Millions of Australians are in the dark about what their health insurance policies actually cover, leaving them vulnerable to unexpected medical expenses.
A recent Finder survey of 1,008 respondents – 438 of whom have health insurance – revealed that 1 in 2 policyholders (50%) mistakenly believed they were covered for a medical expense when they were not. This equates to approximately 6.3 million Australians who are unknowingly unprotected for specific medical expenses.
The research found that misconceptions are widespread, with 1 in 3 (34%) Australians believing their extras policy would cover them for a medical expense it does not, and 1 in 5 (20%) assuming their hospital policy would shoulder the cost.
Tim Bennett, insurance expert at Finder, highlighted the importance of understanding policy details to avoid financial pitfalls.
“Understanding your coverage can prevent you from facing unexpected out-of-pocket expenses for medical treatments or procedures.
“Otherwise, this could lead you to delay necessary treatments or choose less favourable care options due to financial concerns.”
Bennett urged Australians to reassess their health insurance policies as the new year approaches.
“Your life circumstances may have changed throughout the past year.
“Perhaps you’ve started a family, changed jobs, or experienced a health issue.
“Reviewing your policy ensures that your coverage aligns with your current needs and protects you from unexpected medical expenses.”
On average, Australians with health insurance pay $221 per month for their policies. Those with extras-only policies spend $95 monthly – amounting to $1,140 annually. Despite this, more than half (54%) of Australians holding extras cover do not fully utilise their benefit limits, with almost 8 million people missing out on claims for dental, optical, and other services.
Bennett noted that extras policies can provide excellent value if used wisely and pointed to the affordability of entry-level policies.
“You can get great value from a starter extras policy for as little as $13-$17 a month depending on your income level.”
Bennett encouraged consumers to ensure they are on the right plan for their needs.
“In the majority of cases, you can add on and remove different elements of cover to get what suits you best and reduce the cost,” he said.
A Global Perspective: Lessons from the US Insurance Crisis
The findings come amid growing global concerns over the reliability of insurance policies, with mounting disdain in the United States following recent disasters. The devastating Los Angeles fires have exposed significant gaps in homeowners’ coverage, leaving many without the financial protection they assumed they had. Adding to the turmoil, the recent gunning down of the UnitedHealth CEO has intensified scrutiny over the opaque nature of health insurance policies and the financial strain they impose on consumers.
For Australians, these events serve as a stark reminder of the importance of understanding what their policies actually cover. Inadequate knowledge and false assumptions about coverage could lead to devastating financial consequences, much like what many Americans are currently experiencing.
As Australians continue to navigate an increasingly complex health system, experts stress the importance of regularly reviewing policies, comparing options, and seeking expert advice to ensure adequate protection without unnecessary expenses.
Ultimately, being proactive about health insurance coverage can help avoid costly surprises and provide peace of mind in an unpredictable healthcare landscape.
