Here in Australia, we’re lucky to be supported by our high-quality, (and free) universal health care system – Medicare. So with that in mind, you might be asking … Why do I even need private health insurance?
If you’re considering going without, it’s important that you understand what you’re risking when you don’t have cover. So here’s what you need to know:
When being treated as a public patient, you’re limited to the use of public hospitals for your procedures. Unfortunately, public beds are in limited supply and extremely high demand, especially in metropolitan areas. As a result, public beds are triaged with priority given to those needing more urgent care. While 50 per cent of patients are generally admitted in around 45 days nationwide, roughly 6 per cent will wait over 365 days for treatment. This was substantially worse for people living in NSW, which was 69 days and 9.2 per cent respectively. The vast majority of medically necessary procedures are considered elective, regardless of if waiting significantly impacts your quality of life.
Hospital cover subsidises treatment through the private hospital system, allowing you to choose your own doctor and receive treatment on average, much faster. While there may be some out of pocket expenses, many providers participate in gap cover arrangements with health funds to reduce medical fee gaps or remove them entirely. When you use a participating hospital, your hospital accommodation and theatre costs are typically covered in full (less any excesses).
To keep Medicare sustainable, the government encourages participation in the private system through a series of incentives and surcharges. One of them, Lifetime Health Cover loading, penalises those that opt not to take out hospital insurance at an early age, by increasing their future hospital premiums. While you’re generally healthier when you’re younger, avoiding cover could price you out of hospital cover when you’re older and need it. For example, if you enter cover as a 50 year old, you’ll pay 40 per cent more for the exact same policy than had you entered as a 30-year-old.
Similarly to Lifetime Health Cover loading, another penalty you may wish to avoid is the Medicare Levy Surcharge – an additional tax paid by those earning above the $101,000p.a. income threshold ($202,000p.a. for couples and families) that have opted out of private hospital insurance. In some cases, you could pay more towards this tax than you would for a basic hospital product.
Extras insurance is where your health fund contributes to the cost of non-medical health related services such as your annual dental check-ups, purchasing prescription glasses and the use of physical or complimentary therapies (eg. physio, psychology, remedial massage). If you’re proactive in managing your health, you may be able to claim a high proportion of your premiums back in benefits, while looking after your most important asset … your health.
IMPORTANT LEGAL INFO This article is of a general nature and FYI only, because it doesn’t take into account your personal health requirements or existing medical conditions. That means it’s not personalised health advice and shouldn’t be relied upon as if it is. Before making a health-related decision, you should work out if the info is appropriate for your situation and get professional medical advice.