Everything you actually need to know about Health Insurance

You can feel sick to your stomach to discover how much health care costs outside the public system when you don’t have private insurance.

Even if you’re lucky enough to still be included in your family’s plan it’s still worth learning how to get the best from your cover, and not paying for stuff you don’t need. No matter your situation, here’s health insurance 101; the facts about private health cover.

First things first, what is private health insurance?

The first thing you need to know is that the umbrella term “private health insurance” refers to two separate and distinctly different types of cover: a) private hospital insurance and b) extras or ancillary insurance.

You can choose to take one or both, and if you do, you can buy them from the same or different insurers. 

Medicare vs private insurance

If you’re a permanent resident of Australia, you pay the government 2% of your annual salary and receive a Medicare card in return. (If you’re an international student studying in Australia, you’ve already bought private health insurance because it’s a condition of entry. Welcome – we hope you don’t need to use it, but thanks for having it anyway!)

Medicare entitles Australian residents to free or subsidised treatment by health professionals like doctors, specialists, optometrists – as well as free treatment and accommodation in a public hospital. Non-urgent, “elective” treatment has a waiting list.

So which hospital cover do you need?

There are different levels of hospital insurance: basic, medium and top cover. Basic costs less and covers less, but might be all you need right now.

Here’s when having hospital cover is a good idea:

You need non-urgent (elective) surgery and don’t want to be on a public hospital waiting list. Once you’ve served the initial qualifying period, private insurance means you can schedule specialist appointments around times that suit you.

You want cosmetic surgery on your fabulous self – unless it’s reconstructive, cosmetic surgery is considered optional and isn’t covered by Medicare. But note that this might only be partially covered by some private hospital cover.

You want to choose your own specialist – say, if you’re a professional athlete, with a high risk of injury and you’ve got a go-to guy for when you break things. Some specialists don’t work in public hospitals.

You want to be treated in a private hospital. Let’s be frank: the food, bed and rooms are usually nicer in private hospitals and you can generally get in for treatment pretty quickly.

You’re planning on getting pregnant and want to go private. There’s often a 12-month waiting period to qualify for pregnancy-related private insurance claims. If you are admitted to hospital even one day before the 12 months is up, you may not be covered. So upgrading your cover to include birth and pregnancy-related services once you fall pregnant won’t actually cut it – you need to plan ahead.

You’re 30 years old. But isn’t 30 the new 18? Yes poppet, but the government charges the Lifetime Health Cover loading to anyone who starts paying hospital cover after they turn 31. When you finally do get hospital insurance, the premiums will be higher for 10 years. So if only you take out hospital cover at age 40, you’ll pay 20% more than someone who started hospital cover at age 30. The maximum loading is 70%. After 10 years of hospital cover, they drop the loading. The idea is to encourage young people to take out hospital cover early and stick with it.

You earn over $90,000 a year if you’re single or $180,000 as a couple. First of all, congratulations on your job! Second, the Medicare Levy Surcharge is a tax the government imposes on “high income earners” who don’t have private health insurance.

When do I need extras cover?

For most people, Medicare doesn’t cover “extras” like glasses, physio, chiropractic, speech therapy, psychology services, hearing aids or dental treatment.

Statistically, it’s people aged 55-74 who use their extras cover most frequently. However there are plans that bundle together the combination of services a young, healthy person is most likely to use in a year, like gym membership and natural therapies.

Here’s when having extras insurance can be a good idea:

You’re accidentally injured and need an ambulance. In most of Australia you need Private Health Insurance to claim ambulance trips. (Until Uber comes with defib machines, you really should have Ambulance cover because no one plans an accident, right?)

You wear contact lenses and/or glasses. Most private health funds have their own preferred providers that they heavily subsidise, so you’re refunded most of the price.

You’ve got dodgy teeth. No, that’s mean. If you care about your teeth and get regular check-ups, like to keep them sparkling white, and don’t want to grind them in your sleep you’ll make good use of dental cover.

You’re active and want to claim on things like gym membership, sports massage and orthotics – which can all add up.

You sit at a desk all day (the new smoking) and want to claim on remedial massage and physio. (And if you really hate your job but can’t be bothered looking for another, there may well be some counselling services you should look into. Just a thought.)

You take prescription meds not on the Pharmaceutical Benefits Scheme (PBS). Medications that aren’t subsidised can cost a pretty penny.

All of the above. The real value in extras is when you choose a cover that suits your life and you regularly claim on your personal upkeep.

Not all extras policies pay for all services. You’ll need to read the product disclosure statement to understand exactly what you can claim and how much they’ll refund you each year, on each item.

Get your money’s worth

To check you’re getting your money’s worth, request an annual claims statement after 12 months, which will list the premiums you’ve paid and the benefits you’ve received. Like hospital cover, reassessing your extras every few years ensures you’re getting value for money.

Contact the Centra Wealth team for a free health insurance so that you can compare it to your existing cover. And if you sign up before 31 March 2019 to a combined hospital and extras policy, you will also get a rebate of $200 off the cost of your premium. Give us a call at (08) 8231 4709 or send us an email at info@centrawealth.com.au.

Article reproduced from TheCusp
by The Cusp

Centra Wealth Group
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Zac Zacharia (Managing Director) has been assisting clients to create wealth and secure their futures for over 14 years.

He is also an accomplished presenter and educator

Co-authoring the popular investment book, Property vs Shares.