The following section seeks to provide answers to many of the questions that we are asked about medical insurance and health cover.
These questions cover areas such as which type of cover should you choose, who has the best medical insurance policy and should you choose an excess on your plan.
If you have a specific question that isn't covered, then please either give us a call on
07 378 8287, or email us
Our advice: take the cheaper type - with an excess.
The main reasons for having health or medical insurance cover are to protect yourself against the financial risks of having to pay for your own treatment, and to obtain the best possible treatment with the minimum of delay and stress - both of these are covered by having the cheaper Hospital & Surgical or Hospital & Specialist cover - there's no real point in paying double your premium to protect yourself against GP bills or optical & dental costs - in the long term your premium savings will probably more than outweigh what you pay for these smaller, more predictable costs.
Adding an excess is also a good idea - paying the first $250 or $500 of each claim won't increase your risk by a great deal, but it will make a big difference in the total premiums over the course of 10 or 20 years. As to which of the two plans you choose - this is very much a personal choice, but there's no significant financial risk involved either way. The extra premium for the higher specialists cover for adults in their 30's and 40's is usually only $10-$15 per month, but more in later years - the majority of people elect to take the higher cover initially, with a view to reducing to Hospital Cover only as they get older.
There are many factors which need to be taken into account when choosing your own provider - every company is slightly different in the way that it structures it's cover, and every individual, couple or family group is different in terms personal situation and age profile..
Some companies for example have the same premiums for smokers and non-smokers, some base their premiums on the age of the youngest adult, some have 'per-child' premiums whilst others have a flat rate no matter how many children you have - if any one or more of these, or the many other structure variations or differences applied to you, it would make a significant difference in what you pay.
The best way of finding out which company would be the best choice for you is to order a recommendation report:
Our free recommendation report gives you all of the information that you need to make an informed choice on your medical insurance, and includes:
Exact premiums, at a range of excess options, for all insurers for your selected plan
Our recommendation & reasons for which company we feel is your best choice.
Summary of good, and any bad points of our recommended plan.
Brochures & application forms.
Click here to go to the Recommendation Report Request page.
Although it may be easy to adopt an attitude of 'it won't happen to me, you will, statistically, at some point in your life require hospitalization or surgery - in many cases two, three or four times.
The state health service still provides excellent cover for accident and emergency treatment, but the situation regarding elective surgery is getting worse each year.
Whatever your viewpoint as to whether medical treatment should be taken care of by government, the only way to ensure that you and your family will receive prompt and proper treatment is through taking out heath & medical insurance, and even though the premiums may at times seem high, the possible alternative of having to pay tens of thousands of dollars out of your own pocket, with the resulting effect on your whole financial position, would seem to make this a low price to pay.
Yes.
We all hope that medical insurance, like all insurances, will be a waste of money - adding an excess to your policy allows you to waste a little less.
Most companies offer a discount of up to 20% for adding an excess of $250-$300. This saving can add up to a significant sum over the course of 10 or 20 years. Also, most insurers will not apply the excess to smaller claims such as stand-alone diagnostic tests or specialist visits, but only to larger hospitalization or surgery claims.
Unlikely.
Most companies try to issue policies based on the information provided by you an the application form. In some cases they will write to your GP for further information. If they do require a medical, this is usually paid for by the insurer, and performed by either your GP or a home visit nurse.
A pre-existing condition is a health problem which exists (with your knowledge) at the time of applying for cover.
This could be viewed in any number of ways;
How a company will consider a pre-existing medical condition will only be known once your application has been processed. However - any special terms that an insurer wishes to place on your policy will be notified and agreed by you before your cover commences.
No. The important thing when completing any application for insurance is to disclose at least basic details of any past medical treatment or consultations. If the insurer then needs more detail in order to assess your application they can always contact your GP.
Most companies will only offer cover to those people normally resident in New Zealand. Cover can be obtained for new immigrants on work-to-residency, temporary or student visas, though the insurer may include some additional conditions, such as a higher excess amount or annual premium payment.
Our Request a Quotation page asks about residency status so that we can provide relevant details.
