Australia has Medicare, so why would you need private health insurance? Here are 10 reasons that can help you figure out whether you really need it.
Australians are lucky enough to be able to rely on Medicare, Australia’s universal health care system, to provide free and subsidised medical care. So, with Medicare footing the bill for such a wide range of health-related expenses, why get private health insurance?
While private health insurance isn’t an essential expense for every Australian, it does offer a wide range of important benefits. Let’s look at what they are and why you should consider buying cover.
1. You can avoid lengthy waiting lists
One of the key reasons many Australians take out health insurance is to avoid public hospital waiting lists for elective surgery. According to the Australian Institute of Health & Welfare, some 712,000 patients were admitted to Australian public hospitals for elective surgery in 2015-16. Of those patients, 50% of patients were admitted within 37 days and 90% within 260 days, while about 2.0% of patients had to wait more than a year for their surgery.
Not only that, but elective surgeries on public hospitals are scheduled in order of priority. So, if another patient requires surgery more urgently than you, the date of your operation could be postponed.
Private hospital waiting lists are much shorter than public hospital wait times, with patients usually waiting no longer than a month and often accessing immediate treatment. Private patients also don’t have to worry about having their operation pushed back so someone else can go under the knife first.
2. You can get a private room
Sharing a public hospital room with four or more other patients can be an unpleasant experience. There’s little privacy for you and you’ll need to get used to the idea of sharing space with random strangers receiving treatment for all sorts of conditions.
Of course, if you’ve got health insurance that covers you for the cost of a private room in either a public or private hospital, you won’t have to worry about sharing with strangers.
3. You can choose your own doctor
Choice is another big factor that motivates Aussies to fork out for private health cover. If you’ve got health insurance, you get the freedom to choose your preferred doctor or surgeon to carry out your operation.
This offers much greater peace of mind than the public system, where you’re simply treated by the doctor or surgeon assigned by the hospital.
4. You can reduce the risk of an adverse event
What the health is an adverse event? It’s any incident that results in harm to a patient, so the term could refer to anything from a few stitches coming loose to an error in medication, infections - or even death.
And the statistics show that adverse events are more likely to happen in a public hospital than in a private hospital. In 2015-2016, 6.6% of public hospital patients experienced an adverse event, compared to only 3.8% of private hospital patients. That might not seem like a huge difference, but it’s still an important variation.
And if you’re preparing to go under the knife, don’t you want to reduce the chance of something going wrong as much as possible?
5. You can get help to pay for cover
Worried about the cost of health insurance? It might not be as expensive as you think thanks to the Private Health Insurance Rebate. The rebate allows you to save up to almost 35% off the cost of your health insurance premiums, with the exact size of the discount calculated based on your income, your age and whether you're single or a family.
You can claim the rebate as an upfront discount or a refundable tax offset, making the cost of cover a little easier on your hip pocket.
6. You could avoid the Medicare Levy Surcharge
Do you earn more than $90,000 a year? If so, taking out private hospital cover could reduce your tax bill.
This is thanks to a tax known as the Medicare Levy Surcharge (MLS), which is basically designed to encourage high-income earners to buy private health insurance and reduce the burden on the public system. Depending on how much you earn, the MLS is calculated at a rate of between 1% and 1.5% of your income.
How can you avoid it? Well, unless you’re willing to take a pay cut and drop below the $90,000 income threshold, the easiest way to avoid paying extra to the tax man is to take out an appropriate level of private health insurance.
The policy must:
- Provide private patient hospital cover
- Have a maximum yearly excess of $500 for singles and $1,000 for couples and families
- Be purchased from a registered Australian health fund
- Be maintained for the entire financial year
7. You can enjoy long-term savings thanks to Lifetime Health Cover
As the end of financial year approaches every 12 months, Australian consumers are constantly bombarded with ads urging us to take out private health insurance before June 30. Why the big rush to get cover before the calendar ticks over to July?
This is all to do with an Australian Government scheme called Lifetime Health Cover (LHC), which is another initiative designed to encourage more people to take out health insurance. How it works is simple: if you don’t take out private hospital cover before July 1 following your 31st birthday, you’ll then pay extra for insurance if you decide to take out cover later in life.
How much extra? A 2% premium loading applies for every year you did not have cover in place once you were over 30 years of age, up to a maximum loading of 70%. As an example, if you didn’t take out private hospital cover until 45 years of age, you’d have to pay 30% more for cover than someone who took out a policy before turning 30.
While this loading only applies to your premiums each year for a maximum of 10 years, it’s easy to avoid the extra expense by taking out cover earlier in life.
8. You could get better cover for pregnancy
There are myriad questions and concerns running through the minds of expectant parents, but one of the most common would have to be: Do I need private health insurance for pregnancy?
The answer: while you don’t actually need health insurance to have a baby, there are a few good reasons why you might want it. The biggest benefit of going private is that you get to choose the obstetrician who treats you throughout your pregnancy and also attends the birth. This continuity of care is an important selling point for many parents, while there’s also a better chance of getting your own room in a private rather than public hospital
However, make sure you’re aware that most policies have a 12-month waiting period when you can’t claim any pregnancy-related expenses. So if you’re thinking of starting a family soon, make sure you upgrade your cover well in advance.
9. You can get ambulance cover
There’s a widespread misconception that the cost of an ambulance ride in Australia is covered by Medicare. Unfortunately, it ain’t.
If you live in Queensland or Tasmania, ambulance services are free. For everyone else, the cost of ambulance transport needs to be paid for out of your own pocket – and it’s not cheap.
Take NSW, for example, where the ambulance service charges a fee of $372 plus $3.35 per kilometre travelled, or try Ambulance Victoria’s flat $1,204 (metropolitan) or $1,776 (regional and rural) emergency road transport fee on for size. That’s a lot of money in anyone’s language.
Happily, many health insurers include ambulance cover with their hospital or extras policies.
10. You can get value for money from an extras policy
Medicare covers a wide range of medical costs for Australian residents, but there are plenty of other health care services that it simply does not include. Visits to the dentist, optometrist, physiotherapist, chiropractor and a range of other allied health practitioners can be quite expensive, especially if you’re raising a family, and they’re not covered by Medicare benefits.
This is where extras cover from a private health fund comes in handy. It covers an extensive range of general treatments and can also pay benefits for things like natural therapies, remedial massage and even weight loss programs.
Extras cover can be purchased as an add-on to hospital cover or as a standalone policy, and it’s a simple way to save on your out-of-pocket health care expenses.
...And it might simply be the best choice for you
If you’re young, fit and on a tight budget, health insurance might not be high on your list of priorities. But considering the factors above, getting health insurance might just be plain old common sense.