About Health Insurance
All of us insure our homes, contents and cars, yet so many Australian’s neglect health insurance. With nothing more precious than our well-being and health we need to take better care of what is important, which is why almost 11 million Australians decide to invest in private health insurance.
Private Health Insurance is an investment in your health that gives you peace of mind knowing that you’ll have the most efficient access to medical services if and when you need them. Private health insurance also means you’ll also be treated by the doctor of your choice.
Hospital Cover gives you access to both private hospitals and public hospital systems. In a public hospital you can choose to be treated as a private or public patient on account of your health insurance. Health insurance means you’re insured for all accidents and with most covers, for serious illness that requires hospitalisation.
Ancillary or Extras cover reduces your out-of-pocket costs for medical services that you use more regularly like physiotherapists or GPs.
What private health over is right for me?
With literally thousands of health insurance products on the market it is important to look closely. Despite a lot of providers offering products that are similar, there are several key factors involved in selecting the best product for you and your family that must be considered.
ChooseWell are experts in walking you through an effective course that will help you recognise 2 or 3 of the most suitable insurance covers, based on your current usage and your anticipated future needs. The product selector on our website uses insight to make product recommendation based on the information you provide. We take the time to talk you through your current circumstances and decide on the type of cover that is best suited to your needs.
Details are very important when deciding on an insurance package. For example, on two different packages with similar premiums, some funds may return $30-$50 for a visit to the dentist for a ‘scale & clean’ while others may return $110-$130.It is this kind of detail you need to made aware of.
Some funds will only reimburse the higher amount if the appointment was at their preferred dentists, others don’t care which dentist you go to and will pay a fixed % depending on your cover. Based on this simple example, a family who visits a dentist twice a year has the opportunity to receive $500 more in rebates with no additional premiums because of the fund they have chosen. This is not a once off saving as that family is likely to visit the dentist each and every year meaning your savings will continue to roll in!
When choosing a health fund it’s important to remember that the best cover for your needs now may not be the most suitable in 5 or even 10 years’ time. Thankfully, most suitable cover is not necessarily the most expensive, so as you get older and your circumstances change there are opportunities to uphold or enhance you’re level of cover without raising your premium!
How does having health insurance give me faster accesses to medical services?
One of the privileges of being an Australian is that all citizens have the right to use the public health system for free, having said that, almost 11 million people choose to better this by purchasing private health insurance. One of the key reasons for this is that the public health system generally has long waiting lists and takes longer to access compared to private wait lists and provide less choice about who you’ll be treated by. There are several detailed reasons for this ranging from the lack of funds in the public system or medical staff and facilities’ availability in the public system, all which are important factors.
There is a lot debate surrounding wait lists in the public system for procedures classified as elective surgery. The term ‘elective surgery’ is often misconstrued to refer to surgery that is optional. This however is not the case, rather ‘elective surgery’ refers to surgery that is not emergency surgery. So if your condition is not immediately life-threatening then surgery is delayed and you are placed on a lengthy wait list. Patients can be susceptible to wait periods of several months or even years for ‘elective surgery’ on hips or knees, heart surgery or colonoscopies. An additional drawback is that once the surgery is complete patients may face delays in in access to the proper rehabilitation facilities.
Private health insurance means you avoid these lengthy delays. When you hold private health insurance surgery can be performed within days, certainly within the timeframe recommended by the doctor. Rehabilitation is booked in advance and takes place immediately post-surgery, or as soon as determined ready by your doctor.
What choices does private health cover give me?
Being a patient in the public hospital system means you are treated at a particular hospital and allocated any doctor, or potentially numerous doctors, depending on your circumstance. Hospital administrators will decide who is best to treat you so this could vary from the leading specialist to an intern; it is all up to the discretion of the administrator. Having private health cover allows you to choose your doctor and allows you to choose the hospital you’re treated at.
Your GP will recommend specialists whom they believe are best qualified to help in your situation. If hospitalisation is necessary, the recommended specialist will usually suggest hospitals for you to choose from that they work at, so you can continue the medical relationship and not have to start all over with someone new. If you’re dissatisfied with the hospital or the specialist you’ve been recommended you have the freedom to choose another doctor and medical facility.
Over 97% of hospitals across Australia, including all major hospitals, are covered by the health insurance packages provided by our health funds so you will never be left without a range of choice.
What health funds offer you:
Private health insurers provide many different insurance policy options. The most basic health cover has lots of exclusions on additional benefits, however meets the objective of circumventing the Medicare Levy Surcharge and Lifetime Health Cover loading charges.
To access to private hospitals, avoid the Medicare Levy Surcharge and the Lifetime Health Cover loading fees, you’re best to take out Hospital Cover. Extras Cover gives you the right to use to the additional out-of-hospital services that Medicare does not cover.
Many insurance packages combine both Hospital Cover and Extras Cover, and approximately 80% of buyers choose to be covered by both, although it is possible to buy them separately. It is also possible to buy your Hospital Cover and Extras Cover from separate insurers if it means getting the most affordable deal.
