Do I need Private Health Insurance?
All Australian residents have access to Medicare, so why do half the population also decide to take out private health insurance? And what do they get out of it? The biggest users of private health insurance hospital benefits are 60- to 79-year-olds. Women in their 20s and 30s also have a higher claim rate for maternity care.
Payments for extras is spread across all age groups, with the biggest component going to dental care, followed by optical, physiotherapy and chiropractic.
5 Factors that determines the reason for having a Private Health Insurance
1. CHOICE or CONTROL: As per my research, some people purchase private health insurance because they want more control over their health care, choice about the services they use and choice of doctor.
They perceive that private health insurance gives them benefits including shorter wait times, choice of:
- the timing of appointments,
- better quality of care and security or
- “peace of mind”.
For me:
As a private patient, I can … choose my treating specialist and I can say I’m available on these days, rather than sitting on the wait list. Like what I did in Hyde park for an hour I mean, it costs out of pocket, but I am lucky enough to be in a position that cost isn’t a huge barrier for me…how does that work for you?
2. FINANCIAL PENALTIES: Another reason Australians commonly take out private health insurance is to avoid financial penalties. Australia’s tax system encourages high-income earners to take out private health insurance as well as paying the 2% levy to help fund Medicare and the National Disability Insurance Scheme.
If we do not take out private health insurance, we pay a tax penalty called the Medicare Levy Surcharge:
Australian Taxation Office
Simply put it this way, some under-31-year-olds (like myself) take out private health insurance to avoid paying a lifetime health cover loading which takes effect by 1st July following their 31st birthday. It means If you take out private health insurance after you are 30, you’ll pay an extra 2% for every year of delay. You will pay 2% more if you decide on taking one after you’re 31.
What had me to take out private health insurance (aside from the levy threat) was access to subsidies for allied health services (we call it extras) such as visits to the dentists (I did it in two increments this year) and the cost of specs/glasses, and I know this might sound a bit petty but I love me discounts and free movies which are not covered under Medicare. So yeah…
And Finally, as per my research some Australians purchase private health insurance because they perceive that this will reduce the burden on the public system:
They used their health fund, because they wanted to help the hospital out.
Yup “Good on yah mate”
3. HIDDEN COSTS AND SURPRISES
Access may be limited by what is available in the local area, or the ability to pay additional out-of-pocket costs.
My online research indicates that some people don’t know the type of policy they have, and what it covers. They may be paying too much or are not covered for procedures that they do need.
Consumers are also hit hard by the “unknown” or “hidden” costs of private services that are not covered in full by insurance.
I think it goes that some didn’t have the time nor patience to research it properly to know what they’re covered for, hence the confusion and surprise that they’re not even covered and they think they are…
In the news, some even paid around almost A$5,000 for the surgeon and surgeon’s assistant and was only going to get the Medicare cover for that. Then also an anaesthetist … but of course private health insurance won’t cover that either.
Gap payments may include costs for:
the hospital stay,
doctor’s fees,
procedures,
equipment
and prosthesis.
But there is very little information for consumers about the gap they’re expected to pay. So, what my partner and I did was we asked around from companies such as compare insurance etc. both online and over the phone that took us 2 weeks to really determine our health cover.
TIP: The onus is on the patient on us, before we go to hospitals or let’s say extras, to ask our surgeon or the front line if you will to estimate what their charges will be, and then ask our health fund how much is covered with our policy.
There is also an Out-of-pocket costs that varies greatly depending on what hospital you choose, the specialist you see, and your policy and excess, as funds will have different arrangements with different hospitals. So you really need to engage with the provider. Doctors are free to set their own fees and decide on a case-by-case basis whether to use an insurer’s gap cover arrangement.
This means some consumers may feel that they pay more than once for their health care needs and see it as unfair ‘cause if you do or later decide to have a Private Health Insurance 1. you’d pay a Medicare levy, 2. private health insurance, and 3. pay a gap, so you pay three times if you later do decide on having one.
4. PUBLIC OR PRIVATE?
Some people with private health insurance choose not to use it, and instead access public services.
In “the conversation” they conducted various research, and found participants had positive experiences in the public system, particularly in emergency situations, for low-risk procedures or when there were no waiting periods.
Some thought the quality of care in both public and private hospitals was the same, or that choice of doctor or a private room was not certain.
Others, who accessed a public hospital as a private patient, were surprised that they did not even receive a better level of care, that they we’re still in a mixed/ shared room. That they were offered with choices but then again that was the only “available choice” and the level of care was just the same.
Where people are able to choose – and are able to pay the out of pocket expenses – factors such as waiting periods influence their decision to have these procedures done privately.
People waiting for total knee replacements, for example, are likely to experience pain and restricted mobility, which can reduce their quality of life. But the procedure has one of the longest public hospital wait times: a median wait time of 196 days, with 12% of patients waiting over one year.
5. IS IT WORTH IT?
There is what we call a private health insurance rebate – it is an amount the government contributes towards the cost of your private hospital health insurance premiums.
This rebate is income tested, which means your eligibility to receive it depends on your income. If you have a higher income, your rebate entitlement may be reduced, or you may not be entitled to any rebate at all.
Government rebates for private health insurance are now means tested. So, rather than everyone with private health insurance receiving the 30% rebate, the rebate is tiered: Make sure to check the Australian Taxation office to find out more.
The mix of levies, surcharges and rebates can make it difficult for consumers to judge the true cost and value of their private health insurance policy or whether they may be better to rely on the public system to meet their health needs.
I too felt that I pay more than once for my health care needs and see it as unfair ‘cause not only do I pay for private health insurance (a monthly budget), and pay a gap as well … so I pay twice on private health insurance but come with the claims changes my perspective. As a breadwinner having that peace of mind is definitely worth it.
I’ll leave you with a piece of quote, to help you decide that is to “always start with the end in mind”. You may not see it as beneficial as of today, especially for the younger generations, but hey it’s always for the long run.
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