Seven health insurance myths most Australians get wrong

Health insurance is one of the most widely held financial products in Australia. It is also one of the least understood. Most of us know roughly what we pay each month, largely because we see the big bite the direct debit takes from our cashflow.

Far fewer of us know what we’re actually covered for, how the system is structured, or whether the fund we’re with is genuinely working in our interest. If you’re thinking about reviewing or switching your cover, (and if you’re in your 40s or 50s, you probably should be) here is what’s worth understanding before you do.

1. The tiers are a government framework, not marketing. The bronze, silver and gold hospital tiers aren’t created by the funds – they’re a government framework designed to make policies comparable across different insurers.

If a fund says you’re on a silver policy, it means the same set of clinical categories is covered as any other fund’s silver policy (or almost the same). Which means you can actually compare covers between funds with a reasonable level of parity.

What confuses people is the in-between products – the “silver plus” or “bronze plus” policies that add a few inclusions from the tier above to tempt you to upgrade. These exist because funds are allowed to add categories beyond the minimum, and many do to make their products marginally more appealing.

They’re not being dishonest, but they do make comparison from policy to policy harder. So, when you’re evaluating policies, look at the specific clinical categories covered, not just the tier label.

2. The tier tells you what’s covered, not how well you’re treated. This is the myth that costs people the most money. Gold cover does not mean better treatment, nicer rooms or more attentive doctors.

If a clinical category is covered under your policy, you receive the same care whether you’re on a bronze or a gold policy. The difference is purely in which categories are included.

Gold cover adds things like pregnancy and birth, weight-loss surgery and in-hospital psychiatric services. For most Australians in their 50s and 60s, none of those is relevant. Which means many people are paying gold premiums for inclusions they will never use, while silver cover would serve them equally well for everything they actually need.

What’s less well known is how much is actually covered at the lower tiers. Bronze includes chemotherapy, radiotherapy and immunotherapy for cancer, and bone and joint procedures. Silver adds cataracts, joint reconstructions, heart and vascular surgery, and plastic and reconstructive surgery – including post-cancer reco