Private health benefit funds: ACCC acts on changes to annual benefits

The Australian Competition and Consumer Commission (ACCC) has announced that it has accepted a court enforceable undertaking from Australian Unity Health Limited (Australian Unity) in relation to changes to its annual dental benefit limits, during a calendar year.

Following an ACCC investigation Australian Unity has agreed to pay compensation to members who held couple and family policies in 2015 that were likely to have been misled about the dental benefits they could claim from their policy.

At the start of 2015, Australian Unity’s Comprehensive Extras policy for couples and families included one overall limit for dental benefits, which was between $1,600 and $2,400 per calendar year. The insurer’s fact sheets, website and terms and conditions in 2015 represented to members that these benefits were fixed and would not change for that year. Members had been able to choose how to split the annual limit among individual family members. For example, families could use all of the annual limit towards braces for one child.

However, in September 2015 Australian Unity changed the way the annual limit worked. While the total limit for dental benefits was the same, claims for each individual family member were limited to half of the total annual limit. For example, claims for dental work for an individual family member, which had been able to be made up to the entire $1,600 annual limit, were now subject to an $800 limit.

The ACCC was concerned that Australian Unity’s notice of the change came too late for some families who had already made plans about how they were going to use the dental spending limit during the remainder of 2015.

The ACCC said that insurers should not rely on fine print disclaimers to reserve the right to make changes to policies when they have represented that the policy benefits will be fixed for the policy period.

Australian Unity has undertaken that:

  • it will not make a detrimental change to any benefits which are represented to members or potential members as benefits provided for a 12 month period, during that 12 month period;
  • it will improve its information to consumers about Australian Unity’s ability to change benefits, and will also note that Australian Unity is bound by the Australian Consumer Law when making changes;
  • it will provide compensation expected to be at least $620,000 to affected members, including reimbursement for out-of-pocket costs for dental services incurred in 2015, and payment of expenses on ongoing dental plans;
  • it will notify members about its conduct and Australian Unity’s commitments contained in the undertaking.

Australian Unity estimates that about 2300 policies were affected by the changes, out of the 24,000 families and couples covered in August 2015. All policyholders are to be contacted by the fund, which is offering compensation for out-of-pocket costs that it should have covered, as well as for claims that may not have been submitted because of the policy change. Ongoing treatments – such as orthodontics – that began before August 2015 will also be treated as if the original benefits applied.

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