No. Standard medical polices are accepted from the day that you and your insurer issue your cover. Obviously if you have a claim for a major condition after 3 days they'll want to talk to your GP to make sure that it wasn't something you knew about before you completed your application, but if this isn't the case then claims will be paid in full.
The only exception to the stand-down rule applies to the GP & Prescription and Optical & Dental benefit options; these have waiting times of up to 6 months (depending on the company) before you can claim under this option
There is no limit on the amount of claims that you can make, as long as they stay within the policy limits for each area. The limits for most companies is very high however so this should not be an issue.
Again this will depend on the choice of company. Some have age-related premiums increasing each year, whereas others calculate premiums on 5 year age bands.
Regardless of how often these age-related increases are applied, you can expect to receive an increase every year or so to reflect higher than expected claims (company wide rather than specific to you) or to reflect the rise in medical costs.
No, not really.
Although it may be tempting to think that you could save the money that you would normally pay into an medical insurance policy into your own account for possible future use, the levels of medical inflation, (currently about 10% a year) would mean that an investment would need to grow at an unrealistic rate just to keep up.
At present heart surgery can cost up to $70,000, and cancer therapy up to $120,000. These figures could double every 10 years, meaning that any investment account would fall drastically short of providing the right funds.
Obviously there is the chance that you could go through your whole life without ever making a claim (which would be a good thing) but there's also the possibility that you could have several significant claims - in this scenario the amount paid in premium would become insignificant.
If keeping your premiums to a minimum is your priority then our advice would be to take out a basic policy with a large excess - this way you'd be paying the minimal amount, but still passing most of the financial risk to the insurance company, rather than keeping it yourself.
Some companies will provide cover for people residing in Australia, but limit cover to levels equivalent to New Zealand treatment costs.
This could be an advantage to anybody considering working in Australia, with the intention of one day returning to New Zealand, as the policy would be continuous, rather than being reassessed based on your new and possibly diminished health status.
As for the rest of the world; having medical insurance cover in New Zealand will not cover you for emergency or non-emergency treatment elsewhere in the world, therefore its important to make sure that you have travel insurance arranged.
There are two ways that you can reclaim costs associated with medical treatment;
If its just a simple consultation or one-off test then you can pay the bill yourself, and then send in your receipt and a claim form to your insurers.
If the treatment is likely to spread over a longer period, or involve multiple claims or significant costs, then you can apply for pre-approval. This will mean that the insurer will pay the costs direct to the treatment provider, as well as confirming that you will be fully covered for all costs.
Obviously policyholders with Southern Cross have the bulk of their treatment carried out in a Southern Cross hospital or with a Southern Cross linked specialist.
Policyholders with the other, non-hospital linked providers have even more freedom, in that they can get their surgery, test or specialist consultation carried out wherever they wish.
In reality most of the decisions of this type will be made by the specialist that you are first referred to, as they will have their own private practice and/or preferred treatment location.
Adding new-born children to your medical policy is simple. If you do this within three months then most insurers require only a letter from the existing policyholders/parents. After 3 months they may require a short application
Children are normally covered until the policy anniversary following their 18th birthday, though some insurers will cover children to age 21 or 25.
There are numerous ways that you could benefit from reviewing and switching your cover to an alternate provider.
The only potential disadvantage comes from the fact that you may not receive equal underwriting terms. A new insurer will re-assess your medical history at the time of the new application, which may be very different than the time of your original one. Although there's nothing to stop you applying for new cover to see what sort of terms you would be offered, its very important that you do not cancel your existing insurance until you have all of the new terms available so that you can make a comparison.
If you have an existing medical policy that you'd like to review, then we would recommend you completing the Personal Quotation Page above, which will provide us with the information we require to give you a summary of potential advantages & disadvantages
Today, over 1.38 million New Zealanders have health insurance. Why? Because, like any other insurance, it provides peace of mind in times of difficulty.
You cannot tell what health problems may affect you in the future. And you can't foresee how they will impact on your family, your lifestyle or your earning ability.
Not all treatments or costs are covered by the public health system, and you often have no control over the timing or quality of care you receive.
Having health insurance, however, means that you can choose your doctor or specialist, and you can choose when and where you are treated. All with the assurance that you can recover all or most of the costs.
