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21 Health Insurance Myths Busted

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Anneke Van Aswegen Published/updated: October 17, 2017
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There are quite a few health insurance myths floating around the Internet. While some are obviously fake, there are many that are so well presented they seem legit. It’s these types of myths and misconceptions that can prevent you from purchasing the right cover.

We’ve debunked the top 21 health insurance myths in Australia so that you’re well informed and can compare your health insurance options with confidence.

Debunking these myths should also make it easier for you to spot dishonest health insurance companies and separate fact from fiction.

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Myth 1: Private health insurance is not required in Australia – we have Medicare

While private health insurance is not a requirement in Australia, you’ll have to pay a Medicare Levy Surcharge and Lifetime Health Cover loading if you don’t have it. Many people also opt to take out private cover because it enables them to pay for treatments and services not fully covered by Medicare.

While Medicare is fantastic, it doesn’t cover all the medical services you may need, like treatment as a private patient in a private or public hospital, most dental services, prescription glasses and contact lenses, joint replacements and ambulance cover, hearing aids, home nursing care, and many therapeutic treatments including psychological services and speech therapy.

Myth 2: I’m fit and healthy so I don’t need health insurance

It might not make sense to pay for cover while you’re young and healthy. However, accidents and emergencies don’t take into account how often you do cardio or how much salad you eat. Think of health insurance as your support against the unexpected.

Also, if you’re planning on starting a family in the near future, it might be wise to start comparing your options now because there are waiting periods for pregnancy-related services.

Myth 3: The costs of private health insurance outweigh the benefits

Many people who are trying to keep their expenses low believe that the premiums for private health insurance are higher than the benefits they can expect. This is completely understandable and in some cases true, however, you’ll be missing out on benefits such as:

Additionally, you are also able to claim a private health insurance rebate and save money by choosing to either reduce your annual income tax or as lower future premiums.

While you might pay more when you’re younger, as you age you will most probably need to make use of more expensive services and treatments, like a hip replacement, a pacemaker, or a hearing aid. This is when the monetary value of your private health insurance really pays off.

Myth 4: Private health insurance is just too expensive

The cost of health insurance can be expensive, but that’s why you have options. Most health funds offer a diverse range of cover options, catering to people of all income levels and stages of life.

This means premiums will also differ. For example, a person who wants a more comprehensive policy that also covers pregnancy in a private hospital with their choice of obstetrician and midwife will pay a more expensive premium than someone who takes out a more basic policy with fewer bells and whistles.

Myth 5: Once I’ve found a health insurer, I don’t need to update my policy

Life is a moving target. You might experience changes in your health and income, your family expands, children grow-up, and you’ll get older.

Your personal circumstances will influence the type of policy you need. That’s why it’s a good idea to contact your insurer to discuss how your situation has changed and whether your current policy is still providing value.

Myth 6: Choosing the right private health insurance policy is just too confusing

Sources like ComparingExpert make it easy for you to choose a policy best suited your personal requirements and budget.

Websites providing quotes online and free comparisons, like us, will help you find the right policy and premium from some of Australia’s top health funds. Simply fill in the quote form below and we’ll take care of the rest.

Myth 7: You’ll have to re-serve waiting periods

If you switch from one health fund to another and you purchase a policy similar to your previous one, then you won’t have to re-serve any waiting periods. You’ll only need to complete a waiting period if your new policy has benefits that weren’t covered by your previous policy or you’ve opted for an upgrade.

Myth 8: Your premiums can’t be refunded

You can get a full refund on your premiums if you cancel your policy within the 30-day cooling off period and have not made any claims. You can also get a refund for some of your premiums if you paid for a full year and are cancelling mid-year.

Some insurers charge an admin fee, so it’s important to check your insurer’s refund policy before cancelling your health insurance cover.

The refund process can differ between insurers, but generally, you’ll need to request a refund application form and send the completed form back to your insurer.

Myth 9: You won’t have any out-of-pocket medical expenses

This is a common misconception among Australians, with 27% of us believing our health insurance will cover us for all of their medical expenses.

The truth is, health insurance won’t cover all health-related expenses which means that you will experience some out-of-pocket expenses. Out-of-pocket expenses that you might have to pay include:

Myth 10: You need a hospital policy and an extras policy from the same fund

This one isn’t so much a myth as a misconception that’s turned into a confusing mess. The fact is that you’re not restricted to taking both hospital and extras policies from the same insurer.

You can take out hospital cover from one fund and extras from another. You can even take out an extras policy from one insurer and another extras policy from a different health fund, so long as each fund knows about the other and is in agreement and you follow their guidelines regarding claiming.

