Extras only cover| Extras Only Health Cover

Worried about the ever rising cost of Extras Health. 10 reasons why XHP is the best for Extras Health

1 Use It or Lose It

Private Health Insurance Extras Cover (PHI)

You know how, at the end of each year your account balance resets and your old balance is lost forever even if you never made a claim.

What this means is all your efforts to look after yourself is in vain and you have lost your benefits. There goes your peace of mind

In fact if this were to accumulate you would have had a balance to start with.

Stop losing your money year on year.

Some funds offer you higher limits over time. Now ask yourself, how often have you used the higher limits (eg. Major Dental) - Not often, like most people. If you have need the higher limits, you may be faced with one of two situations. Pay the GAP and any other costs or spread it out over time may be years to maximise the benefits whilst having to tolerate it in the meantime.

How does that equate to “Peace of Mind”

To put it in a nutshell Use it or lose it!.

Is this a problem - Yes!!

You may be putting off necessary care or treatment due to costs which will only cost you even more in the long term
Your Health suffers over time and you may be forced to put up or accept less than optimal care.
Your productivity could be affected

Xtras Health Plan Savings Scheme (XHP)

You do not have to be a rocket scientist to know that if unused funds were to accumulate it would mean more money in your account and most likely ”Peace of Mind” of knowing that there are funds for your needs.

What this means is that you can most likely afford the health care that is optimal for you and your needs.

In fact some people are already doing that and reducing their costs and enjoying better health outcomes.

XHP provides just that platform and structure for you save your money and accumulate unused funds to build a nest egg over time for your extras health needs. We call this the Rollover Health Plan, so you can be sure all your health dollars are working for you.

To put it in a Nutshell - Use it or Keep It

Is this an advantage - YES!!!

Funds are available for preventive care
Optimal health outcome can be achieved maintaining quality of life by preventive care.
Maintain productivity as you could be more proactively managing health issues

FACT

Did you know contribution fees charged by XHP is capped for the life of your membership, which means the fees will never go every year.

So let's look at, Betty to compare the pair PHI vs XHP to see who she would be better off with. Imagine Betty had joined either of them 10 years ago, so in the year 2008. Following assumptions have been used to compare PHI and XHP

Amount Paid(Premiums or Contributions) to PHI and XHP is exactly the same - $5/day
No interest earnt has been added to the calculation for XHP
Betty is healthy and has not been to a health provider in the last 10 years
Funds in both PHI and XHP are used for health needs only
XHP Account balance is net of XHP Contribution Fee(10%)
Annual PHI fee increases have been accounted

Account Balance with PHI over 10 years

Account Balance with XHP over 10 years

Information provided is General Information only. Your personal circumstances have not been considered and does not constitute financial, legal, accounting or tax advice. Past performance is not indicative of future performance. Information used here is based on assumptions as above and as having occurred in the past, is not a future forecast. Account balance calculation is based on no spend for health with either PHI or XHP. The return for health insurance assumes no claim on a health insurance policy over the relevant period. No value has been attributed to holding a health insurance policy in the relevant period however it may be desirable to hold health insurance based on your personal circumstances.

Formulas used for the graph:

No spend

Contributions Paid = $5/day

Total paid per year = $5/day X 365 = $1825

Spend = $0

Balance Rollover = $0

Net balance (10 yr) = $0 X 10 = $0

ROI = -100%

Contributions Paid = $5/day

Total paid per year = $5/day X 365

XHP fee 10% = $1825 X 10% = 182.50

Account Balance = $1825 - 182.50 = $1642.50

Spend = $0

Balance Rollover = 1642.50 adding to previous balance

Net balance (10 yr) = $1642.50 X 10 = $16425

Net Cost (10 yr) = $182.50 X 10 = 1825

Chart 2

So what if Betty spent $1000 per year on her health needs. Based on information from APRA the average gap with extras health for the quarter ending June 2018 is 46.84%, in other word, Betty has an out of pocket expenses or GAP to pay on top for the $1000 treatment. PHI offers various limits based on how much is paid for the cover. For this exercise, it is assumed that PHI pays 100% of the annual limit of the membership. To know more about your own cover, please check with your extras insurance provider.

