Australians choosing health plans and products don’t typically assess the business model and financial condition of private health insurers, but they should. These can affect benefits, premiums and quality of service.
Customers should note whether their private health insurers function as for profit or not-for-profit organizations, and can do so by visiting insurers websites, where they can also examine annual results.
What is a not-for-profit health fund?
Not-for-profit health funds use all revenue, (premiums) primarily for covering operating costs, which includes claims, and to maintain the liquidity of the health fund. The absence of investors and owners concerned with making a handsome return on their investment offers assurance that members premiums are used with the interests of members and the fund in mind.
Up until the late 80’s every private health insurer was established as a not-for-profit, before for profit funds grew to acquire almost 80% of the private health insurance market. While some not-for-profit health funds are restricted, most are accessible to all.
What a not-for-profit health fund means for members
Members of a not-for-profit fund can expect to enjoy better benefits and lower premiums compared to those of for profit funds. This is made possible by the annual surplus in earnings and reserves essentially going back into customer’s wallets, through the offer of further or better benefits, and also lowering premiums.
It was reported in The Private Health Insurance Ombudsman that in 2015, members of a not-for-profit health company made 88.9 cents back on average in benefits for each premium dollar they had paid.
The Private Health Insurance Ombudsman reported that in 2015, not-for-profit health fund members received an average of 88.9 cents back in benefits for every premium dollar paid, compared with 85.7 cents received by for-profit members.
Some not-for-profit health funds exclusively service workers and their families employed in certain professions/ industries, and are inaccessible to the public. These currently include:
- Defence Health Limited (AHB) - Restricted to current or former members of the ADF and the Defence community and their families.
- Navy Health Ltd (NHB) - Restricted to serving/civilian personnel of ADF, Employees of ADF Contractors, and their families.
- Emergency Services Health (ESH) - Restricted to emergency services employees and their families.
- Nurses & Midwives Health (NMW) - Health fund exclusively for nurses, midwives, and their families.
- Police Health (SPE) - Restricted to police department employees and their families.
- Railway and Transport Health Fund Limited (RTE) - Health fund for transport and electricity employees and relatives.
- Doctors' Health Fund (AMA) - Restricted to registered medical practitioners and certain health practitioners & their employees and families.
- Reserve Bank Health Society Ltd (RBH) - Restricted to current and past employees of the Reserve Bank, Note Printing Australia and their spouse, partner and dependent children.
- CBHS Health Fund Limited (CBH) - Exclusively for employees and ex-employees, contractors and franchisees of the Commonwealth Bank and its affiliated companies.
- ACA Health Benefits Fund (ACA) - Restricted to current and past employees of the Seventh-day Adventist Church and its associated companies in Australia.
- Teachers Health (NTF) - Health fund for members of the education community and their families.
- TUH - Restricted to past and present members of any union and family members of eligible people, whether the eligible person is a TUH member or not.
These restricted funds occasionally offer better benefits for particular services and procedures that are routinely used by members of the profession covered, in addition to exclusive membership.
iSelect features multiple not-for-profits among their participating health funds. Making their life admin service more compelling for anyone looking for health insurance in Australia.
As Australia’s Life Admin Store™, iSelect helps customers take care of some of life’s most important purchase decisions. They are proud of the service they provide to the millions of Australians who seek expert advice each year. With plenty of partners and hundreds of policies, plans and products, iSelect gives customers the confidence to make the right call on the things that matter most.
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