Myth 11: Medicare will cover emergency ambulance costs

While Medicare does cover emergency ambulance services, it depends on where in Australia you live. For instance, it covers those who live in Queensland or Tasmania, but generally not the rest of Australia.

However, some rural and remote areas of Australia will provide residents with financial assistance when they need to travel to another area for medical assistance.

You are eligible to receive emergency ambulance cover when you have a concession card or a healthcare card. Your only other option is to purchase private health insurance that includes ambulance services.

Myth 12: You can’t claim health insurance on tax

Completely false. You can claim health insurance on your taxes through the private health insurance rebate. This is a percentage of the cost of your premiums that the government will pay for you, up to a maximum of 34.579%.

Your exact rebate amount depends on your taxable income, your age, and how many dependent children you have, and can be received either through a reduction in your premiums or through your annual taxes.

Myth 13: You can just take out health insurance later in life when you need it

Yes, you can and many people do, but you’ll run the risk of paying more for your health insurance. Under the Lifetime Health Cover (LHC) loading, anyone aged over 31 who do not have private health insurance on the 1st of July will pay 2% more on top of your premium for every year that you don’t have hospital cover.

This LHC loading is added every year up to 70%, meaning at age 40 you will pay 20% more for your hospital cover than if you purchased it at age 30.

It’s also important to remember that you are subject to specific waiting periods before you can start claiming health services and treatments.

Myth 14: Private health insurance is for rich people

Health funds in Australia offer a variety of policies, with a range of price points for different levels of cover. You don’t have to pay more than what you can afford, especially since you can simply compare policies suited to your price range and choose the best option for your specific requirements.

Myth 15: Once you get health insurance you are stuck with that provider until your contract is up

Many Australians think that because health insurance policies contain terms and conditions, that they are signing a contract that they’ll be tied to for a set amount of time. However, health insurance policies are contract-free, which means you can switch your policy or fund at any time.

Your new health fund will also assist you in completing the switch and any waiting periods that you have already served will carry over into your new policy, as long as your new policy offers the same or similar benefits.

Myth 16: You’ve missed out on tax benefits if you purchase health insurance after 30 June

If you earned more than the Medicare Levy Surcharge (MLS) income thresholds, more than $88,00 as a single and $176,000 as a couple, and purchased private hospital cover on 29 June, you will still be taxed a minimum of 1% MLS in that year’s tax return. However, come 30 June next year, you won’t have to pay any MLS if you have hospital cover.

Myth 17: Elderly people with pre-existing medical conditions find it hard to get health insurance

False. Health insurance is ‘community rated’, meaning that a health insurer must sell you a policy no matter how likely you are to claim. Simply put, a pre-existing medical condition has no bearing on whether you can get health insurance or not and so elderly Australians will not necessarily find it more difficult to get cover if they have pre-existing conditions.

Myth 18: Once you’ve got health insurance, all your health-related expenses are covered

Health insurance does not cover all health-related expenses. Most health insurance policies have limitations on hospital and extras treatments, which means that you will have some out-of-pocket expenses.

However, you do have the option to take out gap cover, which helps protect you from out-of-pocket expenses.

Myth 19: I’m healthy; private health insurance would be a waste of money. I’ll wait until I’m sick before I get it

When you first join a health fund you must serve a predetermined period of time before you can claim for certain benefits. As a result, you might have to wait before you can use your health cover to pay for the treatment you need.

General waiting periods you can expect to serve include:

In addition, you can’t always prepare for accidents and emergencies. Having adequate cover helps you shoulder the cost of unexpected injuries.

Myth 20: We don’t need private health insurance to have a baby in Australia – we have Medicare

While Medicare does cover some or all your pregnancy and childbirth expenses, you often don’t know who your doctor or midwife will be, and you’ll probably have to share a room with other mothers and their babies.

Health insurance that includes pregnancy cover will give you the opportunity to choose your obstetrician and midwife and provide you with a private room in a private or public hospital.

Myth 21: If you’re unhappy with the services provided by your health insurer, you just have to grin and bear it

Just because you’ve accepted an insurance policy, doesn’t mean you’re stuck with that insurer – especially when you’re unhappy with their services.

In fact, you are perfectly within your rights to take your complaint to the Commonwealth Ombudsman who investigate complaints from people who believe they have been treated unfairly or unreasonably by their private health insurer.

Explore your health insurance options today

Now that we have busted 21 of the most common health insurance myths and you can more easily spot fake insurance news, why don’t you take a few minutes to compare private health insurance policies to ensure you’re getting the best value for your money?

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