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About Private Health Insurance
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What do I need to know about Private Health Insurance
Choosing isn't difficult at Moneytime
Private Health Insurance offers peace of mind for health issues that come up either as a surprise, like breaking a leg while skiing, or something you expect, like renewing your contact lenses or visiting the dentist.
Health Funds give you the ability to choose the level of health insurance cover most relevant to your age, lifestyle and circumstances, to cover you for almost any health incident. There are also financial benefits to taking out Private Health Insurance, as holding hospital cover (with an excess no greater than $500 for an individual and $1000 for a couple or family) exempts a taxpayer from the Medicare Levy Surcharge.
So how do you choose which cover to take out from amongst the many health insurance policies in the market?
Moneytime makes it easy. Simply choose the features you want from your private health insurance, and our fast, efficient comparison engine does the rest. Sifting through the available options from a range of leading Health Funds, we give you all the information you need to find the health insurance plan that's right for you.
Private Health Insurance, and why you need it
All Australians eligible for Medicare receive free public health care, including treatment as a public patient in a public hospital. This means you will be treated by a doctor selected by the hospital and subject to their availability. If your situation is not life-threatening, you may also have to wait longer periods before treatment is available. According to the Department of Health and Ageing, 15% of people are not admitted for surgery within a 'clinically appropriate time frame', and waiting times for elective surgery have increased even further. Hospital admissions continue to increase (4% in the past year), but public hospital beds have only increased at a rate of 0.4% every year for the past decade (Australian Institute of Health and Welfare Report 2006-2007).
The alternative is private health care, where you can be treated in a private hospital with your choice of doctor and greater flexibility for scheduling surgery. However, the cost of private health care can be extremely expensive, and that's where the Health Funds come in. By taking out Private Health Insurance, you can ensure the best medical protection without being slugged with huge bills because your Health Fund will take care of them for you. You can choose a health insurance plan that suits your lifestyle and budget, and even add Extras (non-Medicare features) like dental work, physiotherapy, optical and remedial massage for complete health care.
What the Health Funds offer
As with any insurance policy, private health insurance offers different levels of cover, each with different premiums. The Health Funds offer many options so you can choose to balance the benefits you receive with the amount you are prepared to pay.
All Health Funds offer options in Hospital Cover, Extras Cover (which are the add-ons that Medicare doesn't get involved in) and a combination of the two.
While there is no way to predict whether or not you will break a while leg skiing, there are other benefits that you can more predictably claim - such as pregnancy services, orthodontics and so on. Most importantly, private health insurance offers peace of mind, so you know you'll be covered for any medical emergencies that may arise.
Most Health Funds also offer some flexibility in the way that the risk is shared with you, through a process called Excess or Co-Payments.
Hospital Cover
Hospital Cover helps with the cost of hospital treatment, treatment by your doctor and associated costs such as accommodation and theatre fees.
Health Funds offer various combinations of hospital cover. Full cover for accommodation and in-hospital medical charges obviously command higher premiums, but you will be able to reduce your premiums by:
agreeing not to be covered for some conditions or
meeting some of the costs for those conditions (Excess or Co-Payments)
Moneytime allows you to look at these variations in health insurance cover by comparing similar products from a number of different leading Health Funds, and to make your choice based on what is important to you. All the information is provided so you can make a wise, informed decision without having to run around for the information yourself.
Extras Cover
Health Funds offer Extras (or Ancillary) cover for a range of non-hospital services such as physiotherapy, optical or dental treatment, as well as therapies such as chiropractic and osteopathy.
Extras Cover is often available separately, or in combination with Hospital Cover. You can choose all the features you know you'll claim for, such as optical, dental and physio, as well as some you want to take advantage of, like remedial massage and naturopathy, to support your Hospital Cover and provide complete health care.
Combined Hospital and Extras
By far the most popular (and most all-round) Private Health Insurance cover available is combined Hospital and Extras, and every Health Fund offers a wide variety of health insurance policies in this category.
When selecting Health Insurance, it makes sense to focus on the features and benefits that are appropriate to your life circumstances and lifestyle.
Choosing the right Private Health Insurance Policy
The right health insurance policy for you is the one that most closely fits your lifestyle and budget. At Moneytime, we make it easy to choose health insurance by allowing you to pick the features you want in your cover. For example, if you are young, single and unattached, you are less likely to be interested in cover for pregnancy, IVF treatment or hip replacement. But you might be keen to keep your options open on chiro, physio and naturopathy.
The Moneytime comparison engine searches out only those health insurance policies which offer full coverage for the features you select. We also show you how you can lower your health insurance premium by choosing a cover with Excess or Co-payment options, where you pay an agreed amount from your own pocket for hospital visits. If the results don't suit you or you change your mind on the selection criteria, you can easily go back and refine your choice to find a better fit.
