Dental treatment is the most popular use of extras cover. Picture: Supplied.

Health fund experts say many Australians are unaware that extras cover — for treatment such as dental, physio and optical — plays no role in helping them avoid a financial hit for failing to have health insurance.

Government rules penalise people who are aged over 30 or earn more than $90,000 a year and don’t have private hospital cover, but extras are not counted, and a surge in policy options in recent years has heightened consumers’ confusion.

The latest regulator data shows that 13.4 million Australians have extras cover — more than those with private hospital cover (11.3 million). Comprehensive extras cost families more than $100 a month. While some people get great value from their extras, others may find it cheaper to self-insure.

Many Australians are unaware that extras cover, for treatment such as dental, physio and optical, plays no role in helping them avoid a financial hit for failing to have health insurance. Picture: iStockSource:Supplied

Health fund broker iSelect’s spokeswoman, Laura Crowden, said a majority of people bought combined hospital and extras policies.

“If you are using a lot less than what you are paying for, it might be worth downgrading your extras cover, even if just for a few years,” she said. “For example, if your kids are likely to need braces in five years, why pay for orthodontics now? Generally extras will have a maximum 12-month waiting period.”

Comparethemarket.com.au spokeswoman Abigail Koch said it could be tough for people to make full use of extras because many policies had limits on claims for each individual treatment. “This makes it difficult to extract the most value, as you exhaust your sub-limits for the treatments you use regularly,” she said.

“Costs for basic extras cover can range from $20 to more than $130 a month and the price of a comprehensive policy starts at around $100 per month and can go as high as $300 per month for a family.”

Ms Koch said there was confusion about what policies allowed people to avoid the higher cost of Lifetime Health Cover loadings for over-30s, and extra taxes through the Medicare Levy Surcharge for higher income earners.

Private Healthcare Australia CEO Dr Rachel David said some people thought they only needed extras cover to avoid the government’s “stick” measures.

There is confusion about what policies allow people to avoid the higher cost of Lifetime Health Cover loadings for over-30s, and extra taxes through the Medicare Levy Surcharge for higher income earners. Picture: Supplied.Source:Supplied

“You need to double-check, particularly if you are buying health insurance online or through an aggregator, that the policy you are purchasing is a certified health insurance product which includes some level of hospital cover,” she said.

Dr David said extras payouts were rising about 6 per cent a year, largely because of higher charges by providers — particularly for dental care.

She said to keep premiums affordable, over the last 10-15 years, health funds had issued a “proliferation of products” with a number of exemptions and in some cases restricted cover.

“Members should remember to talk to their fund if there’s any doubts.”

HOW TO SAVE MONEY ON EXTRAS COVER

1. Ask your fund for an annual claims statement to see how much you paid for extras and how much you claimed. Make sure it’s worth it.

2. Look for flexible products that allow you to combine separate limits into a single annual limit to use across different services.

3. Tailor it to your needs — for example, if several family members wear glasses seek a policy with generous optical benefits.

4. Look extra benefits such as free dental check-ups or policies that contribute to gym memberships.

5. Check if your insurer has a preferred provider network that offers no-gap services, and make sure those providers are close to you.

Source: iSelect