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Understanding Health Insurance: The Different Plans and Cover

Jan 18, 2021 1:34:16 PM / by HealthCarePlus

Most insurers offer a range of plan levels – from extensive cover through to basic core policies covering surgical treatment only. Often insurers offer plans with add-ons for services such as diagnostic, optical or dental cover.

In addition to the plan type, most insurers will provide a range of excess options, with higher excesses linked to lower premiums. This means you can tailor the level of cover you need to your particular needs or circumstances. That said there are 3 main types of private health insurance available in New Zealand:


Primary Care Sometimes called Minor Medical or Day-to-Day Insurance. These products provide cover for day-to-day medical treatments, but provide little or no cover for more significant major surgery or treatment costs.
Major Medical Major medical policies typically provide cover for elective surgery, major treatments, and the cost of specialist visits, but do not cover day-to-day medical expenses.
Comprehensive Comprehensive health insurance products provide cover for both major surgery and day-to-day medical expenses.


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Understanding Health Insurance Coverage


To make sure that you understand what you are covered for and the limits that will apply if you make a claim, it is really important to read the policy terms and conditions. So here is a quick guide to the 7 key terms you should be looking out for when evaluating your cover.


1. The Cost

The price of your health insurance can depend on your age, the excess you’re willing to pay, whether you’re a smoker, your gender, the type of cover you need and your current health status.

For example: Insurance companies look at your age because that can predict the likelihood that you'll need to use the insurance. With health insurance, younger people are less likely to need medical care, so their premiums are generally lower. And remember, health insurance premiums will usually go up annually due to the increases in medical inflation and expected utilisation in line with each member’s age.


2. The Excess

An excess is the amount of money you need to pay towards the total cost of any claims you submit. Insurers will offer different excess options that can help to make your premiums more affordable. The higher the excess, the larger the discount on your premium.


3. Pre-existing Conditions

Your medical history, or any pre-existing medical conditions may affect what you can get health insurance cover for.

For example, if you've had a heart attack in the past 12 months, your insurer will want the full details of your condition, but it's highly likely that heart related issues won't be covered in the future.

Each insurer has differing approaches when it comes to how they will approach exclusions. It will depend on your pre-existing condition, and what it's associated with it.

3 ways an Insurer will deal with pre-existing conditions:

  • Permanently exclude the condition from your cover 
  • Charge an additional premium to cover the condition
  • Only cover the condition after a “stand-down” period. A “stand-down” period means that cover will be available for the condition after your policy has been running for a set time, this is normally around three years.

4. Exclusions

Not every kind of medical condition or treatment can be covered, so there are some things that may have to be excluded from your cover. There are usually two types of exclusions:

4.1 General Exclusions:  These are general things such as a medical condition or service that a health insurer decides that they we will not cover for anyone who has the same type of policy. These will be listed in the “what is not covered” section of a policy document.

List of common exclusions:

  • HIV/AIDS and related medical conditions
  • Fertility Treatment
  • Cosmetic Treatment
  • Treatment in a public hospital or covered by ACC 
  • Illness caused or contributed by drug or substance abuse
  • Gender Reassignment Surgery
  • Senile Illness or Dementia
  • Any Sexually Transmitted Disease
  • Self-inflicted injuries Overseas Treatment except is specifically included in the policy

4.2 Personal exclusions: These are specific to an individual and will be based on your medical history (pre-existing conditions). These conditions will be listed on your membership certificate for each individual.


5. Cancer Cover

Surgical and Medical Cancer Treatment Cancer care is usually included in a Major– or Comprehensive policy, and will typically cover treatments like chemotherapy, radiotherapy, surgery, hormone therapy, psychological counselling and alternative treatments like acupuncture. Some types of Cancer treatment may not be included, or cover may be restricted to a lower maximum level of reimbursement.


6. Stand down

Period A stand-down period doesn’t allow you to claim for services within an initial period when you take out cover. These stand-down periods are detailed in your policy document and once your stand-down period has ended, you will usually be informed that you are now able to submit claims for services used and cost incurred after the stand-down period.


7. Non-PHARMAC Drugs

In New Zealand, PHARMAC a government agency is responsible for deciding which medications are funded through the public health system and which are not. While PHARMAC covers the cost and or subsidises many medications, there are a handful of treatments, some of them potentially life-saving, which are not covered, usually because these drugs are very new or extremely expensive. For example Cancer drugs can be prohibitively expensive without PHARMAC funding.

So having medical cover that provides an adequate level of “non-PHARMAC” cover can be beneficial – it’s better to have medical insurance in place (with the right policy) than leave things to chance and discover only upon becoming ill that one's best hope of recovery is not funded via the public health system. Due to the cost of “non-PHARMAC” subsidised drugs, the inclusion of this benefit in your policy can be costly.

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The article is taken from our new  Health Insurance Guide which aims to make health insurance easier to understand and therefore making it easier to make the right decisions when it comes to protecting what's important.

Tags: Financial Resilience, Insurance