Summary: Many Australians pay hundreds of dollars a year for what is known as Extras insurance (dental, optical, ambulance, physiotherapy and various other general treatment services) but could be paying around $200/yr for just essential dental, optical and ambulance cover. And those with more extensive needs could switch to customised Extra policies so that they pay only for what they use.
Other Australians don't have Extras insurance as they consider it too expensive but end up paying, on average, more than $200 per year directly for just general dental and optical services. If they need an ambulance or pay for therapy services, it averages considerably more than $200/yr.
In this post, I explain how to find the best value-for-money Extras insurance, costing around $180-$300/year. The aim is to isolate Extras insurance products that only cover what you need and do so at a cost significantly less than you'd pay directly. The key essential services are preventative dental, optical (if you need it) and ambulance (if you consider it worthwhile). Major dental, pharmacy, physiotherapy and other treatments can also be added by paying a bit more or to customise the coverage.
Gain: ~$200 per year savings in over-paying for Extras insurance or paying more directly for essential services than if you had value-for-money cover.
My Situation: I pay $184.60/yr for HCF - Bronze Plus Extras mainly for 1 free dental inspection and clean per year plus optical benefits. If an inspection reveals I'll need significant dental work I temporarily upgrade to HCF - Silver Plus Extras which is $12 a month more (a 2 month waiting period applies after switching). As I earn under $90,000 a year, I don't waste money on private hospital insurance and do not pay the Medicare Levy Surcharge.
Details:
1. Why is "essentials" Extras health insurance worthwhile?
Primarily because there are essentials-only Extras insurance products that cost around $200 per year - which is less than the cost of paying for 1 dental checkup/clean and an occasional x-ray or filling.
If you use optical products (glasses, contact lenses) or might otherwise pay for ambulance cover, the equation is even more in your favour. And if you already use physiotherapy, remedial massage or other common Extras therapies, then essentials Extras insurance is even more of a no-brainer.
Several insurance funds now also have "no gap" preventative dental (checkup, clean, fluoride, possibly x-rays). This is the first suggested filter for choosing an essentials Extras policy as not having to pay for preventative dental services should be the major aim for most people following this step.
2. How do I isolate the best value-for-money essentials Extras insurance policies?
This is a really simple process, it's just not well-known. But many of those that do find out about it, just can't be bothered doing it themselves.
2a. Go to www.privatehealth.gov.au > Compare health insurance policies
2b. Make the applicable selections. E.g. Victoria, 1 Adult, No dependents covered by policy, General Treatment (aka "Extras"), Include any restricted funds if eligible
2c. If you only need essentials filter the list to "Basic" otherwise click "Show all results"
2d. Click the Monthly Premium column heading to sort from lowest to highest
Below is the list as of 17 August 2016 showing all results sorted from lowest Monthly Premium:
2e. Click on the Policy Name to open the Summary Information Statement and determine whether to shortlist the policy
Generally, it is easy enough to isolate the value-for-money policies worth shortlisting. Some cheaper Extras policies are only available in conjunction with Private Hospital insurance. And many of the cheapest policies do not cover dental or at least one desirable essential (ambulance, optical, etc).
Typically, you are also best off focusing on the larger insurers who offer coverage nationally (e.g. HCF, Bupa, Australian Unity, GMHBA, Peoplecare, Medibank Private, Phoenix Health Fund, HIF). And, in particular, on the insurers offering no-gap dental services (see #4 below).
For most people seeking only essentials cover, you should be able to ignore policies charging a listed Monthly Premium of more than $32. Note that if eligible for the Private Health Insurance Rebate the cost can be up to 30% less than this listed price.
3. Compare the shortlisted value-for-money essentials Extras insurance policies and then review in detail on the insurer's website
Based on my initial review, the best value essentials Extras policies I shortlisted are (as of August 2016):
> HCF - Bronze Extras ($16.25/mnth before rebate)
> HCF - Bronze Plus Extras
> HIF - Vital Options
> Australian Unity Health - Basic Extras
> Bupa - Bronze Extras
> Phoenix Health Fund - Basic Extras
> GMHBA - Bronze Extras Set Benefits
> HIF - Saver Options
> HBF - Saver Flexi Extras Cover
> Peoplecare - Basic Extras ($28.88/mnth before rebate)
Simple comparisons of Extras policies can be done directly on the www.privatehealth.gov.au website. You should compare between insurers and also different levels of cover from the same insurer.
For example, comparing differing levels of Extras cover from HBF shows why those who only need essentials cover can save a lot of money by choosing policies with only the minimum cover desired. In this case, the saving is as much as $130/month which equals $1,560/year. Most people do not need ongoing cover for blood glucose monitors, hearing aids, naturopathy, acupuncture, psychology or orthodontic. By definition, anyone paying for comprehensive health insurance (top level cover) is paying for more insurance than they need and thus paying way too much.
