There are many details to consider when choosing private health insurance, especially when dealing with the challenges of various life stages. Lack of appropriate cover can be financially and emotionally devastating.
To help you navigate the complexities of health insurance and make an informed decision, we’ve created an easy-to-understand roadmap made up of your most frequently asked questions.
This health care roadmap will help you understand and choose the right policy for you and your family’s specific wants and needs, giving you more control and peace of mind.
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The role of private health insurance in Australia
Australian residents are covered by Medicare, Australia’s national public health system. However, Medicare does not provide cover for all your health care requirements, which is why Australians are encouraged by the Government to purchase private health insurance.
People who hold an Australian, New Zealand citizenship, and a permanent residency visa or applied for a permanent visa are generally eligible to apply for Medicare. Medicare benefits are based on the Medicare Benefits Schedule (MBS) fee. When visiting a doctor Medicare will reimburse:
- 100% of the MBS fee for a general practitioner and
- 85% of the MBS fee for a specialist.
- If your doctor does bulk billing, meaning they bill Medicare directly, you won’t have to pay anything.
Medicare vs Private Health Insurance
|Benefits covered||Medicare||Private Health Insurance|
|Hospital Theatre and accommodation costs.|
|Ambulance services and transport.|
|Tests and examinations requested by a doctor for the diagnosis and treatment of illnesses.|
|Most chiropractic services and physiotherapies.|
|Medicines not subsidised under the Pharmaceutical Benefits Scheme (PBS).|
|Programs to manage and prevent chronic illnesses.|
|Eye tests performed by an optometrist.|
|Most Eye therapies.|
|Glasses and contact lenses.|
|Most dental examinations and treatments.|
|Hearing aids and other appliances.|
|Most occupational therapies, speech therapies and psychology services.|
*Take note: Private health insurers cover differ and some companies might cover part or all of the benefits mentioned above. It’s important that you compare private health insurance companies to determine which policy offers you the best level of cover at the most affordable price.
Do I need private health insurance?
Most people do need private health insurance because unexpected illnesses and injuries can happen to anyone. The burden of paying for medicines and treatments not covered by Medicare can jeopardize your financial future. Health cover provides you and your family with protection and peace of mind.
Benefits of private health insurance:
- Receive cover for treatments and services excluded from Medicare, for example, Physio, Chiro and optical.
- Cover can be tailored to you, and your family’s specific wants and needs.
- More control over your health care: Choice of preferred providers, doctors, hospitals and appointment times.
- Better quality care and generally faster access to diagnosis and treatments.
- Avoid financial penalties like Medicare Levy Surcharge and Lifetime Health Cover loading.
- Gain access to membership discounts and special offers, like gym memberships and vouchers.
- Reducing the burden on the public system.
- The luxury of having your own room when in private hospital.
- 24/7 telephonic support from heart and cancer nurses from select insurers.
- Each health insurer generally has their own specialist claim team guiding you on how to process your claim.
What does private health insurance cover?
Private health insurance supplements the Medicare system by covering part or all of the hospital theatre and accommodation charges for private patients in a public or private hospital. It further covers a portion of your medical fees and allied health services, as well as dental services, spectacle purchases and ambulance transport. Programs helping you manage and prevent chronical illnesses might also be covered.
There are a variety of private health funds available. However, there generally 3 basic cover options available: Hospital Cover, Extras Cover and Combined Cover.
The 4 general categories of hospital cover include:
- Top Private Hospital Cover: Covers most medical services provided by doctors in hospital, i.e. does not restrict or exclude on MBS-payable items.
- Medium Private Hospital Cover: Exclusions or restrictions are placed on some MBS items, for example, Pregnancy and birth related services, hip replacements, cataract and eye lens procedures, and Dialysis for chronic renal failure.
- Basic Private Hospital Cover: Excludes or restricts one or more MBS items, including Cardiac and cardiac related services, Non-cosmetic plastic surgery, Rehabilitation services and Palliative care.
- Public Hospital Cover: Covers minimal benefits for treatment in public hospitals only. You may be placed on a hospital waiting list if you’re not a private patient.
The 3 general categories of Extras Cover are:
- Comprehensive Cover: Includes most or all cover for general dental, major dental, orthodontic, endodontic, optical, Non-PBS Pharmaceuticals, Podiatry, and Psychology within the dollar limits of each particular health insurer.
- Medium Cover: Covers general dental, major dental and endodontic and 5 of the following options: Psychology, Hearing aids, non-PBS Pharmaceuticals, Optical, Orthodontic, Physiotherapy, Chiropractic and Podiatry within the dollar limits of each particular health insurer.
- Basic Cover: Includes at least one for general dental, optical, physiotherapy and chiropractic within the dollar limits of each particular health insurer.
Other cover provided by most private heath funds:
- Ambulance Cover: Most health insurance providers offer some form of emergency ambulance cover, for example transferring you between hospitals. Queensland and Tasmania residents are covered by their state government, but the Northern Territory, South Australia and Western Australia will need insurance from a private health fund.
- Dental Cover: General dental cover will help pay for minor dental treatments, like check-ups, teeth cleanings, small fillings and plaque removal. Major dental cover includes wisdom teeth removal, crowns, orthodontics, dentures and bridges. The type of dental cover available will depend on your specific health policy.
