This guide is here to assist young adults in the exciting transition from parental health insurance to personal health insurance policies. We will discuss the ins and outs of how it works, provide you with all the information you may need, and walk you through a step-by-step process on how you can easily switch from a family policy to health insurance for young adults.
Key facts
- Switching from a family policy to a personal health insurance policy may be necessary due to lifestyle changes and evolving personal health requirements.
- There are Age-Based Discounts for young people who acquire a policy before 31. This discount can go up to a maximum of 10%.
- The Lifetime Health Cover Loading penalises young people for every year without cover after 31. This is calculated as a yearly 2% surcharge.
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Aligning Health Insurance with Life Changes
Health Insurance Policies are specifically designed to meet the personal health requirements of their policyholders. When a policy is chosen, a lot of consideration is often put into the present and future needs that a policyholder may have. Milestones can also greatly affect and change the way that health insurance policies work.
In the case of transitioning from a family policy, this can often occur because the young adult has transitioned out of the age limit, is no longer a student, or is financially independent. In these cases, the young adult will have to switch to their own personal policy because the limitations of the family policy have been reached. When these life changes occur, it is always crucial to assess the extent of the coverage available, and how sufficient or insufficient it may be in the future.
Evaluating Financial Implications
When a young adult switches to a personal plan, it is important to consider the financial implications that may occur. Each policy is priced differently, and as such, every policy is also structured differently. Factors such as monthly premiums, tax implications, and government subsidies can greatly improve or worsen the financial implications of private health insurance for young people.
A good example is the ‘Age-Based Discount’ and the ‘Lifetime Health Cover Loading’. The Age-Based Discount is an incentive for young people to acquire their own personal policy before the age of 31. For every year before 31, the policyholder wil receive a discount of 2% up to a maximum of 10%. The Lifetime Health Cover Loading is the complete opposite. This penalises young adults for not acquiring a policy before the age of 31. Every year a young person is left without cover, the surcharge is increased by 2%, which can drastically affect the total cost of premiums in the future.
- Hospital Cover which covers you for in-hospital costs that may occur.
- Extras Cover which provides coverage for ambulance physio, optical, dental, chiro, and other healthcare services that Medicare does not cover.
- Combined Cover which is often a policy that you get to design on your own. This will include hospital coverage and whichever other coverage types you choose from.
Choosing the Right Plan
Choosing the right plan can be a difficult decision to make. There is often so much information out there, which can quickly become overwhelming. In Australia, there are 3 distinct categories for Private Health Insurance Policies. Hospital, Extras, and Combined Cover. Let’s have a look at each and understand what the difference is between each.
- Hospital cover is specifically designed to provide coverage for in-hospital services. This could include surgeries, medical procedures, housing within the hospital, and a range of other necessities.
- Extras cover is designed to provide policyholders with out-of-hospital coverage. This can be for a wide range of services such as optical, physio, dental, and many more. Extras cover only is best suited to young adults who are in very good health and only require these specific services.
- A Combined Policy is a mixture of both Hospital and Extras cover. A Combined Policy will typically cover a wide range of in-hospital services and a specific set of Extras. These policies are generally more expensive but provide the policyholder with comprehensive coverage that aims to meet their many personal health requirements.
Understanding Policy Features and Benefits
Before rushing into a policy, the best thing anyone can do is first to compare the policy features, benefits, exclusions, inclusions, and extras provided by each policy and Private Health Insurance Provider. Although a policy may share the same name across insurers, the policies and available coverage can differ vastly, not to mention the difference in pricing structure and benefits.
Using comparing websites, brochures from insurers, and government websites can be a fantastic way to ensure that you are recieving the best possible policy for your financial and personal health needs. It is also always a good idea to receive a quote from multiple providers to compare policies within your financial range and that attempt to meet your personal health requirements.
How to get Health Cover as a young adult
- Research: Explore different health insurance providers to find a plan that fits your personal health requirements and budget.
- Selection: Choose a suitable policy and contact the insurer to discuss the transition.
- Application: Provide the required personal information and follow the insurer’s guidance for the application process.
- Review: Carefully review the policy details, including coverage and waiting periods.
- Communication: Keep your parents informed throughout the process.
- Coordination: If you have existing coverage under your parent’s plan, coordinate the cancellation to avoid overlapping.
- Activation: Once approved, your new personal health insurance becomes active.
- Understanding: Familiarize yourself with the policy terms to maximise your coverage. Enjoy the peace of mind that comes with having your health insurance.
Frequently Asked Questions and Answers
What is the age limit for staying on my parents’ health insurance in Australia?
The age limit for staying on a parent’s health insurance is typically 25 in Australia. This age limit also increases if you are a full-time student or not financially dependent. This age limit can often change based on the chosen insurer. While some insurers will allow dependants to remain on the policy till the age of 25, others may allow this till the age of 31. It is crucial to always speak with the chosen insurer and gather the necessary information to understand how these limitations and exclusions may work.
What are the key benefits of switching to personal health insurance at 30?
Switching to personal health insurance at 30 often provides policyholders tailored coverage that meets their personal health requirements. Additionally, there are also ‘Age-Based Discounts that apply, which can drastically lower the cost of premiums. Getting personal health insurance at 30 can allow the policyholder to receive cover that meets not only their present needs, but also their future needs.
How does the Lifetime Health Cover Loading affect me if I take personal health insurance after 30?
The Lifetime Health Cover Loading is designed to push young adults and all citizens toward a healthier lifestyle that prioritises their wellbeing. While there is an ‘Age-Based Discount’ for young adults with Private Health Insurance before the age of 31, the Lifetime Health Cover Loading does the opposite. Every year a young adult is without Private Health Insurance after the age of 31, there is a 2% surcharge on premiums. This could potentially increase the overall cost of future Health Insurance policies.
What factors should I consider when choosing a personal health insurance plan?
When deciding on a personal health insurance plan, it is important to consider your present and future needs. A policy needs to not only meet your present needs but any future health requirements that you may have. Additionally, you should consider other factors such as health needs, lifestyle, budget, the different types of coverage offered, waiting periods, potential out-of-pocket costs, and inclusions/exclusions.
Are there any government subsidies or discounts for personal health insurance for those under 31?
Yes, young adults who are below the age of 31 may be eligible for the ‘Age-Based Discount’ on private health insurance, which offers up to 10% off on monthly premiums. This ‘Age-Based Discount’ increases or decreases based on the age that a young adult is when applying for Private Health Insurance, so the sooner that one applies, the greater the discount. Additionally, depending on the monthly income, a young adult may qualify for the Australian Government Private Health Insurance Rebate.