Top Tips On Selecting Health Insurance

From how private health insurance works, to how it can help you and your family - get peace of mind with our guide to family health insurance.
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*iSelect does not compare all providers or policies in the market and not all policies or special offers are available at all times, through all channels or in all areas. Not all policies available from our providers are compared by iSelect and due to commercial arrangements and customer circumstances, not all policies compared by iSelect are available to all customers.  Learn more.

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1) Don't pay the taxman more than you have to

Beware: If you're moving up the income scale you could end up losing a percentage of your taxable income through the Medicare Levy Surcharge (MLS).

For example, for the 2014-2015 tax year if you earn over $90,000 per year ($180,000 for couples, families and single parents), you may be exposed to an EXTRA 1% MLS in addition to the 2% Medicare Levy you already pay in tax. For most people this MLS charge applies if you don't have private hospital cover.

The MLS will increase to 1.25% if you earn over $105,000 ($210,000 for couples, families and single parents) and 1.5% if you earn over $140,000 ($280,000 for couples, families and single parents).

For more information about the MLS please contact the Australian Taxation Office, or consult a tax professional.

2) Consider giving your current hospital cover a health check

There are a range of great health covers out there so don't be afraid of switching funds. If you are currently covered for a particular service on your hospital policy you generally will not have to re-serve waiting periods (in most cases) if you change health funds - this is protected by law. People often don't switch funds because they believe they have to re-serve waiting periods.

However, legislation guarantees that if and when you change funds you will not have to re-serve waiting periods for services you were covered for with your previous fund. This is called continuity of cover. Don't forget to review your policy - make sure the premium is competitive. Before switching funds, iSelect recommends that you check to ensure that waiting periods will not need to be re-served.

3) Review your extras

Many consumers opt for hospital cover as well as general treatment (extras) cover for services such as dentistry, physiotherapy, optical, and others. There is a variation between health funds on what services are offered and what you'll get back as rebates, so make sure that your cover satisfies your requirements and the cost of the cover is competitive. The cost of the policy should be weighed up against what you get back in terms of services offered and benefits paid. For example, some policies set their benefit limits (for each service) on a per person basis, whilst others apply family benefit limits on each service.

Top Tips On Selecting Health Insurance

Some general treatment services are bundled together, and a benefit limit applied to the bundle of services. This wide variation makes comparing extras covers difficult for the average consumer, so call an iSelect consultant today on 1800 784 772 and let them make life easier for you.

4) Match the policy to your needs

Your hospital and extras covers don't necessarily need to be with the same health insurer. By using different health insurers for your hospital and general treatment policies (extras) you could be doing yourself a favour and helping to save on your hospital and extras policies. How you may ask? There may be an extras policy with another health fund that pays better rebates for services that are important to you - like orthodontic or optical services, whilst yet other health funds may offer a hospital policy that better suits your current needs.

It is important to review your current policy/s and make sure that the premiums you are paying are competitive and cover you for all the services that you need. This could substantially reduce your out-of-pocket expenses.

5) Use iSelect

iSelect helps take the complexity out of shopping for private health insurance. iSelect has the advantage of being able to compare policy combinations from across its participating funds and to enable you to purchase your chosen policy quickly and simply. iSelect can also help you compare your existing policy against iSelect's participating health funds.

6) Excess or Co-payments, try to avoid paying both when you purchase a Hospital policy

Excesses or Co-payment options vary from health fund to health fund; you generally either pay one or the other.

Ideally try and ensure that you are not purchasing a hospital policy that requires you to pay both, an excess and a co-payment, when you are admitted to hospital. This could end up being a very costly exercise for you.

Excess and co-payments explained:
An excess is an upfront payment that you agree to pay before the health fund benefits are payable. The excess is applied on each admission into hospital for the year, however, it could be capped at a total amount that you would have to pay in a year.

A co-payment could be a lesser amount that is paid each day for the services that you receive in hospital. For example if you were in hospital for 3 days you pay $150 ($50 per day x 3 days). Co-payments could be as high as $250 per day. Like an excess, the co-payment that you pay in a year is generally limited to a set amount. Some hospital policies do not require a co-payment to be paid for day surgery.

7) Part-pay the hospital bill

If you agree to share the cost of your hospital bill by paying an excess or co-payment, you could reduce the cost of your premium. Generally, the higher the excess or co-payment you are willing to pay, the lower the premium. Health funds offer hospital policies with either an excess or co-payments, or sometimes both. There are even some funds that do not charge a co-payment for day surgery.

If you are a single with a taxable income over $90,000 ($180,000^ for couples, families and single parents), you may wish to choose a hospital policy with an excess equal to or less than $500 for singles or $1,000 for couples, families and single
parents. In doing so, you may avoid paying the Medicare Levy Surcharge that requires you to pay 1% in tax if you do not have qualifying hospital cover (with the appropriate excess).

The MLS will increase to 1.25% if you earn over $105,000 ($210,000 for couples, families and single parents) and 1.5% if you earn over $140,000 ($280,000 for couples, families and single parents).

*The threshold amount of $180,000 for couples, families and single parents increases according to the number of dependents there are on your hospital cover. For more information about the surcharge please contact the Australian Taxation Office, or consult a tax professional.


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