In short, health insurance takes away the uncertainty of your future health care.
Public health in New Zealand
We are fortunate in New Zealand to have a good public health system, but there are limitations as to what it can provide.
If you are very ill or require emergency treatment, you should always go to your public hospital, where you will receive immediate attention. But if you don't require immediate treatment, then you'll need to go through an assessment process and qualify for elective services in the public system - a process which could take months, even years.
And if you don't qualify for publicly funded surgery you will need to consider paying for surgery in a private hospital, which can be costly - unless you have health insurance.
The costs of surgery
'Elective services'
Elective surgery can be vital to improving a person's health and quality of life.
Elective services are non-emergency treatments (including diagnostic services), where the condition is not life-threatening and does not require immediate surgery. The term 'elective' may be misleading, as it implies that the surgery is not necessary.
Common elective services include:
hip replacement
knee replacement
heart surgery
hysterectomy
cataract removal
cancerous tumor removal
diagnostic services such as endoscopy, laparoscopy, MRI scans.
Many diagnostic procedures are essential before a decision can be made to proceed with surgery, and there can often be delays in obtaining these services through the public hospital.
Procedure |
Indicative cost range (NZ $)* |
| Cardiac bypass (heart surgery) | $30,000 - $40,000 |
| Valve replacement (heart surgery) | $33,000 - $50,000 |
| Angiogram (diagnostic test) | $3900 - $4400 |
| Angioplasty - without stents (heart surgery) | $13,000 - $15,000 |
| Angioplasty - with 2 stents (heart surgery) | $18,000 - $20,000 |
| Total hysterectomy (surgery) | $5000 - $8000 |
| Laparoscopic hysterectomy (surgery) | $8000 - $11,000 |
| Laparoscopic excision of endometriosis (surgery) | $4500 - $12,000 |
| Prostate removal (cancer surgery) | $8000 - $13,000 |
| Prostate brachytherapy (cancer surgery) | $20,000 - $30,000 |
| Excision of cancerous skin lesion | $500 - $3000 |
| Colonoscopy (diagnostic test) | $1450 - $1600 |
| Radical mastectomy (breast cancer surgery) | $4000 - $9000 |
| Gastroscopy (diagnostic test) | $800 - $1200 |
| Laparoscopic cholecystectomy (gall bladder surgery) | $5000 - $8500 |
| Total hip replacement (surgery) | $15,000 - $22,000 |
| Total knee replacement (surgery) | $15,000 - $22,000 |
| Cataract removal (eye surgery) | $3500 - $4000 |
| Thyroidectomy (surgery) | $5500 - $9000 |
| Endoscopic (sinus surgery) | $6400 - $18,000 |
| Wisdom teeth removal | $1400 - $8600 |
| Varicose veins (both legs) | $6000 - $9000 |
| Hernia repair | $2400 - $6000 |
| Knee arthroscopy | $1500 - $3000 |
| Biopsy | $1000 - $3000 |
| MRI scan | $900 - $2200 |
| CT scan | $600 - $1500 |
| Ultrasound | $300 - $400 |
*As at February 2008 (incl.GST). Procedure costs will vary depending on the location, the medical practitioner/s and any medical complications, and the medical procedure and technology used.
The role of health insurance
While the public health system focuses on acute (emergency) services, private health insurers are able to cover the cost of many semi-urgent and non-urgent procedures. The health insurance industry complements the public health system, by 'bridging the gap' between what the public health system can sustain and what we, the public, want for our health.
The health insurance industry makes an enormous contribution towards the health and well-being of New Zealanders. In 2006 health insurers spent around $700 million on healthcare, the majority for the 15-64 age group.
The insurance contract
You can insure against the risk of getting a disease - but not against the certainty of already having one. When you apply for health insurance, you will be asked to provide information on your health, lifestyle and family history. The information is used to assess the likelihood or risk of you requiring medical care. The financial soundness of health insurers and their ability to pay claims largely depends on their skill in assessing, classifying and pricing risks in a way that is attractive to customers.
Insurance policies are contracts of utmost good faith. The insurer relies on the information given by the applicant in assessing the risk, and the applicant is bound by a legal duty to disclose any material facts relevant to the application for insurance. Disclosure of all relevant health information is very important, as failure to disclose a material fact entitles an insurer to avoid the insurance contract.
