What are health insurance benefits and limits?

In Australia, health insurance limits dictate the maximum amount a policy will pay for certain services within a specific period of time. Benefits, on the other hand, are the actual cover provided under your policy. These can include everything from hospital stays to specialist consultations, allied health services and much more.

Of course there’s plenty more to understand beyond the surface level, which is why we’re here to explain everything so you can maximise your policy’s value while avoiding out-of-pocket costs. Let’s dive into what health insurance limits and benefits really mean.

Health insurance benefits is a broad term that encompasses the wide range of services covered under your policy. These benefits can include hospital treatments, specialist appointments, tests, surgeries, physiotherapy, chiropractic care, psychology sessions and more. The benefits of your policy will be outlined in the PDS and will vary depending on the level of cover you choose. Basic hospital cover, for example, will only give you limited benefits, whereas more comprehensive policies like Gold-tier insurance will provide more extensive cover across a broader range of services.

By doing a bit of digging and seeing exactly what services are covered under your policy (and to what extent), you can better plan for medical expenses and avoid unexpected out-of-pocket costs. It’s also important to stay across any waiting periods associated with specific benefits, as this might affect when you can access those services after taking out or upgrading your policy.

Here are some of the most common benefits of private health insurance in Australia:

• Hospital treatments
• Specialist consultations
• Diagnostic tests
• Surgeries
• Allied health services (e.g., physiotherapy, chiropractic, psychology)
• Prescription medicines
• Ambulance services
• Dental treatments
• Optical services (e.g., glasses, contact lenses)
• Podiatry
• Hearing aids and audiology services
• Speech therapy
• Occupational therapy
• Medical appliances and equipment

In cases like couples or family policies, benefits work by pooling the cover of all the individuals listed on the policy. Each person is entitled to access the benefits outlined in their chosen health insurance plan. When anyone gets access to medical treatments or services covered by their plan, the benefits are applied to their expenses according to the policy’s terms and conditions.

Here’s the most important point: the total benefits available under the policy can be used by any of the listed individuals, which can be great for couples and families that need flexibility around different healthcare services.

In some cases, your insurer might let you carry over any unused annual maximums of your benefits from one calendar year to the next. This ‘rollover’ feature can be super helpful for certain types of benefits, particularly those related to hospital cover or major medical expenses. However, be aware that not all benefits will roll over, and the specific terms and conditions around any benefit rollovers will be completely up to your insurer – and dependent on the type of policy you took out.

For extras benefits, such as those covering dental, optical or physio services, they typically don’t carry over from one year to the next. It’s therefore in your best interests to take advantage of any extras benefits before the end of the policy year.

Extras health insurance provides an annual benefit for services like optical and dental treatments – these benefits usually reset every year. Since extras benefits typically don’t roll over, we recommended using them (only if you actually need them, of course) before they reset.

Reset dates for extras benefits will depend on your specific fund. But to make life easier this usually happens on either 1 January or 1 July, or the anniversary of your policy’s start date.

A health insurance limit represents the maximum amount your insurer will contribute towards covering the cost of services and items included in your cover within a specific timeframe. Each private health insurer will establish their own type of limits, but there are a few you’re likely to come across:

• Standard limits: These will differ based on your type of cover. Some are consistent across all funds and cover types, while others aren’t. For specific details on your limits, read your PDS.
• Annual limit: This is the maximum amount your insurer will contribute for your covered services and items within a financial year (e.g. July 1 to June 30). Annual limits are generally subject to per-person restrictions.
• Family limit: This is the total claimable amount by all members covered under your policy within a financial year. Each person covered under the policy can claim up to their allocated ‘per-person’ limit unless the family limit has already been exhausted by other members.
• Per-person limit: Every person under the policy can claim up to their per-person limit within a financial year, except if the family limit has been reached by other members or if the person has exceeded a lifetime limit.

Some funds have additional limits, such as flexible limits so you can have higher maximums for something like physio services and less on dental, for example. Or they may have bundle limits or even loyalty limits, where you can claim more on certain services if you stick with the same insurer for a long time. Make sure to read your PDS to get across all the specifics here.

Be aware that not all health insurance limits roll over each year. While rolling limits do, there are some services that will only be covered under lifetime limits – so once you hit the maximum, that’s it! And it’s usually carried across all Australian health insurers.

A sub-limit is the highest claimable amount for a particular service, subtracted from the wider annual limit. Let’s look at an example:

Your policy may include a total annual limit of $800 for orthodontic treatments, with a sub-limit of $400 for each service (e.g. root canals, extractions and more). This means you can only claim a maximum of $400 for any of these services within the year.

If you claim $400 for a root canal, for example, you won’t be able to claim further for that same service throughout the year. However, the remaining $400 could be used for one or more of the other services within the ‘orthodontic treatments’ umbrella.

A lifetime limit – or cap – is the maximum benefit you can claim for a specific service in your lifetime, and it tends to carry across to all insurance providers. The good news is that lifetime caps are only for very specific procedures, such as laser eye surgery, and you may not even end up using them at all!

Here’s how it works. Once the threshold is reached (which will be outlined in your PDS), you won’t get any further cover for that service – even if you raise your level or cover or switch to a different provider. Remember that these lifetime limits are retained across all insurers, so if you exhaust your cap with your current insurer, switching to a different one won’t reset it.

Learning about health insurance limits and benefits can be a little tricky at first, but once you’ve wrapped your head around the basics you’ll be able to make smarter decisions about the type of private health cover you want. From extras benefits to lifetime limits, do your due diligence by reading the PDS and choosing an insurer that matches your needs. You can get started by comparing private health insurance today.