Which health insurance is best in Australia?
The best health insurance in Australia depends on your specifications and unique circumstances. You need to determine which services you need cover for, how much cover you need and what you can afford. Australia has many health insurance companies to choose from. The health insurers with the largest market share in Australia include:
10 factors to consider before buying private health insurance:
- Your age and health: The type of health cover you choose depends largely on the stage of life you’re in. If you are young and healthy chances are you don’t need much coverage, and a basic Hospital plan should suffice. However, if you have a family or are on chronic medication, you might need a combination of Hospital and Extras cover.
Make sure the list of drugs you need are covered by your chosen health insurer. If you have a chronic medical condition that requires a specialist, make sure you choose a policy that covers your specialist. Ask your doctor which health insurance plans cover his services.
- The cost of private health insurance: Price is an important consideration when choosing a health fund, which is why you should pay close attention to the overall cost of the policy, including monthly premiums. If you are single and in good health, a low premium health insurance policy might be the right choice for you. However, the cheaper your policy, the less you’ll usually be covered for.
- Private health insurance threshold: If you or your family pay private health insurance premiums, you may be eligible for Australian Government rebates, which means you’ll receive a percentage of your private health insurance premiums back. This rebate is based on your income threshold, age and the number of dependent children you have.
If your income is higher than the relevant income threshold, you may not be eligible to receive a rebate. The threshold depends on whether you have a single income or a family income as of 30 June each year. Your threshold increases by $1,500 for each child after your first born. Singles that are earning $140,000 or less and families earning $280,000 or less qualify for the rebate.
You can claim your rebate either as a reduction on your health cover premiums or receive the full amount as a refund during tax time.
- Lifetime Health Cover Loading (LHC): Anyone turning 31 who doesn’t already have a private health insurance policy will have to pay the penalty to the government. For every year you are over 31, the government will charge you a 2% loading fee on top of the base rate of your policy. Meaning, every year you delay getting health insurance, you’ll pay more for the same amount of cover, which will affect the long-term affordability of your policy. Once you have a loading, you can only be free of it by holding your health cover for 10 consecutive years.
- Medicare Levy Surcharge: You’ll pay an additional tax if you do not have private hospital cover and your income is over a certain amount; over $90,000 a year if you’re single and over $180,000 as a couple or family. This surcharge helps fund the public health system.
- Access Gap Cover: Access Gap Cover minimizes or removes out-of-pocket expenses and is available via most private health funds. Essentially, it helps cover the gap between how much your policy will pay out and how much the doctor or specialist charges you when you go into hospital. However, not all doctors and specialists participate in these gap schemes, referred to as ‘no gap’ or ‘known gap’. Review which doctors on your health insurer list have agreed to these gap cover schemes.
- Waiting periods, Excess and Co-Payments:
Waiting period: The amount of time you’ll have to wait before you’re able to claim a specific benefit. Your waiting period will depend on the insurer and the type of treatment you need.Usually, waiting periods will apply when you’ve just joined a health fund, upgraded your cover or have a pre-existing condition. For example, if you had cancer before joining a private health fund, you’ll likely have to wait 12 to 24 months before claiming on any treatments or medications related to cancer. Look for a policy with the shortest waiting periods.
Hospital excess: The maximum amount you have to pay if admitted to hospital, regardless of the number of days in hospital. Payable once per person, to a maximum of twice per year.
Hospital co-payment: The maximum amount you agree to pay for each day that you are in hospital, up to a specified amount. The payment is capped, so you’ll never pay more than your yearly co-payment limit.
Both Excess and Co-payments are designed to lower your health insurance premiums by agreeing to make an out-of-pocket payment when admitted to hospital.
- Policy exclusions and restrictions: Always check the list of illnesses and injuries covered under the policy’s information statement before making a final decision. However, such a list is rarely comprehensive, which is why it’s best to call the health fund directly confirm what is and isn’t covered. Benefits and exclusions will vary from fund to fund.
- Provider networks: Review the list of hospitals, doctors and specialists tied to a policy and try to choose one that has your preferred hospital and health care providers tied to it.
- Travel frequency: If you travel a lot, you need to make sure your health insurer provides cover wherever you go. You’ll want a large network of providers so that when travelling you are not restricted to which doctors you can see. Emergency care services are usually an out-of-pocket expense, but try to find a policy that will at least partially cover the cost of emergency services.
Medicare surcharge calculated
|Tier 0||Tier 1||Tier 2||Tier 3|
|Singles||$90,000 or less||$90,000 to $105,000||$105,001 to $140,000||$140,000 or more|
|Couples or Families||$180,000 or less||$180,000 to $210,000||$210,001 to $280,000||$280,000 or more|
|Rebate % by Age Group|
|Under 65 Years||26.791%||17.861%||8.930%||0%|
|65 to 69||31.256%||22.326%||13.395%||0%|
from the 2016-2017 Mulcahy Report
Is private health insurance worth it?
Yes, health insurance is worth it because of all the benefits it provides and the peace of mind that comes with knowing you and your family’s health will be taken care of. Before you choose your policy, make sure you understand what type of health care you’ll be covered for and what is excluded and restricted.
If you need assistance with this important decision, give us a call, and one of our specialists will take you through the process step by step.
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