Private Health Insurance – should you have it?
Increasingly, Australians are choosing to have private health cover. If you don’t, but are wondering if you should, here’s a quick rundown of 8 key benefits.
1. The gap. Private health insurance helps members pay hospital and medical costs not covered by Medicare, dramatically reducing – but not always eliminating – the ‘gap’.
This is the difference between the amount paid by the patient, especially for fees charged by doctors, surgeons, anaesthetists or other specialists for elective surgery, and the amount reimbursed (by Medicare and the insurer).
2. ‘Elective’ surgery. Surgery for conditions not considered life threatening are considered to be ‘elective’ even if they are painful and debilitating.
Many people would be surprised to hear that the following procedures are considered ‘elective’:
– coronary artery bypasses
– hip replacements
– total knee replacements
– cataract extraction.
Public patient waiting periods for elective surgery are often measured in months – sometimes many months, and occasionally over 12 months. Even worse, as operations are scheduled in order of priority, patients finally allocated a date for an operation can be told that it has been pushed back for another patient whose situation is more critical. The average waiting period for a knee replacement is six months, and for many patients the wait is closer to a year.
Waiting periods for private patients are usually substantially less (or even zero). Private patients also have a ‘locked in date’, meaning that their operation will not be pushed back due to another patient’s needs. It should be noted, however, that there is a great deal of variance from policy to policy (and even hospital to hospital) about what elective surgery is covered and how much of ‘the gap’ is covered.
3. Dental. Basic dental care such as check-ups and cleans are not covered by Medicare unless you are a teen or have a chronic condition affecting your general health.
If you are uninsured and have a dental problem the only alternative to paying in full, is a state run public dental clinic, some of which are limited to pension or concession card holders, and most of which involve very long waiting periods.
Over half a million Australians are estimated to be on a dental waiting list and the average waiting period is over two years.
4. Choice. Members can choose their preferred doctor / specialist / surgeon.
5. Little ‘luxuries’. Private cover often contributes to the extra cost of single rooms, private bathrooms and sometimes even TVs.
6. Extras. These vary from policy to policy but usually include dental (note above), optometry, physiotherapy, remedial massage, chiropractic, and sometimes even gym memberships and some alternative therapies.
7. Avoiding the Medicare Levy Surcharge. This is charged to singles earning over $90,000 per year or couples earning over $180,000 per year, and starts at 1% of total annual income including fringe benefits and superannuation contributions (increasing to 1.5%). As 1% of $90,000 is $900, which is enough for basic hospital cover, the choice for those on higher incomes is clear.
8. Life Time Health Cover Loading. If you’re approaching 30 years of age, give special thought to taking out private cover. Under Lifetime Health Loading, funds are required to levy a loading on top of the basic premium, based on the age at which a member first purchases cover.
The loading adds 2 per cent for each year the member’s age is above 30 yrs when they first take out hospital cover. The loading is applied for the first 10 years of membership. For example, someone who first takes out cover at age 40 will pay an additional 20 per cent (40yrs-30yrs = 10yrs x 2% = 20%) premium for 10 years.
If you are considering taking out private health cover, have a look at choosing the right level of health cover.
MORE AND MORE OF US ARE GOING PRIVATE
Back in 1999, about a third of Australians had private health insurance, but the numbers have steadily increased since then.
Now, just under half of us have private hospital cover (47.3% according to the latest figures*) and just over half have private extras, or ‘ancillary’ cover (55.6%).
* As of March 2015 according to the Private Health Insurance Administration Council.No Fields Found.
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