Not-for-profit health insurance
What is a not-for-profit health fund?
A not-for-profit health fund is a health insurance company that chooses to reinvest their earnings into running the business instead of being beholden to shareholders or investors. Most not-for-profit health insurance providers are also members of the Members Health Fund Alliance.
These not-for-profit funds can use the money they make above their operating costs to lower premiums, increase member benefits and better meet their members’ health needs. However, this doesn’t necessarily mean that you’ll pay lower premiums or receive higher benefits with a not-for-profit fund.
Health funds and their for-profit status
| Fund Name | Profit status | Policy type |
|---|---|---|
| ACA | Not for profit | Restricted |
| AIA Health | For profit | Open |
| Australian Unity | For profit | Open |
| BUPA | For profit | Open |
| CBHS | Not for profit | Restricted |
| CBHS Corporate | For profit | Open |
| CDH | Not for profit | Open |
| Defence Health | Not for profit | Restricted |
| Doctors’ Health | For profit | Restricted |
| GMHBA | Not for profit | Open |
| HBF | Not for profit | Open |
| HCF | Not for profit | Open |
| HCI | Not for profit | Open |
| Health Partners | Not for profit | Open |
| HIF | Not for profit | Open |
| Latrobe Health Services | Not for profit | Open |
| MDHF | Not for profit | Open |
| Medibank | For profit | Open |
| Navy | Not for profit | Restricted |
| NIB | For profit | Open |
| Onemedifund | For profit | Open |
| Peoplecare | Not for profit | Open |
| Phoenix | Not for profit | Open |
| Police Health | Not for profit | Restricted |
| QCH | For profit | Open |
| Reserve Bank | Not for profit | Restricted |
| St Lukes | Not for profit | Open |
| Teachers Health | Not for profit | Restricted |
| TUH | Not for profit | Restricted |
| Westfund | Not for profit | Open |
|
Source: Privatehealth.gov.au – Health Insurers. Current as of August 2024 |
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This is a list of all registered Australian health insurers. However, some policies are sold using secondary brand names or child companies, which aren’t included in this list. Open funds are free for all to join, while restricted funds will have conditions you need to meet to join such as your profession.
Not-for-profit health insurance
Are not-for-profit funds cheaper?
While choosing a health insurance policy from a not-for-profit health fund may have some effect on the total premium you pay, the cost of health insurance primarily depends on other factors like your level of cover, where you live and the rebates, loadings or discounts that apply.
When it comes to choosing a private health insurance fund, most will offer a range of polices at different price points. However, there’s more to choosing a fund than the price; you also want to consider the overall value you’re getting from your policy and whether it’s meeting your healthcare needs.
When it comes to value for money, the private health insurance Ombudsman’s State of the Health Funds report found that in 2022-23, not-for-profit health funds had a slightly higher average benefits to contribution ratio than for-profit funds at 81%, while for-profit funds averaged 79%.1 This is the percentage of premiums collected by the fund that are returned to members in benefits. However, it’s important to note that this only includes benefits paid for claims made by fund members and may not include some health programs or other members benefits.
Do not-for-profit funds offer more coverage?
The exact amount of your private healthcare costs that your health fund can cover will depend on several factors like your level of cover and the healthcare provider that treats you. This is because private healthcare providers can set their own fees and choose whether to participate in your fund’s gap cover scheme.
With that said, according to the State of the Health Funds report, not-for-profit fund members had an average of 91% of their hospital-related charges covered when claiming on their hospital insurance policy, while for-profit members had an average of 88% of their costs covered.1
However, keep in mind that this doesn’t account for the total amount of healthcare providers that have partnerships with the health funds and choose to participate in their gap cover scheme. It’s possible that a fund could pay a higher percentage of hospital costs at a smaller selection of private hospitals.