Two kinds of policy
There are two main types of medical insurance policy:
Comprehensive Care policies. These cover primary care costs, such as doctor's visits, prescription charges, physio costs and other everyday medical bills, as well as surgical and hospital costs - sometimes up to a preset limit.
Elective Surgical and Specialist Care policies. These only cover health problems that require hospitalisation. You pay for your day-to-day medical costs, such as doctor's visits and prescription charges. Sometimes additional cover can also be purchased for extras such as dental treatment or diagnostic or screening treatments.
Both kinds of policy usually exclude certain conditions or treatments, such as cosmetic surgery or fertility treatments.
In addition, many employers offer 'group schemes' where premiums are based either on the individual risk or on the estimated claims costs of the group as a whole. Group schemes may also offer additional benefits.
Pre-existing conditions
Pre-existing conditions are health problems that exist at the time you apply for insurance. Most insurers treat these in one of three ways:
by excluding your pre-existing condition from your insurance cover, or
by charging a higher premium to cover your pre-existing condition, or
by covering your pre-existing condition only after your policy has been running for a set time (usually three years).
It is very important to inform your insurer of any existing medical conditions. Failure to do so may lead to a future claim being declined.
Another thing to remember is that if you decide to change your health insurance policy, your new policy may not cover you for any health problems you have at the time you transfer. That's why it's important to take out the right health insurance policy early, before you develop a medical condition that may be excluded from your cover.
Setting your premiums
Your health insurance premium can be set using a risk rating system, a community rating system or a combination of both.
Community rating
Premiums are based on the average cost of insuring a broad age group. Everyone within the group pays the same premium. This means that your premiums will not greatly increase as you age within your 'community group'.
Risk rating
Premiums are based on age (and sometimes other factors such as gender). People of a similar age and risk are often grouped together in 'age bands' (eg, five-year bands). People within the same age band pay the same premium.
Under this scheme, the premiums more accurately reflect the true health costs of each age band, which means that your premiums will increase regularly as you get older.
Premium 'swings and roundabouts'
When you're thinking about any kind of insurance cover, it helps to think of all your insurances collectively as a single package. As you get older, you'll pay more for some kinds of insurance and less for others.
For example, when you are younger, you'll probably pay higher premiums for car and household insurance, but lower premiums for life and health insurance. As you get older, the reverse applies, and you may even no longer need certain kinds of insurance, such as life cover.
So while it is true that your health insurance premium is likely to increase over time, you should balance this against the savings you may make with your other kinds of insurance.
Why do premiums go up?
Premiums go up when the cost of paying out insurance claims increases. Factors that contribute to higher claims costs include:
restricted access to public health care (more people claim on private insurance)
new medical technology (more costly to provide)
an ageing population (with higher average claims amounts)
rising 'medical inflation' (ie, increasing consultation, treatment and equipment costs).
Why are older people charged higher premiums?
Insurers can set premiums based on age, as long as they are based on good statistical data or reasonable medical knowledge. Because older people tend to claim more, there is an increased cost to the insurer, and so their premiums are generally higher.
The average claim per life insured for the 12 months ending 30 September 2007 showed the claims mostly rose with age (lowest claims less than $200 in the 0-4, 5-9, 10-14 and 15-19 age bands), to a peak of between $1400 and $1600 at the 75-79 age band (dropping slightly to around $1200 with the 80+ age band).
Under the Human Rights Act, a health insurer cannot refuse to insure you because of your age or disability, but they can defer for a period, or exclude specific health conditions. However, the good news is that once you have health insurance, your level of cover will generally remain unchanged, even if you develop an illness or serious health problem in later years.
Choosing a health insurer
When choosing a health insurer, remember to consider the impact of their pricing (age-banding) structure on the cost of your insurance over the life of your policy. Will you be able to afford health insurance in retirement? When planning your retirement income, don't forget to allow for the cost of your future health needs. For more information, talk to your insurer. If you have any questions about how your premium is set or your risk assessed, contact your health insurer, who will be happy to discuss these issues with you.