medical Doctor) and some specialists
• Seeing a doctor in hospitals (surgeons and anesthetists)
• Pathology tests (including blood and some biopsies)
• Medical x-rays
• Hospital fees
• Prescription medicine costs
• Ambulance costs
ahm OSHC cover also provides access to health advice from a
registered nurse 24 hours a day.
Allianz Global Assistance
Don’t get confused with Allianz Global Assistance being an Allianz Group provided product. It isn’t. Allianz is well known across the world as a big player in the insurance market, however the Allianz Global Assistance product is in fact underwritten by Peoplecare Health Limited. Peoplecare Health which is not a large private health insurance provider in Australia. Their presence is very much limited to the steel and manufacturing industry, as it began as a mutual fund. Since 2006 it now is open to any members outside of the steel industry.
Bupa Australia is part of the BUPA group which sells insurance products and operates aged care health services. They are a large company, with tens of thousands of members. You may have heard of the Royal Commission into aged care services where BUPA has been found to fail customers in providing the most basic of services. There is a long road ahead for the new appointed CEO Hisham El-Ansary, to restore confidence in BUPA’s aged care services.
BUPA’s private health insurance business is also not faring well. Customers are dropping out of purchasing private health insurance industry wide, however it is not clear if this is impacting the BUPA OSHC business channel.
CBHS International Health
CBHS International Health is a relatively new private health insurance provider, and the general reviews aren’t great. The quality of customer service and the process of claims leaves a lot to be desired. CBHS International Health, are not a major insurance provider in Australia. Infact, if you ask the Australian general public if they have heard of CBHS many would say they haven’t.
If you intend to purchase CBHS International Health OSHC cover, then research the quality of cover that they provide.
Medibank Private is one of the most well known private health insurance providers in Australia. Medibank Private also owns ahm private health insurance for OSHC and is the underwriter or the insurance provider. It is the second largest insurance provider in Australia, and began as a mutual company operated by the Australian government. The company has a market value of approximately $8.7 billion.
NIB’s motto is “I feel better now”. Is it the third largest private health insurer in Australia and is listed on the Australian Stock Exchange. Founded in 1952 as nib, it has over 1.6 policy holders. nib also provides life insurance and pet insurance but underwritten by TAL Life and other insurance providers.
nib offers three type of Overseas Student Health Cover.
- LS4 nib OSHC
- LS6 nib OSHC Premium
- LS9 nib OSHC Top Cover
These three covers in summary are the minimal, extra coverage and additional dollar coverage.