How To Know If You Need Health Insurance

In this article we’ll explore 9 reasons why taking out a health insurance policy may be right for you and your family. As you’ll see, it all comes down to your individual circumstances and life stage. So let’s dive in and see why, according to the Australian Prudential Regulation Authority’s (APRA) 2018 quarterly private health insurance statistics report, 11 million Australians¹ have private health cover, and why it might suit you.

1. Avoiding the Lifetime Health Cover loading

Most Australian taxpayers pay a Medicare Levy at tax time (2% of your taxable income). But if you don’t have private hospital cover with a registered health fund, and you earn over a certain amount, you might get slugged with a Medicare Levy Surcharge (MLS) - up to an extra 1.5% of your taxable income². So if you fall into the MLS higher income thresholds, and are looking to avoid this tax, then taking out private hospital cover may be right for you.

2. Peace of mind

It’s important to know that you’re covered in the event of an unforeseen health risk in relation to you or your family. Also knowing you have more control over the hospitals you can go to, and the specialists who can treat you, may also give you further peace of mind. Plus, there’s the added relaxation of knowing your health insurance may ease much of the financial strain of hospital and specialist bills – depending on your policy.

3. You need dental work

Unfortunately, Medicare doesn’t cover the cost of most dental care. If you, or someone in your family, needs dental or orthodontic work, it might be in your best interest to pay for extras (and design your package to maximise dental benefits). Dental work can be incredibly expensive, so if you’re someone who may require dental work in the future, it may be a good idea to consider your private health insurance options.

4. You want to jump the queue

The latest figures from the Australian Institute of Health and Welfare (AIHW)³, show the average public hospital waiting time for elective surgery is 38 days. But some surgeries have a wait time of more than a year. In most cases, with private health cover you’ll be able to dramatically reduce your wait. This could make the difference between dealing with a painful and frustrating health problem for a long time, or a much shorter time.

5. You don’t want a loading

Have you heard about the Lifetime Health Cover loading (LHC)? It’s a government initiative designed to encourage younger people to take out, and maintain, private health insurance. Here’s how it works.

You’ll incur a 2% loading on your health insurance premiums for every year you don’t have private hospital cover before July 1st following your 31st Birthday. The loading goes up 2% every year and maxes out at 70%. Here’s an example. If you decide to get private hospital cover when you’re 50, you’ll pay an extra 40%. It’s important to note that the loading will cease after 10 years of continuous cover.

Further, the LHC loading only applies to private hospital cover, not extras. It’s important to not just consider what your needs are now, but what your needs will be in the future. For instance, if you’re 30 but don’t need health cover, what happens when you’re 38 and decide the time is right – are you going to be in a financial situation where you can afford to pay a 16% loading on your premiums?

6. You’re starting a family

If you want to start a family, private maternity hospital and assisted reproductive technologies are added extras on many policies. If you do have to change your cover, it’s important to note that you need to have the pregnancy policy for at least a year before the baby is born⁴. So, it’s not something you can add on after discovering you’re pregnant. You may decide later on to go public and avoid out of pocket costs, but health insurance gives you increased flexibility.

7. You want to kickstart a healthy lifestyle

Extras cover unlocks a range of services⁵ that can improve your health, as well as fix something when it goes wrong. Depending on your policy and provider, you could get rebates on a gym membership, quit smoking programs, or physiotherapy.

8. You’re not prepared to pay hefty hospital and specialist bills

Without health insurance, you need a Plan B if an unexpected health issue arises. If you don’t have the backing of a nest egg (that you’re willing to risk on a hospital bill), insurance may be the smarter choice for your budget.

9. You want a private room

There’s no 100% guarantee of a private room (even with health insurance). However, your odds of getting one increase dramatically if you have private health insurance, versus if you were being treated in the public system. If privacy is important to you, insurance could help you avoid a shared hospital ward.

Do pensioners need health insurance?

Coverage gives you choices, so you can stay independent and in control of your health as you get older. The good news is as you age you get a higher insurance rebate from the government. It goes up around 4% when you turn 65, and again at 70⁶.

Ready to design your own coverage?

Build your own package of extras focused on what’s important to you. Ideally, look for a policy where you can choose your extras coverage categories to suit you or your family’s ages and stages of life. Start comparing health policies online with iSelect today, or give us a call on 1800 784 772.

Sources:
1. https://www.apra.gov.au/sites/default/files/documents/1808-qphis-20180630.pdf
2. https://www.privatehealth.gov.au/healthinsurance/incentivessurcharges/mls.htm
3. https://www.aihw.gov.au/getmedia/d7f4d698-6e92-4afe-9b16-7a244788b073/aihw-aus-221-chapter-7-11.pdf.aspx
4.https://www.privatehealth.gov.au/healthinsurance/howitworks/waitingperiods.htm#pregnancy
5. https://www.privatehealth.gov.au/healthinsurance/howitworks/
6. http://www.health.gov.au/internet/main/publishing.nsf/Content/fairer-faq