Using www.privatehealth.gov.au to do a compare on the cheapest six policies in my shortlist produces the following summary. Useful things to note:
- None of the cheapest policies cover Major dental so you need to move up to more expensive policies in the shortlist if this is desired. But HCF Bronze Extras does cover simple fillings under General dental, but you'll only find this useful detail via its website.
- The three cheapest essentials Extras policies do not cover optical or have limited cover, which is just fine for those who need little or no optical cover.
- Ambulance cover and pharmaceuticals are another key area where the level of cover is traded off for cost savings.
- There are various useful trade-off opportunties to personalise cover and spend money primarily on services you need.
Comparing policies ranked 7 to 12 in cost provides further insights:
- General dental cover doesn't necessarily improve as the cost goes up within the same level of cover (Basic, Medium, Comprehensive). You can easily pay more for less cover by choosing an insurer that isn't value-for-money.
- In some policies, services you may never use (e.g. naturopathy) start to be covered at higher levels (entailing costs) while the cover for essential services (general dental) can remain low. E.g. Medibank Private Basic Extras 55.
- It is impossible to use www.privatehealth.gov.au to properly compare out-of-pocket costs as some policies pay fixed dollar amounts for each specific service while other pay a varying percentage (e.g. 55%, 70%...). And a few policies offer "no gap" services like preventative dental.
4. Which insurers provide "no gap" for some essential services like general dental? How do I figure out and compare out-of-pocket costs?
Out-of-pocket costs for the same service (e.g. a dental checkup and clean) can vary considerably based on the insurer and specific policy. For each specific service item, some policies pay fixed dollar amounts while others pay a percentage (e.g. 55%, 70%...). And all have annual limits. You'll need to review the full policy details to compare. And you'll need to know what the provider will charge - for instance, for a periodic dental checkup or a scale & clean.
In my view, the simplest and most cost-efficient solution is to limit your choice to insurers that provide "no gap" services for preventative dental. Some extend to general dental (e.g. include simple fillings), some optical and initial consultations. However, you don't want to purchase ongoing "no gap" insurance for things you won't definitely use as you will spend more than you need to. Note that "no gap" services typically require visiting a preferred provider, so you'll need to check there is a suitable one nearby.
My main driver for obtaining Extras insurance is general dental cover. So, in reviewing Extras insurance on an insurer's website, the first thing I do is check whether they offer "no gap" preventative or general dental. If they don't, I drop them from consideration.
Of the insurer's I've shortlisted and other major ones, the following provide "no gap" preventative dental (plus some general dental). Note that not all general dental services are no-gap and major dental definitely are not.
> HCF - No-gap services; HCF - More for you
> Medibank Private - Dental insurance
> NIB - Dental care
> Australian Unity - No Gap Dental Network
> Peoplecare
Other insurers provide rebates at high levels across most dental services (above 70%). If you aren't just getting a yearly checkup and clean with the occasional x-ray then you may be better off with a high rebate across more dental services.
See:
> Choice - Dental fees: is the price right?
> E.g. HIF - Dental cover
5. Why can't I save more by getting rid of bundled services in essentials Extras policies that I don't need such as optical, pharmacy, physiotherapy, chiropractic, podiatry, remedial massage? Can I customise my Extras cover completely?
At the very cheapest end of Extras cover, there isn't an option to customise your cover by choosing say 4 services out of 10. Instead you need to use comparison tables (see #3 above) to pick the best match.
However, this customisation option does become available from the mid-tier of the Basic level of cover and up. Policies with the word "flexi" or similar in their name are usually customisable such that you can pick which services to include (and thus exclude others).
From the shortlist in #3, the best example of a customisable policy is: HBF - Saver Flexi Extras Cover. As you can see you pick 4 out of 10 services to obtain cover for. You could include Major dental or Pharmacy and exclude things most people don't need like Chiro, Osteopathy, Podiatry, Physiotherapy and Remedial massage.
6. Some recommendations for essentials Extras insurance
For my needs and preferences, my priorities are:
- No-gap preventative dental (checkup, clean, x-rays also if possible). This is my major priority.
- $100 of optical per year for contact lenses.
- Ambulance cover if adding less than $30/yr to the policy cost
Sometimes the best value-for-money is obtained by paying a little bit more than the minimum. In this case, paying $40/year more for Bronze Plus Extras provides the key added benefit of 100% back on one dental checkup every year. It also adds optical cover.