Pros and cons of not-for-profit health funds
While it’s up to you to decide the best health fund for you, there are a few commonly considered pros and cons to not-for-profit health insurance that you might want to think about.
| Pros | Cons |
|---|---|
|
Peace of mind. You may find comfort knowing your health fund is motivated by improving the health of their members, not increasing profits. |
Restricted funds. Many not-for-profit funds have restricted membership. This means you may need to be part of a certain group or profession to be a member. |
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Customer satisfaction. The Members Health Fund Alliance claims that not-for-profit funds have consistently higher customer satisfaction scores.2 |
Smaller funds. Not-for-profit funds hold a smaller percentage of market share and are sometimes considered less sustainable. |
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Have your say. Some not-for-profit health funds will allow their members to have a say in the governance of the company. |
Not-for-profit vs for-profit health funds
Each year, the private health Ombudsman releases a State of the Health Funds report that provides a summary of the performance for each Australian health fund. While this shouldn’t be used as your sole means of comparison, it can help you get an idea of how the funds match up.
We’ve split the funds up by their profit status to give you an idea of what’s available among both for-profit and not-for-profit funds.
Not for profit
| Not-for-profit health funds | Member retention (hospital cover) | Benefits as % of contributions | % of hospital-related charges covered | % of general treatment (extras) charges covered |
|---|---|---|---|---|
| ACA | 91.4% | 75.6% | 93.8% | 56.5% |
| CBHS | 92.4% | 84.2% | 90.6% | 46.2% |
| CDH | 88.4% | 70.9% | 94.4% | 34.6% |
| Defence Health | 91% | 76.4% | 89.6% | 41.7% |
| GMHBA | 78.9% | 78.9% | 89.1% | 47.5% |
| HBF | 89.9% | 87.9% | 93.7% | 55.5% |
| HCF | 88.2% | 87.7% | 89.1% | 50.3% |
| HCI | 88.2% | 74.7% | 91.9% | 46.6% |
| Health Partners | 90.2% | 81.9% | 93.2% | 56.8% |
| HIF | 75.9% | 78.8% | 89.7% | 46.3% |
| Latrobe | 77.8% | 79% | 89.8% | 40.2% |
| MDHF | 91.5% | 82.4% | 91.4% | 53.5% |
| Navy | 89.4% | 83.4% | 89.8% | 48.3% |
| Peoplecare | 85.9% | 83.3% | 90.7% | 44.3% |
| Phoenix | 85% | 77.7% | 90.5% | 54.1% |
| Police Health | 91.2% | 86.9% | 92.4% | 65.8% |
| Reserve Bank | 91.3% | 74.9% | 92.4% | 69.6% |
| St Lukes | 89.4% | 83.6% | 91.9% | 56.3% |
| Teachers Health | 96.8% | 86% | 90.5% | 44.6% |
| TUH | 90.6% | 82.6% | 90.2% | 51.7% |
| Westfund | 87.1% | 83.3% | 90.7% | 44.9% |
| Average | 88.1% | 81% | 91.2% | 50.3% |
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Source: Commonwealth Ombudsman – State of the Health Funds. 2022-23. Accessed August 2024 |
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For profit
| For-profit health funds | Member retention (hospital cover) | Benefits as % of contributions | % Hospital related charges covered | % General treatment (extras) charges covered |
|---|---|---|---|---|
| AIA Health | 76.1% | 83.2% | 80.2% | 45.8% |
| Australian Unity | 79% | 70% | 88.7% | 51.7% |
| BUPA | 87.7% | 80.9% | 90.1% | 49.6% |
| CBHS Corporate | 71.1% | 84% | 84.8% | 48.7% |
| Doctors’ Health | 90.2% | 80.4% | 90.8% | 53.2% |
| Medibank | 86.9% | 83.4% | 90% | 52.6% |
| NIB | 82.7% | 79% | 85.9% | 57.5% |
| Onemedifund | 93.8% | 73.7% | 92.5% | 48.6% |
| QCH | 87.6% | 79.8% | 86.8% | 47.4% |
| Average | 83.9% | 79.4% | 87.8% | 50.6% |
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Source: Commonwealth Ombudsman – State of the Health Funds. 2022-23. Accessed August 2024 |
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Meet our health insurance expert, Steven Spicer
As the Executive General Manager of Health, Life and Energy, Steven Spicer is a strong believer in the benefits of private cover and knows just how valuable the peace of mind that comes with cover can be. He is passionate about demystifying the health insurance industry and advocates for the benefits of comparison when it comes to saving money on your premiums.
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1 Commonwealth Ombudsman – State of the Health Funds. 2022-23. Accessed August 2024
2 Members Health Fund Alliance – About our Funds. Accessed August 2024.