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Balancing Cost and Coverage in Family Health Insurance

The health and well-being of your family are extremely important, but the cost of services and procedures can often be too high. Balancing the cost of services with the necessary required healthcare assistance your family needs can be difficult. Private health insurance for families allows each household member to receive the healthcare services they need while also managing the potential costs involved.
Fact Checked

Updated: 20 May 2024

The average cost of family health insurance in Australia can be high if the decision is not correctly made. It is essential that families make the correct decision when choosing to partner with an insurer to ensure that the required coverage is provided while also keeping the overall costs low. This blog is here to assist in analysing the average cost of basic family policies offered by various different health insurance providers, government policies, and factors that should be considered before making a final decision.

Key facts

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Types of Health Insurance Policies

In Australia, health insurance policies are designed to cater to the health requirements of specific groups of people. These policies vary in coverage and cost from hospital to extras and combined cover. It is also important to understand the difference between public and private health insurance. Let’s have a look at the difference between these two and how it affects your family’s health insurance and access to healthcare services.

Private vs Public Health Insurance

Private health insurance offers personalised healthcare options, coverage for in-hospital services, a broader range of medical services, and additional benefits like dental and optical. Private health insurance also allows for a choice of specialists and shorter waiting times for elective surgeries.

The public health insurance system, covered by Medicare, ensures broad coverage for essential hospital and medical services, with expenses covered by the government. However, public health insurance usually involves longer waiting times for elective procedures and certain necessary treatments.

Different Policy Types

Assessing Your Family’s Coverage Requirements

Before selecting a policy, evaluating your family’s health requirements is essential. When evaluating your family’s health requirements, consider your medical history, lifestyle, and budget constraints. Look for policy flexibility that allows adjustments over time to ensure the provider network includes preferred doctors, and assess coverage for prescription medications, emergency services, and preventive care.

Cost-Saving Strategies Without Compromising Coverage

Understanding Government Policies and Rebates

The Private Health Insurance Rebate is a government initiative aimed at making health insurance more affordable. It works by reducing premium costs based on factors like age, income, and family status. Eligibility criteria cover singles, families, and seniors. Claiming the rebate is straightforward—apply it directly to your premium or receive it as a tax offset when filing your annual return. 

Income-tested rebates play a significant role in families understanding health insurance costs. As income increases, the rebate percentage decreases, which means that higher earners often pay more for their premiums. It’s essential for families to understand these income-tested tiers for effective financial planning. This rebate can greatly assist financially struggling families who still need access to necessary healthcare services.

Medicare Levy Surcharge (MLS)

The Medicare Levy Surcharge is designed to encourage Australians to take up private hospital coverage by imposing an additional levy on taxpayers without coverage. Its purpose is to reduce the burden on the public healthcare system by incentivising individuals with higher incomes to contribute to their private healthcare. If you fall within the income thresholds and don’t have private hospital cover, the MLS adds an extra percentage to your tax liability. Taking up private health insurance helps you avoid the MLS and ensures you have access to a broader range of healthcare options, offering financial benefits and greater control over your healthcare experience.

To avoid the Medicare Levy Surcharge and choose the right health insurance, consider the following strategies:

Lifetime Health Cover Loading

The Lifetime Health Cover Loading is designed to encourage young adults to take up a private health insurance policy. Those who delay taking out coverage until after age 31 may incur additional loading on their premiums. This loading increases the longer that a young adult is without cover. The loading increases by 2% for each year beyond the age of 30, up to a maximum loading of 70%. This means the earlier you take out private health insurance, the lower your lifetime loading will be.

The most effective way to avoid LHC Loading is to take out private health insurance before turning 31. Be aware that the LHC Loading deadline is July 1, following your 31st birthday. Taking out insurance before this date helps you avoid loading and keeps your premiums lower.

Comparing Providers and Plans

When comparing health insurance providers and plans, it’s crucial to delve into the details of policy terms and carefully read the fine print. Here’s why:

Compare Family Health Insurance

Insurer
Hospital Cover Premiums
Extras Cover
Medibank 150x75 1 removebg preview
$284.00
$62.60
Bupa 150x75 TB
$308.30
$40.00
HCF 150x75 TB
$291.40
$34.40
HBF 150x75 1