What is a Restricted Health Insurance Fund?
In this guide, we'll go into detail about restricted health funds vs open health funds to see which type of health fund is better.
by Gary Andrews
Last update 15 Apr 2021
Health funds in Australia must be registered under the Private Health Insurance Act 2007 as either an 'Open' or 'Restricted' organisation.
There are 38 registered health funds.
Of these, 26 are open and 12 are restricted.
Both types of funds are subject to the same regulations under the 2007 Act.
Before we look at the pros and cons of each type, let's take a detailed look at what they are.
A restricted health fund is a fund that only provides cover to members of a specific group or industry.
You will have to meet certain eligibility criteria to qualify for membership to the fund.
In some cases, cover is also offered to family members of the eligible person.
Restricted health funds are typically operated by industry groups as a not-for-profit enterprise.
Most funds allow you to join even if you are no longer a part of the industry.
For example, if you worked for the Reserve Bank in the past but have since left the industry, you are still eligible to join the Reserve Bank fund.
In this case, the same is true for your family.
Family memberships may extend to the following:
If you join a restricted health fund and your situation changes, you are usually permitted to remain in the fund.
You won't be asked to leave if your brother leaves the police force, or if you leave your position with the Seventh-Day Adventist Church.
However, you should always check the rules of a specific fund before making any assumptions.COMPARE & SAVE
An open health fund offers memberships to the general public.
You do not have to be a member of a specific organisation or work in any particular industry to qualify.
Open health funds can be either not for profit or for-profit organisations.
You are probably familiar with many open health funds, like Bupa, HCF, NIB, and Australian Unity.
More than 95% of health insurance policy holders belong to Open Health Funds.
There is no simple answer to this question.
Whilst restricted funds can sometimes appear to have modestly lower premiums, because they are typically much smaller they have a narrower range of policies and may be less likely to have arrangements with Doctors and Allied Health professionals that reduces gaps for members.
Restricted funds may also be more exposed to market changes, including government reforms and sometimes respond with premium increases that are significantly higher than the industry average.
If you have access to a restricted health fund, you should consider it as an option.
However, don't assume that it is automatically the better option.
Although restricted health funds may have advantages, it's still important to look into the finer details.
Price is not the only feature to take into account, though it something to keep in mind.
Here are some of the questions to ask yourself when choosing between restricted and open health funds:
Compare policies to determine whether or not a restricted fund offers you the most value.
If you do decide to join, remember to review your policy at least every 2 years.
Competition in the health insurance industry is fierce, which means that great new deals often become available.
Comparing policies is quick and easy.
It only takes a few minutes to find out if your policy is still competitive, or if it's time to switch to a better one.COMPARE & SAVE
This guide is opinion only and should not be taken as medical or financial advice. Check with a financial professional before making any decisions.