HEALTH INSURANCE
Health insurance with no waiting period
By Sean Callery
Why get health insurance in Australia?
Here are some of the main benefits of private health insurance in Australia.
Skip hospital wait lists
Having private health insurance means you may receive treatment faster than you would through the private system. Public waiting lists on certain treatments can be very long and private health insurance can mean being seen sooner.
Choice and flexibility
If you have private health insurance you may be able to choose where to be treated and by which doctor. You also have a lot of choice when it comes to tailoring you cover to suit you needs, particularly on Extras cover.
Avoid paying extra tax
Depending on your income, if you don’t have an adequate level of Hospital cover you won’t need to pay the Medicare Levy Surcharge. There are also government incentives designed to encourage people to take out private health cover when they are younger.
Private health insurance rebate
Depending on your income level, you may receive a rebate from the government to lower the cost of your private health insurance. This will either come in the form of a discount on your premiums or as a tax offset.
Private health insurance versus medicare
Private health isurance
- Your choice of doctor when you go to hospital
- Covers certain out-of-hospital services, like dental, through Extras cover
- Some policies cover ambulance services
- May mean you avoid the Medicare Levy Surcharge
Medicare
- Covers hospital treatments but you can't choose your doctor
- Does not cover out-of-hospital services, like dental
- Ambulance services not covered (but are paid by for the government in some states and territories)
- You may need to pay the Medicare Levy Surcharge to help fund the system
Health insurance basics everyone should know
1
Waiting periods
Health insurance policies usually have waiting periods, which is the time you must wait before you can claim on certain services. These can range from two months for basic hospital treatment to 12 months for pre-existing conditions or pregnancy-related services. However, there are some scenarios where you may be able to get health insurance with no waiting period.
2
Gap payments
Even with private health insurance, you might still have out-of-pocket costs, also known as ‘the gap’. This happens when the doctor’s or hospital’s fees are higher than what Medicare and your health fund will pay. How much the gap payment will be depends on the type of treatment, which hospital you visit and other factors.
3
Excess
An excess is the amount health insurance policyholders need to pay upfront when admitted to hospital, as a contribution towards the cost of treatment. You may be able to opt for a higher excess to lower your health insurance premiums.
4
Lifetime Health Cover (LHC) Loading
This is a government initiative encouraging Australians to take out private hospital cover before they turn 31. If you join after that age, you'll pay an extra 2% on your premium for every year you're over 30, up to a maximum of 70%.
5
Medicare Levy Surcharge (MLS)
Higher-income earners who do not have private hospital cover may need to pay the Medicare Levy Surcharge. This is an additional tax designed to encourage people to take out private insurance and reduce pressure on the public health system.
6
Community rating
In Australia, health insurance premiums are not determined by your health status or risk. Under community rating, everyone pays the same premium for the same policy, regardless of age, gender, or health conditions. This is different to other kinds of cover (like car insurance) where insurers can take account of factors like the policyholders age and past claims.
How to save on health insurance?
There are plenty of advantages to having private health insurance, but the major drawback is the cost. Here are some ways you may be able to reduce the cost of your health insurance:
Regularly compare policies
Switching health insurers is a very simple process, so don’t be afraid to regularly review what you’re paying and change if you can find better value elsewhere. Comparing health insurance once at least once a year is a good way to ensure you’re not overpaying.
Look for discounts
When you’re comparing providers, look out for health insurance offers and discounts. Some providers offer 6 or eight weeks free on new eligible policies, which can be equal to hundreds of dollars in saved premiums.
Get coverage while you’re young
There are various incentives (and penalties) in place to encourage people to take out health insurance while they are young. For example, if you have not taken out hospital cover from the year you turn 31, but then decide to take it out later on, you will pay a 2% loading on top of your premium for every year you are aged over 30.
Pay your premiums before they increase
Health insurers typically increase their premiums once a year on 1 April. However, it may be possible to pre-pay your premiums for the remainder of the year at the current level. This would mean avoiding the premium increase for that year. Just be sure you won’t need to cancel your policy after you have forked out for the premiums in advance.
Only pay for what you need
Health insurance policies are sold in tiers to reflect the level of coverage available under the policy. Take a look at what’s covered under each tier and match your level of cover to what you actually need (or are likely to need in the future). Consider reducing your cover level if you are overpaying for cover you don’t need.
Increase your excess
On Hospital cover, you may be able to choose a higher level of excess on your policy. This will mean a higher up-front cost if you are admitted to hospital and make a claim, but your premiums should be lower.