Excess or Co-payments
Most Health Funds use Excess or Co-payment options to offer the option of lower premiums on some of their health insurance policies. An Excess is the amount of money you agree to pay towards the cost of hospital treatment, regardless of the number of days you are in hospital. For example, if you take out a health insurance policy with a $200 Excess, you agree to pay the first $200 of your hospital bill, whether you're admitted for 1 night or 10 nights. Some policies charge the Excess for your first admission to hospital only, while others charge the Excess every time you are admitted.
A Co-payment, on the other hand, is a sum of money you agree to pay for every day that you spend in hospital up to an agreed amount. For example, if you have a Co-payment amount of $50x4, you will pay $50 for each night you are in hospital for the first 4 nights only. There is usually an upper limit to the total number of Co-payments you will be required to pay for each stay in hospital, or over the course of a year.
Excess and Co-payment arrangements differ between Health Funds and health insurance policies, so it is important to read the policy document before selecting your cover. Keep in mind also that the Medicare Levy Surcharge is still applicable if you take out a cover that has an Excess greater than $500 for singles or $1000 for couples and families.
Waiting Periods
A Waiting Period is the time between taking out a health insurance policy, and when the benefits of that policy actually become available to you.
Normally there will be no Waiting Period before you are eligible for hospital or medical treatment as the result of an accident that happens after you join the Health Fund. Also, you will not have to serve additional Waiting Periods if you transfer from one Health Fund to another with the same or a lower level of benefits, as any Waiting Periods you have already served are credited to you. However, the Health Fund to which you transfer may require Waiting Periods to be served before you are eligible for any new or higher benefits on your new health insurance policy.
The Government has established maximum Waiting Periods that Health Funds are able to impose as a guideline. These are:
12 months for obstetric cases
12 months for pre-existing ailments
2 months for psychiatric care, rehabilitation or palliative care (whether or not these are pre-existing conditions)
2 months in all other circumstances
There are no Government regulations covering Waiting Periods for benefits under Extras Cover.
You should always make sure you clearly understand the Waiting Periods associated with the health insurance plan you take out.
Federal Government Rebate
All Australians eligible for Medicare receive a minimum 30% rebate on their health insurance. People aged between 65 to 69 receive 35%, while those over 70 receive 40%.
The level of rebate is determined by the age of the oldest member covered by the health insurance policy, and is applied to the total premium paid.
There are three ways to receive the rebate:
The most common method is to deduct it from your premium by submitting a registration form supplied by your chosen Health Fund. (Note: Moneytime assumes this method will be used when providing you with health insurance quotes. If you decide to use either of the other methods, the health insurance rate you pay to the Health Fund will be correspondingly greater.)
You may prefer to claim the rebate when completing your tax return, or
As a cash amount from your local Medicare office.
Lifetime Health Cover
Lifetime Health Cover is a Government initiative to encourage people to take out Private Health Insurance at a younger age, and to maintain that cover over their lifetime.
Joining a Health Fund before 1 July following your 31st birthday ensures that you receive the lowest rate for life. Joining after this date attracts an additional 2% loading for each year without hospital cover from the age of 30, up to a limit of 70%. For example, if you take out hospital cover at 35 years of age, you will pay a 10% loading on the premium quoted by Moneytime. People who have held Private Health Insurance continuously for ten years are now rewarded by having their loading removed altogether.
Transferring between Health Funds will not affect your Lifetime Health Cover entitlements so long as the health insurance transfer includes Hospital Cover.
The Medicare Levy Surcharge
Individuals earning over $50,000 and couples or families (including single parent families) with a combined income greater than $100,000 who do not have Private Hospital Insurance are required to pay an additional 1% Medicare Levy Surcharge, on top of the 1.5% Medicare Levy that most people pay as part of their taxes. These thresholds are expected to increase to $100,000 for singles and $150,000 for couples and families, but this change has not yet been approved by the Senate as at July 2008. This section will be updated as soon as any changes are made.
The Medicare Levy Surcharge works out to be at least $500 for singles, and $1,000 for couples/families. This can be avoided by taking out Hospital Cover with an excess no greater than $500 for individuals and $1000 for couples. You may choose this Hospital Cover as part or your Private Health Insurance package or simply choose a basic hospital cover on its own, which, in some cases, can be even cheaper than the cost of the Medicare Levy Surcharge.
More information
For more information on health insurance, go to the Private Health Insurance: Information page.
Moneytime has also put together a glossary to help you understand any health insurance technical jargon.
To read the latest information on Moneytime or Health Insurance in general, go to the Private Health Insurance: Latest News page.