Hospital Cover
Hospital Cover takes care of the cost of hospitalisation, including treatment by your selected doctor while in hospital and the costs involved with hospital accommodation and theatre fees. A ‘minor’ operation and short hospital stay can cost thousands of dollars, with 1 in 3 hospitalisations costing in excess of $10,000. In some cases the cost of hospitalisation can exceed $200,000 (see ahia.org.au for details). If you are covered by a private health fund for the actual procedure, your insurer will pay for all accommodation and theatre costs as well as contribute to your doctor’s charges, significantly reducing your out of pocket expenses.
Health funds offer various arrangements of hospital cover. Full cover which covers all accommodation and in-hospital medical charges obviously results in higher insurance premiums, however you can reduce your premiums by:
- Agreeing not to be fully covered for some conditions or
- Paying an excess which is billed when you go to hospital. This excess is only a small proportion of the overall cost.
Unless you are planning or expecting to hospital stay (eg planning to have children etc), ChooseWell recommends you take the cover with an excess because it is more likely to save you money long term. All types of health insurance deals ChooseWell recommends abolishes the excess fees when dependent children (under 21) are admitted to hospital.
Extras Cover
Extras cover provides coverage for non-hospital medical services that as a rule are not covered by Medicare. These include: Dental, Optical, Osteo, Chiro, Psych, Physio, Speech Therapy, OT and many more therapies that are growing in need and popularity. Extras cover is a very worthwhile investment as it is highly unlikely you’re never going to need any of the out of hospital medical therapies. To maximize the benefits for your extras cover, examine and compare how the benefits offered by the provider relate to the medical services that you use. Some providers are very generous at their preferred clinics but then only offer small rebates at non preferred clinics. Other providers offer a consistent rebate % based on your level of cover ie 50% for a ‘silver’ level cover and up to 80% for platinum cover.
Combined Cover – Hospital and Extras Together
More than 80% of people who purchase hospital cover also choose to purchase extras cover. Some funds offer the two as separate products while others package them together into the one coverage. If the covers are separate this means you can mix and match your providers to find the best deal affordable for you.
Waiting Periods
An insurance waiting period refers the time lapse between when you first take out the health cover policy and when the benefits of that policy are made available to you.
Your waiting period will be credited to you if you switch from one health fund to another of equal or lesser value of benefits, meaning it is available immediately.
However, your new health fund might apply waiting periods on your policy before you are eligible to upgrade to higher benefits.
The Government has established maximum waiting periods that health funds cannot exceed. There are as follows:
- 12 months waiting period for pre-existing conditions
- 12 months waiting period for obstetrics
- 2 month waiting period for psychiatric care, rehabilitation or palliative care (whether or not these are pre-existing conditions or not)
- 2 month waiting period in all other circumstances
There are no Government regulated waiting periods for benefits covered under Extras Cover, however the individual funds usually have wait periods of anywhere between 2 & 12 months. These will not apply to customers who switch funds at an equal or lower value policy. Funds are often willing to waive waiting periods on extras to attract new members, so ask us if we can have waiting periods waived for you.
Lifetime Health Cover
Lifetime Health Cover is a Government initiative to try and encourage people to take out Hospital Cover at a younger age and maintain that cover over their lifetime.
Lifetime cover penalizes people for taking out cover over the age of 31 or 12 months after migrating to Australia if you are a new citizen. The penalty is a 2% loading charge added each year that you are over 30 and decide to take out health insurance. This loading fee expires 10 years after your insurance purchase, providing that continues cover is maintained. Whilst Extras Cover is not required to avoid the loading, if a loading fee is applied it applies to the full cover, including the cost of extras.
If you choose to switch health funds it will not affect your Lifetime Health Cover entitlements as long as the health insurance transfer includes Hospital Cover.
Choosing to be covered by private health insurance before the July 1st date following your 31st birthday allows you the benefit of paying the lowest possible rate for your health cover for as long as you choose to hold it.
The Medicare Levy Surcharge
To encourage people on higher salaries to take out health insurance, the government has introduced a tax surcharge.
If your family income exceeds $154,000 in the financial year, or your individual earnings are more than $77,000 annually and you do not own health insurance, you will have to pay an additional 1% Medicare Levy Surcharge in addition to the 1.5% Medicare Levy that you already pay as part of your taxes. These thresholds are indexed annually.
The Medicare Levy Surcharge works out to be a minimum of $1540 for families and $770 for singles per year in addition tax costs.
Taking out hospital cover means you can avoid this extra charge, and in some cases the hospital cover works out to be cheaper than the additional tax itself.
Federal Government Rebate
Every Australian who is eligible for Medicare is also eligible to receive a minimum of 30% rebate on their health insurance premiums. People aged 65 to 69 are eligible for a 35% rebate, and people over the age of 70 receive 40% rebates.
The rebate percentage is calculated by the age of the oldest person in your family covered by the health insurance policy.
ChooseWell quotes insurance prices assuming that you register for rebates to be taken out of your premiums upfront like the vast majority of insurance holders do.
Otherwise, you can choose to pay the outlined higher rate and then claim your rebate through your tax return or through the Medicare office, which usually takes longer and is a more complicated process.
