If you’re thinking about transferring from one Australian health fund to another, then you will need to request a Clearance Certificate from your current fund to give your new fund.
What is a Clearance Certificate?
A Clearance Certificate, also called a Transfer Certificate, serves as a record of your health insurance cover. The certificate confirms the following details:
- Type of cover (e.g. hospital, general treatment, combined
- Level of cover
- Your join date
- Your cancellation date
- Your Lifetime Health Cover (LHC) Certified Age of Entry
- A history of your recent claims
Why do I need a Clearance Certificate?
If you do not provide your new fund with your Clearance Certificate, you will have to complete waiting periods as though you were taking health insurance for the first time. Your new fund may also increase your hospital premium by applying Lifetime Health Cover loading, again, treating you as if you are taking health insurance for the first time.
Waiting periods and portability
The Private Health Insurance Act 2007 includes some specific rules to protect consumers who want to change their hospital products (either to another product in the same fund or to another fund). These ‘portability’ rules mean that if you choose to transfer to another fund you won’t have to serve the normal waiting periods again before benefits can be paid to you.
However, you may have to serve waiting periods for any extra benefits or services on your new product. For any new or upgraded items, you will have to serve waiting periods. For any services where you have not served the full waiting period, you will be required to serve the balance with your new fund.
The maximum waiting periods that funds can impose for hospital treatment are:
- 12 months for pre-existing conditions,
- 12 months for obstetrics (pregnancy),
- 2 months for psychiatric care, rehabilitation or palliative care, even for a pre-existing condition,
- 2 months in all other circumstances.
To take advantage of the portability rules, it is important that your payments are up to date before you leave your fund. If you allow your membership premiums lapse, the new health fund may not grant portability as your cover has not been continuous. Most health funds allow a gap of 1 to 2 months between transfers, but the fund rules do vary between funds and some may not allow any gap at all.
The portability rules contained in the Private Health Insurance Act 2007 apply specifically to Hospital cover only. Health funds are not obliged to recognise General Treatment policies (i.e. dental, optical, physiotherapy, etc) for portability. However, most health funds will generally apply some form of portability to General Treatment, so ask your new fund for details.
Lifetime Health Cover
Your Clearance Certificate also confirms your Lifetime Health Cover (LHC) loading. LHC is a Government initiative designed to encourage people to take out hospital insurance earlier in life and to maintain their cover. The LHC rules determine how much you pay for hospital cover on top of the standard rates. If you do not have a Certificate as proof of your previous membership, you may be charged a higher premium as though you were purchasing private hospital cover for the first time.
How portability works
Here are some examples of how portability works when transferring to a new fund:
- You currently have a hospital cover that includes cover for obstetrics (pregnancy related) services and have completed your 12 month waiting period. You transfer to a new fund with a hospital cover that also includes these services. The new fund will waive the 12 month waiting period on obstetrics cover under the portability rules.
- Your current hospital cover has an excess of $500. You transfer to an equivalent hospital cover with a $200 excess. This is an upgrade in cover as you have reduced your hospital excess. Your new fund can apply the 12 month pre-existing condition rule in this circumstance which means that if you are admitted to hospital during the waiting period for treatment of a pre-existing condition, the new fund will apply the higher excess. If your condition is deemed not to be pre-existing then the lower $200 excess will apply. For more information about the pre-existing rule, refer to www.privatehealth.gov.au.
- You had a $200 annual limit for general dental treatment but your new policy has $300 annual limit. The new fund may apply a waiting period before you can claim the additional benefit of $100. In addition to this, benefits paid by the previous fund may be deducted from your new limit when your new fund determines your annual benefit limits.
Requesting a Clearance Certificate
When cancelling your membership, you will need to contact your fund to cancel the policy and any direct debit arrangements that you have in place. This is also a good time to request your Certificate. You can provide a copy to your new fund. We suggest you also keep a copy of the Certificate on file for your own records. In accordance with the Private Health Insurance Act 2007 your health fund has 14 days to issue your Clearance Certificate. The Clearance Certificate can be issued either to you, or, at your request, it can be issued directly to your new fund.
Making a complaint
If you or your new health fund do not receive your Transfer Certificate within 14 days, or for more information on this topic, you can contact the Private Health Insurance Ombudsman on 1800 640 695 or www.phio.org.au for assistance.
Issued by the Private Health Insurance Ombudsman
Download the Clearance Certificates factsheet PDF.