Contributions Paid = $5/day

Total paid per year = $5/day X 365 = $1825

Spend = $1000

GAP on $1000 = $1000 X 46.84% =$468.40

Balance Rollover = $0

Total Cost per year = $1825 + $468.40 = $2293.40

Total cost over 10 Years = $2293.40 X 10 = $22934

Total spend 10year = $1000 X 10 = $10000

Summary:

Betty has paid out a total of $22934 for $10000 that she got back in cover from her extras health cover.

Paid out two time more than what she got back.

Contributions Paid = $5/day

Total paid per year = $5/day X 365

XHP fee 10% = $1825 X 10% = 182.50

Account Balance = $1825 - 182.50 = $1642.50

Spend = $1000

Balance Rollover = 642.50 adding to previous balance

Net balance (10 yr) = $642.50 X 10 = $6425

Net Cost (10 yr) = $182.50 X 10 = 1825

Summary

With XHP, Betty has a balance of $6425 left in her account after spending $10000 over the 10 year period.

Betty is better off, even after fees and charge.

2 Mind the GAP

Out of pocket expenses 'gap' is the amount you pay, over and above what you get back from private health insurer.

PHI

Gap with your extras cover can arise due to

Limits to your Claimable Benefit
Set limits for each service type eg fixed amount for Physio
Fund rules - where each fund has it own way of calculating the benefit

As a general rule the more you pay the more benefits you will receive per service.

There is a gap with almost all extras health services, except in some circumstances, if you go to a health provider nominated by your health fund and your extras cover meets the criteria for the no gap treatment as well as fund rules. Such cover does not come cheap.

To minimise GAP, health funds have preferred providers who are contracted on a fixed fee schedule. Despite such contractual agreements you may have a gap to pay irrespective of the years of membership with your extras insurer. Only some treatments are covered under the no gap arrangement. Even with the highest level of cover you could be faced with a GAP.

Data from APRA, shows the average gap across all health funds to be 46.84%. Which translates to increased costs to you as a member as the gap is payable by you over and above the fee you have already paid for the extras health insurance to be a member.

XHP

Often the two main reasons, extras health cover is taken out is for peace of mind and the other to reduce cost when needed.

At XHP that is just our aim is to make healthcare affordable, and have peace of mind of knowing that unused funds accumulate.

So unless you have spent all the balance in your account you will never have a GAP.

Simply put, you are in control of your health needs and health expenses. Assuming you are careful on how the funds are spent it is very likely you may have adequate funds in the account to cover the big ticket item that you did not foresee coming.

With preferred providers you will have the comfort of knowing the fee schedule is fixed in relation to the maximum fee that can be charged which would enable you to quickly make informed decisions.

To explore the difference and compare PHI with XHP. Let's look at Betty who is in need of a dental implant that costs $5000. To maximize her benefits with PHI, Betty has decided to spread the treatment over two year to enable her to claim the maximum back.

Assumptions used for comparison are as below

Same amount paid as premium or contribution - $5/day
Betty’s annual limit is $1000 for major dental
Betty gets 100% of the annual limit
XHP account balance is after the deduction of fees and charges

Total Paid (10 year) = $18250

Cost of Dental Implant = $5000

Annual Limit = $1000 (maximum claimable)

Gap = $5000 -( $1000*2) (done over 2 years)

Total paid by Betty = $18250 + $3000(Gap)

With PHI, Betty has paid $21250 for the $5000 dental implant.

1.https://www.apra.gov.au/publications/private-health-insurance-membership-and-benefits- Part 9

Total Paid (10 year) = $18250

XHP Fee (10 year) = $1825

Account balance = $16425

Cost of Dental Implant = $ 5000

Even after paying in full for the treatment, Betty is left with a balance of $11425 in her account for future needs. What’s better is that she would not have to wait two years to have her treatment done.

With XHP, Betty has $11425 left after paying in full for the procedure and fees of her membership.

3 Dreaded 1st of April premium rises

Come the 1th of April of each year the health fund premiums go up. Often above CPI and wage growth. Adding to financial pressures. At XHP we get your pain. So the fees dont go up. We recommend that you increase contributions by the amount you can afford.

