Around half the Australian population currently has private health insurance, according to the industry regulator.
It’s definitely not just the old or seriously ill who have health insurance. Plenty of young people either pick it up in their 20s, or start their own policy when they leave their parent’s cover.
Private health insurance is all about choice and control of your health care.
Private hospital insurance gives you more flexibility and choice about how you access treatment, doctors and hospitals, with reduced waiting times for treatment. And ‘extras’ cover provides benefits for the health care that Medicare doesn’t cover. Dental, optical and other general treatment benefits can help to maintain your health and keep you out of hospital.
What does private health insurance give you?
There are a range of benefits associated with private health insurance. Some of the common reasons people choose it include:
- Cover for hospital treatment – private health insurance covers the cost of your hospital stay and many of the fees associated with your procedure or treatment.
- Choice of specialist doctor – as a private patient, you can choose your specialist doctor or surgeon.
- Reduced wait for treatment – skip the lengthy public hospital waiting list and get the treatment you need faster.
- Ambulance cover – emergency ambulance treatment is not covered by Medicare but most private health insurers include comprehensive ambulance cover.
- Extras – ‘extras cover’ provides benefits for everyday general treatment such as dental, optical, alternative therapies (such as remedial massage, naturopathy, chiropractic), hearing aids, physiotherapy, psychology, podiatry, speech therapy, occupational therapy, and audiology. Extras cover can help you to manage your health and keep you well.
- Pregnancy – many women want the ability to choose their obstetrician and to bond with their baby in the comfort of their own room in a private hospital.
- Peace of mind – there are fewer hassles and less worry when you are in control of your treatment and can receive that treatment promptly.
- Benefits for medication – prescription medication that is not available on the PBS (Pharmaceutical Benefits Scheme) can be partially covered by your private extras insurance.
Premiums versus benefits
Just like any insurance, private hospital insurance requires you to pay a premium in return for the insurer covering the cost if you go to hospital . When you need treatment, your insurer will cover your private hospital bills and contribute at least 25% of the Medicare Benefit Schedule (MBS) fee for your doctors’ charges (Medicare pays the other 75%). Your doctor may choose to charge above the MBS, most funds will have gap agreements available which can reduce your out-of-pocket expenses, if your doctor chooses to participate.
The benefit you receive can add up to many tens of thousands of dollars by the time you factor in hospital fees, specialist treatment, anaesthetist attendance, and in-hospital diagnostics, pathology and radiology.
The biggest benefit of private hospital insurance is timely access to the network of private hospitals and medical specialists. Without it, you’ll need to join the lengthy elective surgery waiting list.
With extras cover you can receive benefits for treatment that Medicare doesn’t cover. Your dentist, chiropractor, physiotherapist and other extras service providers can be paid directly by your private health insurer, reducing your out-of-pocket costs.
Other benefits of private health insurance
Some of the other reasons why people choose to take out private hospital insurance include:
- To avoid the Medicare Levy Surcharge – higher income earners must pay additional tax if they don’t have private patient hospital cover for themselves and their family. The Medicare Levy Surcharge is in addition to the Medicare Levy paid by most taxpayers. Depending on your income, it could mean you pay between 1% and 1.5% more tax each year. The Medicare Levy Surcharge kicks in for a single person earning more than $90,000 . If you’re a single earning $136,000, you’ll pay an extra $1,700 in tax if you don’t have private hospital cover.
- Peace of mind – knowing you’re covered means you won’t have to question the cost of important treatment if you need it.
- Lifetime Health Cover – by taking out hospital cover earlier in life and maintaining cover, you will avoid paying more for it later in life. The government’s Lifetime Health Cover loading penalises people who delay purchasing hospital cover beyond age 30. Leave it until age 40 and you’ll pay an additional 20% more in premiums – and the loading is not removed until you’ve held cover for 10 continuous years.
Private health insurance with Defence Health
Defence Health provides great value hospital and extras cover for the families of serving ADF members and the broader Defence community. We’re all for members and not-for-profit. Find out if you’re eligible to join.