Let’s be honest; health insurance is one of those things we know we should have, but the thought of shifting through funds and policies makes us cringe. It’s time consuming, fund’s use language that’s confusing and working out exactly what you need and want in a policy can be difficult.
We’re here to make life a little easier for you with a beginner’s guide to health insurance. Read on and we’ll fill in you on what you need to know and what you should consider when looking for the cover right for you and your family.
The types of health cover available to you
In Australia, there are 35 health funds offering over 65,000 different policies. That’s a lot of opportunities to get confused! Of those policies, there are five types of health cover available to you:
Take out hospital cover and you’ll be protected in the event you need hospital care. It covers the cost for a wide range of procedures, ambulance treatment and transport expenses and allows you to bypass many of the lengthy waiting lists for treatment. Hospital cover gives you the opportunity to choose your own doctor or specialist and covers the costs of your accommodation in a private or public hospital.
Extras lets you customise your health insurance policy by allowing you to claim benefits for medical treatment received outside of a hospital. These are services that aren’t covered by Medicare. Depending on the level of extras cover, you’ll be able to claim on general dental, chiropractic, physiotherapy, optical, travel vaccinations, orthodontics and psychology.
Combined cover is simply combining two of the main types of health insurance in the one policy: hospital cover and extras cover. This offers people the convenience of having all their health cover in one package and can, in some cases, provide discounts.
There are two types of dental cover: general dental and major dental. General dental will cover the basic treatments such as cleaning, removing plaque, x-rays and small fillings. Major dental includes orthodontics, crowns, bridges, dentures and the removal of wisdom teeth.
Ambulance cover can be offered as part of the hospitals or extras cover or a standalone policy. Depending on your policy and the state you live in, hospital cover will protect you in emergency situations only, or for ambulance cover under any circumstance.
Reasons why you should consider health insurance
Taking out health insurance gives you the peace of mind you’re financially covered in the event you need medical assistance. You can be rest assured you or your loved one can avoid expensive out-of-pocket costs when receiving medical care.
Depending on your policy, health insurance can offer you the following benefits:
- You’ll experience reduced waiting times for medical treatments;
- You can choose the preferred hospital to receive treatment;
- You’ll be able select a doctor or specialist;
- You’ll receive cover for out-of-hospital medical services;
- You can avoid Government tax penalties.
Government schemes and how they affect you
The Australian Government encourages people who can afford it, to take out private health insurance. This is in an effort to reduce the burden of Medicare and the public health system. Three Government schemes have been introduced that may prompt you to get health cover:
Lifetime Health Cover Loading
To encourage people to maintain their health insurance from a young age, the Government has introduced a Lifetime Health Cover Loading. If you don’t take out health insurance before 30th June following your 31st birthday, your premiums will increase by 2% every year you’re without cover.
To be exempt from the Lifetime Health Cover Loading scheme, all you need to do is take out a policy that includes hospital cover.
Medicare Levy Surcharge
Depending on your income, without adequate health insurance you could be charged an additional tax ranging between 1-1.5%. Singles earning less than $90,000 and families less than $180,000 fall under the income threshold and are exempt from the surcharge.
Private Health Insurance Rebate
Take out private health insurance and you may be able to claim the Private Health Insurance Rebate to help cover the cost of your premium. The rebate applies to hospital, extras, ambulance or a combined policy, and is income tested and dependant on your age and relationship status.
Deciding on the type of health insurance you need
Deciding on the best type of health insurance for your needs depends on how much you’re willing to spend on cover and what type of medical services and treatments you want to be protected for.
For example, you may decide that cover for hospital treatments would suffice or you may want cover for out-of-pocket expenses for services such as dental and physio. This would mean an extra cover would be more suitable. For those who would like to enjoy the benefits of having both forms of cover, a combined policy is the one for you.
Once you’ve decided on the type of cover, each policy is available in different levels or forms:
There are three tiers to hospital cover which determines the amount of medical services you can claim and how much you pay for your policy:
- Top – covers you as a private patient in a private hospital for all services where a Medicare benefit is paid. You may also be able to claim for specialised treatment such as pregnancy or dialysis.
- Medium – covers you for a range of hospital treatments as a private patient in a private hospital. Generally, services such as pregnancy are excluded from this cover.
- Basic – as the name suggests, this covers you for just the essentials such as injury and ambulance services. Typically, with basic cover you’ll be treated as a private patient in a public hospital.
There are three tiers to extras cover which determines what services outside a hospital are covered and how much you pay for your policy:
- Comprehensive – covers you for a wide variety of medical services such as major dental, optical and psychology. You’ll also benefit from higher annual limits.
- Medium – covers you from a wide range of medical services, but excludes some of the more specialised treatments.
- Basic – covers you for the minimum including general dental, physiotherapy and optical. This is best suited for those who are young, fit and healthy.
Combined cover (hospital and extras) is usually offered in two forms:
- Package – this is a fixed cover with services selected by the health care fund. Often, they design packages to suit certain age groups or lifestyles, such as family cover.
- Mix and match – this is a flexible form of combined cover which enables you to choose the level of hospital or extras cover you need. Choose to combine covers of the same level such medium hospital and extras or mix it up, like a top hospital cover with basic extras.
How you can save money on health insurance?
Once you’ve decided on the type of health insurance you need, we’re sure you’re going to look for ways to save on your premiums. There are a few ways you can potentially save money on your health insurance:
- Shop around and compare health insurance policies with different providers.
- Consider going with a not-for-profit health fund who may offer greater benefits to its members.
- Avoid paying for additional services you don’t need.
- Consider opting for or increasing your excess to reduce your annual costs.
- Check out the fund’s payment methods and any discounts for paying annually or by direct debit.
- Take out your cover early to avoid the Lifetime Health Cover Loading and Medicare Levy Surcharge.
This article was written by the team at Members Own Health Fund, an organisation created in 2014 by 17 not-for-profit and mutual health funds to make the Australian public aware there is an alternative to the for-profit health funds.