PHI

Every year there is an increase in the premiums paid to health funds,and is a subject of debate in many households if they should continue with the

health cover. Average premium increases in the last 8 years is 5.37% making insurance cover unaffordable for some households. The increases are not in line with CPI or wage growth.

The Conversation website , has a chart that tracks the private health insurance premium rises compared to wages and CPI. However bear in mind that it is not specific for extras cover cost increases.

Adding to rising cost of cover is the GAP and decreasing level of benefits paid, which results in a financial burden for people resulting in most people putting off the much needed health care and tolerating the discomfort.

XHP

Increasing contributions for your extras health needs is entirely your call with XHP as long as the minimum contribution amount of $5/day is met. The fact to keep in mind is that cost of health services keep rising every year. Our recommendation would be to increase your contribution by the CPI, to be on top of the inflation and costs over time.

Did you know Contribution Fees charged by XHP is capped for the life of your membership. With the contribution fees being capped and your account balance increasing over time, contribution fees in relation to account balance would be decreasing as an overall cost.

4 Complex Private Health Insurance Rules

PHI

You know that sinking feeling that you thought you had the cover for the service you needed, just to find out that you have reached the limit or other reasons that do not make sense. Now what?. Sorry to break it to you but you are a 100% out of pocket over and above what you paid as premiums.

What about if you need a few more sessions to recover, and you have hit limits, caps and other terms.

In fact, you should check your health cover to be sure of how much and what you are covered for.

XHP

It's your money after all, you have been saving up diligently for your extras health needs.We don't have fancy words such as ultimate, platinum or premium for it - Well if you like it let’s call it My Plan.

This is how it works.

Use the funds as you see fit for your health needs. At XHP there is no limits, tiers or caps that you can apply the funds for a service that you need. So if you need more physio sessions to recover then you simply apply your funds to physio session. Just make sure you have adequate funds in your account or you will have a gap to pay. So with XHP the decision on how to spend your money is entirely up to you.

Our advice is simple, prevention is better than cure. As Preventions is often cheaper and more effective than a costly fix.

5 Limits and Caps

Well there is a limit, sub limits and combined limits on the services that you need. Lost you are not on your own. There is no universal definition and its application various from one fund to another. Finder.com.au has an article that explains it as Annual limit is the maximum that you are entitled to, for a particular service in that year. Sub limits may apply to services within the annual limit and is sometimes deducted from and the limit, combined limit the aggregate various services under one heading and may have its own limit. There is no universal definition

PHI

The amount of benefit for a health service is either a set limit or a percentage benefit.

Set Limit has a cap of what will be paid by your insurer for the particular service.

With a percentage benefit a percentage of the cost of the service is covered and the balance is upto you to pay. Some funds allow you to aggregate funds from other services to use for a particular service.

If you do not use the benefit for the year, then you lose out on the benefit for good. An article by Choice magazine1 titled “Less for more” does a fantastic job of explaining this.

XHP

Straight up, there is no limits for any service. How much you spend on a service that you need or which services you choose to use is again your call. Furthermore you may not use all the services in a given year so why lose out. We think you should accumulate your unused funds year on year as you may need the service sometime in the future. How about family members who don't use certain services but need more of other services. It is only fair that you be in control of your health and financial decisions

6 Limited to Extras only

PHI

With Private Health extras cover, it is limited to extras cover only and can not be used to pay for your pharmaceuticals unless you pay more for the cover. How about paying the gap at your GP visit, not likely pay your hospital gap.

Ex CEO Shaun Gath told News Corp Australia extras cover was an “irrational” purchase for most people because the premium paid was more than the benefits derived1.

https://www.news.com.au/lifestyle/health/experts-say-having-extras-private-health-insurance-doesnt-make-financial-sense/news-story/269e157dade739719679c44a7ec0b655

XHP

Use the funds in your account as you need to. The only restriction being it must be for health. The funds in your account can be used to pay hospital gaps, medicines and even cover the gap of your GP visit. As long as it is related your health needs its all cool at XHP. You will need to upload the health invoice for verification before funds are paid out.

Rules that apply with regards to your funds are

Health provider must be registered in Australia and current with AHPRA
Health business is an Australian Business and has a valid ABN
Invoice for treatment must be submitted for verification

Funds are only paid to a bank in Australia

7 Gift What Gift?

"If wealth is lost nothing is lost, If health is lost something is lost, If character is lost everything is lost" -Billy Graham. Health is wealth assuming character is intact.