Given the higher prices of the other Basic policies with no-gap dental, the best option for me is HCF Bronze Plus Extras. Including a 27.8% rebate, it will cost only $180 / year - the minimum I'd pay directly just for one dental checkup and clean. HCF's No-gap services also extend beyond dental, whcih is an added bonus.
> HCF - Bronze Plus Extras
If an inspection reveals I'll need significant dental work I temporarily upgrade to HCF - Silver Plus Extras which is $12 a month more. Waiting periods (2 or 12 months) usually apply when upgrading your plan even if you've been with the provider for years already. Typically minor services are 2 months and major services (like major dental) are 12 months.
HCF's waiting periods are below:
Other recommended value-for-money policies that are cost a bit more but have a slightly different mix of coverage are:
> Australian Unity Health - Basic Extras ($219/yr)
> GMHBA - Bronze Extras Set Benefits ($236/yr). Fact sheet PDF (Doesn't seem to offer a no-gap dental checkup but covers a much wider range of services)
> HBF - Saver Flexi Extras Cover ($251/yr) Allows custom picking of 4 out of 10 services and generally has Medium level cover (not Basic).
7. How do I find a convenient dentist covered by my insurance provider whose fees aren't excessive?
As explained in section 4 above, the key element of Extras insurance for most people will be obtaining "no gap" preventative dental services such as 1 or 2 free dental checkups and cleans per year (often including X-rays and fluoride). Some providers "no gap" general dental extends to simple fillings and other low-cost treatments.
However, at some point you may need more extensive dental work that will have out-of-pocket costs. As insurers typically refund a set percentage of the dentist's charge for a specific service, it is very beneficial to do some research when choosing a dentist to check their fees are not at the higher end of the spectrum (the difference between bottom and top is often around 100% - e.g. $100 to $200 for the same service like a filling on 1 tooth).
The general steps for choosing a dentist are:
1. Using the advice above, identify the best value-for-money Extras insurance firm with "no gap" preventative dental
2. In choosing one, check that your shortlisted insurance firms have associated "no gap" dentists in your area. The insurance firm's websites usually have a service provider search by suburb or post code
3. In city area's you'll usually have a few nearby dentists to choose from. Ask for their current Dental ADA Code Price List. If they don't provide a comprehensive list, ask for the current prices for these common general dental services:
011 Comprehensive oral exam
022 X-ray (per exposure)
114/115 Scale and clean
121 Fluoride treatment
521 Adhesive restoration – one surface – anterior tooth – direct
522 Adhesive restoration – two surfaces – anterior tooth – direct
523 Adhesive restoration – three surfaces – anterior tooth – direct
531 Adhesive restoration – one surface – posterior tooth – direct
532 Adhesive restoration – two surfaces – posterior tooth – direct
533 Adhesive restoration – three surfaces – posterior tooth – direct
577 Cusp capping – per cusp
411 Direct pulp cap
(Include any other ADA codes you know you need from treatment plans)
You can compare the prices quoted with recent data from sites like those below:
> Privatehealth.gov.au - Average dental charges 2015
> Choice - Dental fees: is the price right?
> smile.com.au - Dental Fees - VIC
8. If you have very expensive dental work to be done, either temporarily use the maximum dental insurance, or temporarily join the best value annual dental plan, or go overseas to a recommended dentist
Occasionally people need very expensive dental work as it involves a lot of treatments or specialist work. The three options are:
a. Use www.privatehealth.gov.au to temporarily join the insurance plan that provides the most cover for the treatment you need and after the 12 month waiting period get it all done within a short period. If you need two years annual caps then time your eligibility to commence around October to December as the annual caps reset on January 1 regardless of when your plan renewal date is.
b. Temporarily join the best value-for-money Australian annual dental plan. E.g. $77 for one year can save you hundreds of dollars for extensive treatment. smile.com.au - Dental Fees - VIC
c. Try to get the dental work done in fewer visits as dentists are more likely to give discounts off the total bill if it comes to several hundred dollars per hour - this is common if getting multiple fillings or other major dental work done in the same visit. If the out-of-pocket dental costs would cause financial hardship make sure you ask upfront for a discount and shop around till you find a dentist that provides a decent discount.
d. If you're looking at thousands of dollars in dental costs in Australia, consider going to the most recommended overseas dental providers in south east asia. You could go on holiday and get all of your dental work done at the end of your trip. The typical saving will be at least 70% of the dental costs in Australia.
9. Example comparison of different levels of cover and their cost
Further Info:
Australian Government Department of Health
> Private health insurance rebate frequently asked questions
Choice
> Dental fees: is the price right?
Canstar
> How much of your extras fees are covered by benefits?
Dental Guide Australia
> Dental insurance options, reviews and advice
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