In Australia, not all health insurance operates in the same way and it can be pretty confusing as to what to look for across funds and policies. See below for an introduction to the types of funds that are available in Australia today. Once you find a few funds that operate in a way that suits your preferences and needs best, start comparing individual policies from these few in order to save time.
Funds vary in their organizational structure
Funds that are listed as not-for-profit will put your premiums into a fund which is used to cover benefits for members and costs to run the business. They are also known as mutual organizations. For-profits funds aim to give any profits to their owners which are other funds, corporations or shareholders. It’s also good to know that if you have a health policy with a for-profit fund, it doesn’t mean that you are a shareholder, you’ll have to purchase shares in the company on the ASX to be a part ‘owner’ that is eligible to receive dividends.
More for your money
One of the best reasons to select a non-profit health fund is that you will get more benefits for your money. As noted in the Private Health Insurance Ombudsman’s 2015-2016 recent report on health funds, not-for-profit funds return an average of 88.9 cents per dollar of health premiums paid back to customers. Comparatively, the top 3 not-for-profit funds return 84.8 cents back and for profit funds more broadly, 85.7. This equates a difference of hundreds and even thousands dollars of benefits that customers of for profit funds are not receiving. For this reason, non-profits are known to deliver more to their customers and record higher levels of customer satisfaction.
Eligibility for not-for-profit fund
There is a mistaken misconception that only restricted membership funds are run as not-for-profit health funds. Yes, 9 out of the 10 restricted funds are not-for-profits, but in good news for those who aren’t teachers or in the armed forces for example, there are many open funds that are non-profit. Check out the Commonwealth Ombudsman for a clear list of who you could get cover through if you are ineligible for a restricted fund. Again, the figures speak for themselves. Last year, 4 out of the top 5 open funds that delivered the highest percentage of contributions as benefits back to their members were non-profits.
You can compare across not-for-profits
It’s useful to know that if you decide to sign up to a non-profit or mutual fund, there is a way to compare 20 funds in Australia that meet this criteria, without having to wade through oodles of for profit options. Members Own health funds have a comparison tool that will suggest suitable products to use based on your criteria and eligibility to join. You can select a fund and contact them directly yourself, or Member’s Own can help to set you up with your new fund whether you are switching from another or signing up afresh.