PHI

Sorry you are limited to the ones you nominated on your membership. If you really care and want to help out a friend or family, you will need to come up with the money. That’s not friendly is it?

What if it, could be the difference between someone having a far better quality of life and be productive vs suffering ill health?

What if that person is your own family member like your child who is not on your cover and cannot afford extras health cover?

XHP

Evidence of helping other and the benefit to ourselves is well documented. Think back to natural calamities when people pull together to help those affected. How about if you are able to help out a sibling, a friend or even a neighbour. Well you can with XHP. You can send a gift of health to anyone you care about. They can use the funds to pay for the much needed health service at a preferred health partner. Your small gift of health could mean the world of difference for the recipient of your gift and what's more it they don't use it within the year. You don't lose it all. You get 80% of your gift amount returned to you. Now that is an X factor don't you think?

8 Cancel - Total loss with PHI

PHI

With a change in circumstances you may be able to negotiate a payment plan with your health fund. Some health funds do allow you to suspend between 2 to 4 years provided you meet certain guidelines such as financial hardship, you are overseas, or in jail. During the suspension period you may not have any benefits paid if you seek treatment leaving you fully exposed to the cost of service But if you cancel, you lose the lot.

XHP

Circumstance do change and not all of those circumstances are within your control. It may mean that you have to make decisions on weather to continue or not. With XHP you have two options

You can withdraw upto 25% of your account balance in a given year subject to fees after the first anniversary of your membership

You can cancel your account and be entitled to a refund of 80% of your account balance

If the chosen option is to withdraw from your account, you will still have full access to your funds and the platform. Either way you dont leave empty handed. In the event of death, 80% of your account balance is returned to your estate. So your money is not lost.

9 Suspension Limited with PHI

PHI

Unless specific conditions such as minimum payment and caps on what you can withdraw are met. The investment may not return anything for you. With health funds you lose any benefits payable to you if you suspend your membership. Some investments have a lock in period before you get returns and if that happens to coincide with good health then everyone's a winner. But it that is not the case then you may lose the value gained in the investments or worse still may have to pay a penalty if you choose to cancel and withdraw your funds that you have been setting aside for health.

XHP

Tough times may force your hand into making tough decisions to weather the storm. Maybe all you need is a short term break to get back up and going. Such situations are of common occurrence and can be distressing to the individual. At XHP - we understand the painful decisions that have to be made at times. So we allow you to suspend your account for 3 years and still have access to your funds. Suspension fees applies and you can suspend only after a 6 month period has elapsed from your membership date.

10 Investment Platform- Conditions Apply

Investment Platforms

Investment platforms offer a wide range of returns for investors along with the risks associated with the such investments, which can fluctuate. If you are not a sophisticated investor, you may rely on a broker or a financial adviser. There may be fees and charges that apply, and the funds could also be locked in for a period of time. Investment platform whilst attractive is not specific in terms of what the funds can be used for. As clearly the objective here is for general growth of funds and not for health.

What if the funds you set aside are lost or diminished in a financial meltdown. For example, what if your funds suffered losses like in the GFC when the ASX fell by 54% over 16 months.

https://www.marketindex.com.au/history

XHP

XHP is a health specific platform where the objective of the Scheme is to help you accumulate funds in a low risk environment for your health needs. The funds are held in cash or cash deposits that return an interest which is paid to you in full and added to your account balance.

Significant Risk associated with your funds with XHP are

Interest rate fluctuations offered by banks
Collapse of the Bank where funds are held
That you may not have enough funds held with XHP to cover required medical treatment at any given time. If this is the case, then you will be required to meet any difference between the cost of treatment and the funds held with XHP.

Whilst the interest rates vary. The risk associated with Australian banks folding up is minimal as the banks are well regulated

Why Us

Worried about the ever rising cost of Extras Health. 10 reasons why XHP is the best for Extras Health

Private Health Insurance Extras Cover (PHI)

Xtras Health Plan Savings Scheme (XHP)

Account Balance with PHI over 10 years

Account Balance with XHP over 10 years

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