Australia has arguably one of the best public health systems in the world and the Medicare system gives us access to subsidised health care.
If you are in an accident and require emergency treatment, you will be taken to the nearest public hospital.
However, as public hospitals struggle to meet the demands of an ageing population, Australians are being encouraged to join private hospital funds and help take some pressure off an overburdened public system.
Currently, close to two thirds of elective surgery in Australia is funded through private health insurance.
So what does private hospital insurance offer, over and above Medicare?
Having hospital cover essentially gives you more control over you and your family’s health care.
For non-urgent, elective surgery, such as a knee reconstruction, waiting lists in the public system are generally very long. You also have no choice when it comes to choosing your health care provider.
With private hospital insurance, not only are you able to choose your specialist, hospital waiting lists are virtually non-existent. Depending on the procedure, surgery can be scheduled when you need it. And a private hospital usually means a private room and possibly more comfortable facilities and services.
There are also financial carrots and sticks for you to purchase private hospital insurance. The government currently offers around 25% rebate on the premium (depending on age and income) and higher income earners must pay the Medicare Levy Surcharge if they do not have private hospital cover for themselves and their dependants.
And the government encourages people to take out private hospital cover earlier in life. Lifetime Health Cover adds 2% loading to the premium for each year after turning 31 that you delay taking out cover. Depending on the fund and level of cover, younger people may be entitled to a discount on their premium if they take out hospital cover before turning 30.
Choosing the Best Policy
Just like any other financial purchase, it’s important to do your homework and shop around.
The private health insurance sector is very competitive and there are thousands of policies on offer.
In April 2019, government reforms took effect which categorise all clinical hospital treatment and set minimum standards of ‘gold, silver, bronze and basic’ cover. Some insurers have already sorted their policies into the new standards – the remainder have until April 2020 to comply.
Understand what you are covered for and what the entitlements are under the policy, to ensure you receive the treatment you want, when you need it. If you have any questions, ask your health insurer directly.
Some key questions you will want to ask an insurer include:
- which hospitals have an agreement with the fund?
- can I choose my own doctor?
- how long are the waiting periods?
- what portion of hospital bills are paid and what out-of-pocket expenses could apply?
- until what age are my children covered?
When choosing an appropriate policy, try to consider your current circumstances and health needs; and review your cover as you move through the different stages of life.
Look at your current state of health and take note of any pre-existing conditions you, your partner and other family members have (or could have) and what type of treatment you might need to accommodate in the future.
This may help narrow down policy choices. For example, if you’re planning to start a family, you will want a policy that covers all aspects of pregnancy and birth.
It may also help to look at your family history for any chronic conditions, such as heart disease or familial cancers (like breast, ovarian or bowel) that you need to take into account?
The gold, silver, bronze and basic tiers give people greater certainty about services covered by each insurer, making it easier to shop around and compare different hospital policies.
If a policy covers a certain category, such as ‘heart and vascular system’ or ‘back, neck and spine’ then it must cover everything described within that category.
Once you’ve chosen your insurer and level of cover, don’t just file your policy away and forget about it. As toddlers turn into teens and medical needs change, it’s important to regularly review your cover to ensure it continues to meet your needs.