Private Health Insurance – Do You Need It?

private health insurance
Never before has health been so much on our minds. The COVID-19 pandemic of 2020 has made us all much more conscious of the need to be healthy and to look after ourselves physically and mentally.

Although the public health system in Australia has shown itself to be capable of coping with a crisis, it’s natural to wonder what more you can get more from private health insurance. Currently, around 54 per cent of the Australian population – about 13.5 million – have private health insurance. Should you join them?

What is Private Health Insurance?

Simply, private health insurance is insurance to cover some, or all, of the costs of health care as a private patient. There are two kinds: general treatment cover (extras or ancillary) which covers non-medical services such as optical, dental and physiotherapy treatments, and hospital insurance which provides cover for the costs of treatment as a private patient in a hospital including doctor’s/surgeon’s fees and accommodation. You can also find packages which combine hospital and extras cover. A third option, which is worthwhile if you live in a state without a free service, is ambulance cover.

The Benefits of Private Health Insurance

Let’s start off by saying that private health insurance is not designed to save you money on general healthcare. Instead, you get the benefits of being a private patient, plus cover for certain medical and hospital expenses that are not covered by the public health system. So, when you decide to get insurance, make sure you shop around for the best deal. If you use a comparison site like Ask James it will help you understand the cost of premiums as well as provide explanations of the products which can be varied and complex.

#1 – You experience shorter waiting times

Waiting times for surgery in Australia are on the increase – especially for elective surgery. With private health insurance you can jump the queue so to speak, and depending on your fund and policy, may even be able to choose when you are admitted to hospital. There are also “locked-in dates” which means your operation cannot be bumped in favour of another patient who needs surgery more urgently.

#2 – You can choose your own surgeon or doctor

Many private health insurers allow their policyholders to select a preferred surgeon for an operation or doctor for treatment, as opposed to a public hospital where the medical and surgical staff who treat you will be those on duty during your admittance and stay. The benefits of this should go without saying.

#3 – You can have a private hospital room

Being a private patient means you are not placed in the general ward population – instead, you are given a private room that isn’t shared with other patients, and it will usually have an en-suite bathroom. In some private hospitals, when you are a pregnant, you can request a room where your partner can also stay over.

#4 – You can reclaim costs of non-Medicare health services

Costs for treatments not covered by Medicare can be expensive. This can mean everything from dental work to new glasses, as well as physiotherapy and chiropractic treatments. Extras insurance will cover part or all of the cost of these. Also, pregnancy cover can be added to your extras to gain access to pre and post-natal services not available through Medicare.

#5 – Dental costs are covered

Dentistry and orthodontics are not covered by Medicare. Without private dental insurance the options are a state run public dental clinic or a private dental clinic which mightn’t be ideal. While the latter is expensive, there can be limited accessibility to and long waiting lists for public clinics depending where you live. Private insurance will cover everything from basics like check-ups and cleaning, to major procedures like wisdom tooth extraction and root canal work (depending on your policy.)

#6 – You can avoid the Medicare Levy Surcharge

To ease pressure on the public health system, the government introduced the Medicare Levy Surcharge for Australia’s higher earners. Depending on the legislation, you might have to pay at least 1% of your income on top of the basic Medicare Levy. For those in the highest income bracket, that can rise to 1.5 per cent. The levy can be avoided if you have private health insurance with a sufficient level of hospital cover.

#7 – There are some long-term savings

In another measure to ease pressure on the public health system, Lifetime Health Cover was introduced. This was particularly to encourage young people to take out private health insurance. If you aren’t a member of a private health fund when you turn 30 years of age, for every year after that you are hit with a loading charge when you do take out cover. The loading charge is only removed after you have had 10 years of continuous private health insurance. Taking out private health insurance before you turn 30 avoids the loading charge.

The Takeaway

There are genuine advantages of private health insurance, particularly when you consider we are living for longer. But always do your homework. Make sure you are aware of any levies, excesses, and qualification periods, as well as any exemptions, such as if you leave the country for a period of time. The key thing is to know your policy inside and out to make the most of it.

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