When a financial adviser needs to claim: ‘I learnt not all health insurance plans are created equal’

From relying on only Pharmac-subsidised drugs to thinking you’re fully covered by your work health insurance, Lifetime adviser Lisa Davis warns of the common mistakes we make when selecting health insurance and how best to avoid them.

OPINION: It’s funny being on the other side of the fence. As a financial adviser focussing on health insurance, I’m used to helping my clients sign up for the right products and to help push their claims along should the worst happen. Now I am a patient waiting for a final diagnosis, looking to get the most out of my health plan.

I am one of the lucky ones. I signed up for health insurance at 23, and continued to pay my premiums while I was living overseas. Today, at 34, I find myself scrutinising my policy and I’m grateful that one of the bigger financial investments in my health I made in my 20s is assisting me when I need it the most.

This is what no one tells you about health insurance: the plan you choose is so important to cover what might happen as you get older. So is commencing health insurance as early as you can.

It’s vital to invest the time to understand the details of your policy, to ask questions so that you understand what it does and doesn’t cover, especially when it comes to access to critical medication that could save your life. 

One important reason to pay for cover? Access to the medicine you need

We’ve all seen articles in the news about people who don’t have health insurance plans, and the harsh reality is that it leaves one at the mercy of Pharmac-approved medicine provided through government subsidy. New Zealand is lagging behind with access to new, life-saving medicines. This is according to a 2016 global study across 20 OECD countries, where we ranked last with the least amount of new medication approved. Over a five-year period, Australia funded 66 new medicines while New Zealand only funded 12. And while Government increased Pharmac’s budget by $60 million in 2017, it may not be enough to clear the backlog of medicines awaiting approval.

Health insurance can give you access to non-government funded drugs; it can provide you with critical medication when you’re faced with an illness or chronic condition. Because New Zealand’s medicine spend only accounts for 3.6 per cent of the health budget, you could be taking a real risk leaving your health in just the government’s hands.

Don’t go for the cheapest product, go for the best value

Health insurance is often a grudge purchase – it’s one of those things we need to pay and so we grab the option at the lowest price point without really understanding what it offers. Lean on your financial adviser to break down what each plan offers and examine what is covered, including any exclusions, gap cover and any extra excess charged due to you and your family’s medical history. 

For example, if you had a family history of cancer it would be in your best interest to make sure your policy covers you for Keytruda, a melanoma drug which, recently and only through relentless campaigning by sufferers, was finally funded by Pharmac. It is yet to be approved for lung cancer sufferers. In addition, some health insurance policies may cover you for it entirely while others may contribute towards the cost, so it’s best decide what degree of cover you’d like to opt for.

Receiving health insurance as a work perk

Employers often use health insurance as a carrot to attract and retain staff – but what exactly does it cover you for? Because workplace health insurance is often standardised across employees, you may not be receiving the cover best suited to your needs. This could mean you may not even qualify to receive non-Pharmac medicine and may need to get at the back of the public hospital waiting line to see a specialist. 

I often recommend a top-up policy for my clients to make up the shortfall in cover.  This minor cost can save you major expense in the long run. Here it’s important to work with your adviser to help evaluate the cover gap so that you pay only for what you need.

As a public health system often envied by others offshore, it’s a common misconception to assume health insurance has little role within the New Zealand landscape. Access to non-Pharmac medicine, more than anything else, necessitates paying that little extra each month to ensure you have the right coverage. You need to start while you’re still healthy.

Article By Lisa Davis

Lisa Davis is a Lifetime financial adviser based in Christchurch. She has experienced first-hand how events can change your life in an instant, and can attest to how putting the right measures in place can make things easier for you in stressful times.