Ways to decide to get or keep Private Health Insurance
COVID has made us appreciate how important it is to care for our health. At the start of the lockdown, restrictions meant we had to cancel our checkups. Now, we are making bookings for our vaccine injections. It is also that time of year when the price of Private Health Insurance increases. You are probably wondering how the latest changes will affect you and your family.
Private Health Insurance price increase
There are 13.75 million Australians with Private Health Insurance. Prices have increased for everyone from 1 April, with an average family policy increasing by $127 a year, and $59 for singles.
Although this is the smallest increase in 20 years, it follows a 2.92 percent rise that hit in October last year (delayed from April 2020 due to COVID) and a 3.25 percent hike in 2019.
It is a little known fact that the cost of Private Health Insurance will increase even more for many people because the government is again reducing the rebate it offers. And the government plans to continue to reduce the rebate in the coming years.
Recently, I did a segment on Channel 7’s The Morning Show about Private Health Insurance.
Check out the segment to learn more about the Private Health Insurance price increase and ways to decide if it is worth getting or keeping a policy.
Raise Your Voice - Vote Below!
Why have Private Health Insurance
We are fortunate that we live in a country where you will be ok if something happens and you do not have Private Health Insurance. Private Health coverage gives you flexibility and choice and also potentially covers some expenses.
Medicare covers 100 percent of the cost when a patient is admitted to a Public Hospital as a public patient. With the public system, the hospital choses the doctor. Average wait times in the Public Hospital system can be 125 days for the removal of your tonsil, 17 days for coronary artery bypass surgery, 119 hip replacement, 209 knee replacement surgery.
Accessing the Private Health system will waive these wait times. With Private Health, you get to choose the doctor which means sometimes a procedure has expenses that aren’t covered. This happens when the medical professional charges a fee over the standard costs.
If you want to have instant access to a procedure, Private Health Insurance is the way to go.
Private Health Insurance can likewise help pay for medical care costs that Medicare doesn't cover like physiotherapy. How much and what it covers depends on your policy.
Is Private Health Insurance worth the cost
There is no clear yes or no answer for whether you need private health insurance. It really depends on your circumstances, your lifestyle, needs, goals and objectives, like most of your financial profile.
One reason to have it is to avoid Medicare Levy Surcharge. If you are earning over $90,000 per year for singles and $140,000 for couples, you should have Private Health Insurance because the government is charging you 1 percent levy in your tax return anyway which is $900. And you get a policy for an amount less than the cost of the levy. However, you need to have Hospital Cover; Extras cover is insufficient.
Things you might not know about Private Health Cover
- There is a 2% loading (LHC) on premiums each year after your 31st birthday, if you don't have hospital cover.
- Increased premiums due to LHC loading stop after 10 years of continuous hospital cover.
- A fund can’t increase the cost of its premiums without approval from the Minister of Health.
- It’s now popular for health cover to try and ‘reward’ you for being with them eg. discounts, vouchers.
Private Health Insurance for pregnancy
It is worth noting that 85 percent of babies in Australia are born in the Public Hospital system. However, if you would prefer to go with the Private Hospital system, you don’t need to take out family cover. Each partner can have an individual policy with only the mother having pregnancy cover for the birth to be covered. This way there will only be additional premiums on one policy, not both, so don’t be afraid to have separate policies.
Also, if you’re planning to have children in a Private Hospital, you need to have a Private Health Insurance with pregnancy cover for 12 months prior.
Who decides on the price increases
Some funds will have bigger price hikes than others. The Government approves price increases for Private Health Insurance. A fund can’t increase the cost of its premiums without approval from the Minister of Health.
The Private Health Insurance Act 2007 requires health insurers to submit details of proposed premium increases to the Minister for Health before they can increase premiums on any of their policies.
In their submissions, insurers have to provide detailed financial information as well as cost and benefit projections to justify any increases.
Some funds have average increases up to 5.47 percent for this price increase. The average increase 2.74 percent.
Most people only review their Private Health cover every 5 years and they are losing out. So now is definitely a great time to review your private health cover. You’ll waste money if you leave it for another year.
Perks and Policies
There can be some good perks if we look at what we're paying for. Extras and hospital coverage is standard now. It’s now popular for health cover to try an ‘reward’ you for being with them in other ways.
Such as a discount on the gym you attend, as an example. Up to 50 percent off the gym membership fees. Another example are frequent flyer points and shopping vouchers. There is a fund that offers you $5 voucher if you achieve at least 7,500 steps three times per week for the year.
With rewards and discounts, you may only be paying $200 - $600 per year for Private Health Insurance and this might be a luxury you can afford.
The thing about signing up to these policies that the perks they offer can change at any time. So if you do sign up to a provider for the extra benefits, be prepared to review your policy each year to make sure you are getting the best deals.
Key Considerations for Private Health Insurance
Ask yourself the following:
- Am I under 31 years old?
- Do I earn over or under $90,000 in income?
- Does my hospital policy cover me for the major things I’m worried about?
- Can I self-insure my extras?
- Can my policy offer me benefits above just my hospital and extras cover?
- Do I want to have a baby in a Private Hospital?
When something goes wrong
If you have a Private Health Insurance and encountered any problem, report your concern right away.
Step 1: Compile all the documents and contracts you have relating to your insurance and medical expenses and tests.
Step 2: Use Handle My Complaint to file a complaint in writing, give us a full account of what happened, and copies of the contract. We‘ll send you confirmation of your complaint and if you have an account with us, we’ll keep a copy of this complaint for future reference.
If you’ve problems with your Private Health insurance, you can lodge a complaint with us. With the details you provide, we’ll lodge your complaint with your provider.
If you’re not happy with the response from your Private Health Insurer, we will send your complaint to the Private Health Ombudsman for their review.
If you have Private Health Insurance and have been unhappy with the experience and want to lodge a complaint, we will help you file your complaint correctly. We are here to help you handle it. Just say the magic words 'Help Me Handle It'.