Getting kicked off your parents' health insurance policy? Find what to look for when you need to get your own.
If your parents have private health insurance, chances are you've enjoyed the benefits of having cover but not paying for it. Unfortunately, if you've turned 25 (or with some funds 21), you won't be able to be listed as a dependant on your parents' health insurance policy anymore.
So, what do you do? Well, you've got two choices: get private health insurance or don't. There are pros and cons either way but let's look into some of the reasons why you might want to consider private health insurance when you're booted from your family policy.
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Why are you leaving your family policy?
There are several reasons why you might have to leave your parents' health fund and take out cover on your own, including:
- Turning 25. Following your 25th birthday, you will generally be ineligible to be listed as a dependant on your parents’ health insurance policy. The maximum age for student dependants is 25. A student dependant is someone who studies full-time and is financially reliant on their parents. If you’re not a full-time student, the cut-off age for dependants on many policies is 18 or 21 years.
- Entering full-time employment. If you have a full-time job and have started earning a stable income, most health funds will no longer classify you as a dependant. This means it’s time to branch out on your own and find a policy for yourself.
- Graduating. Finished your degree and no longer a full-time student? You will no longer be classified as a student dependant and will need to start shopping around for cover.
- Getting married. Most insurers stipulate that in order to be classified as a dependant, you must be unmarried. So if you and your partner are walking down the aisle, it’s time to start looking for your own private health insurance.
How long can you stay on your parents' policy?
You can see the full list of Australian health funds and how they define dependants in our family health insurance article.
If you've got to get your own cover, don't just get what your parents had
In most cases, your health needs won't be the as your parents, so why would you get the same policy? A 2017 survey conducted by finder.com.au found that 28% of people took out cover with the same fund as their parents, which when you think about it doesn't make sense.
Actually take the time to sit down and work out what you want out of a policy. Hospital cover might not make sense to you at this stage of your life and that's fine. But, maybe you want cover for going to the dentist or visiting the optometrist. It's all about finding the value.
What should you be looking for in a policy if you’re young?
If you’re young and healthy with no major medical concerns, you need to choose a policy that provides cover for the services you may need but excludes those that you don’t.
For example, it’s pretty unlikely you’ll need cover for a hip replacement, so you probably won't need a high-level hospital cover. However, you might play sport and go to the physio every couple of weeks, so you might want to look at getting comprehensive extras. It's all about finding value and making sure you're getting what you paid for.
One of the stats people love to bandy about is that young people are more likely to end up in the emergency room than other groups, which is true. This age group consistently represents almost 14% of those heading into the emergency room each year, so making sure you've got ambulance cover may not be a bad idea.
Emergency department presentations those between 25 and 34
|Year||Men||Women||% of emergency room admissions|
Source: Australian Institute of Health and Welfare (AIHW) Emergency department care: Australian hospital statistics
It's also quite common for people at this stage of their lives to think about starting a family. If this sounds like you and you want to have your child in a private hospital, you'll need hospital cover. You'll need to make sure that not only your hospital policy covers pregnancy but that you've held your policy long enough to have served the waiting period – usually 12 months.
According to claims data from HCF, between December 2016 to November 2017, 2,521 people between age 20 and 29 claimed for dental extraction or restoration. This accounted for 25.47% of all dental extractions or restorations performed by HCF that year. If these people hadn't had health insurance, they would have been on the hook for an average cost $1,609. Luckily they did and only had to pay an average out-of-pocket cost of just $258.
Medicare is free – so why should you bother with health insurance?
If you're young and fit, private health insurance can seem like an unnecessary expense, particularly once your parents are no longer footing the bill. Here's why it's a good idea to consider getting your own cover:
- Extras are expensive. Whether you've been used to getting regular dental checkups, sessions with a psychologist or occasional remedial massages for a sports injury, the cost of these can add up, and be considerably more than the cost of insurance.
- Emergencies happen. As mentioned before, those aged between 25 and 34 have a decent chance of winding up in the emergency room. Not only can health insurance cover the bill for the ambulance but, if you require follow-up treatment for say a torn ACL, you'll be able to skip the public waiting list and be treated in a private hospital by a doctor of your choosing.
Do you want hospital, extras or both?
Whether you get hospital, extras or a combined policy will depend on your needs and can suit singles, couples and young families. But, it's all about working out which policy is right for you.
What is hospital-only cover?
Hospital cover is designed to protect you against the cost of a wide range of in-hospital procedures. It includes cover for accommodation in either a public or private hospital, your choice of doctor, theatre costs and other expenses associated with your medical treatment. Hospital cover offers a long list of benefits for young singles, including:
- Cover to suit your needs and budget. Australian private health funds offer a wide range of hospital cover options so that you can choose a policy that suits your needs and budget. There are even some policies specifically created to meet the health insurance requirements of young singles.
- Tax breaks. Taking out hospital cover means you can avoid the Medicare Levy Surcharge and also access the Australian Government’s private health insurance rebate to make cover more affordable.
- Avoid Lifetime Health Cover (LHC) loading. If you take out private hospital cover before your 31st birthday, you can avoid paying extra for cover thanks to the LHC scheme.
- Peace of mind. Hospital cover provides you with the confidence and peace of mind that comes with knowing you will be able to pay your medical bills if you ever suffer an unexpected illness or injury.
- Cover for a wide range of services. From knee reconstructions and appendix removal to pregnancy and birth-related services, hospital cover provides protection against the cost of a wide range of in-hospital procedures.
What is extras-only insurance?
Extras-only insurance provides cover for a wide range of out-of-pocket medical expenses that are not covered by Medicare. Sometimes also referred to as general treatment cover or ancillary cover, extras-only health insurance covers you for out-of-hospital medical services such as optical, dental, physio, chiro, podiatry, natural therapies and much more. There are plenty of reasons why young singles can benefit from having extras cover in place, including:
- Choose cover that suits your needs. Whether you want basic extras cover for some essential treatments, or comprehensive extras cover for a wide range of treatment options, Australian health insurers have extras cover policy options to suit everyone. Some insurers even have extras policies designed with young singles in mind.
- Standalone or combined. You can take out standalone extras cover or combine it with hospital cover for a higher level of protection.
- Ambulance cover. Many extras policies also include cover for the cost of emergency ambulance transportation and treatment, which is not covered by Medicare.
- Reduce healthcare costs. Extras policies provide cover for the cost of a wide range of general treatments, allowing you to take better care of your health.
- Government rebate. Taking out extras cover entitles you to the Australian Government’s private health insurance rebate, which helps make cover more affordable.
What is combined cover?
Combined cover is a health insurance policy that offers both hospital and extras cover in the one package. This allows you to enjoy the convenience of taking out the two main types of private health insurance – hospital cover for in-hospital treatment and extras cover for general treatments like optical and dental – in one policy. The vast majority of Australian private health insurers offer a range of combined cover options, and taking out this type of insurance has many benefits for young singles, including:
- It’s tailored to your needs. Many insurers offer combined cover options that have been specifically designed with the needs of young singles in mind. This means you only pay for the services you are likely to use and none that you won’t.
- You only have to manage one policy instead of two. Combined cover allows you to manage your hospital and extras cover in the one policy. This can make it easier to compare, choose and purchase cover.
- Potential discounts. When you purchase combined hospital and extras cover many funds have member only discounts that will be available to you.
- Wide range of cover. Having both hospital and extras cover in place means you are covered for an extensive range of in-hospital services and general treatment options.