Trauma Cover vs Health Insurance

What is trauma insurance?

Trauma insurance, also known as critical illness cover or recovery insurance, is an insurance product that is designed to provide a one time payment in the event that you are diagnosed with or suffer from a life-threatening medical condition. Some of these conditions often include cancer, heart attack, or stroke.

Why should I consider Trauma Insurance if I already have Health Cover?

Health insurance can cover some hospital expenses and medical treatment but it won't provide coverage for additional expenses following a major medical event. These expenses can include:

  • Rehabilitation
  • Equipment
  • Home modifications
  • Therapy
  • Nursing care
  • Lost income

A trauma insurance policy provides you the with the financial aid to cover these types of costs in a way that's suited to your specific circumstance. Continue reading for a full breakdown of the major differences between trauma and health cover.

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Coverage is the amount of money that you will be paid in the event of a claim. An insurance consultant can help you determine an appropriate amount. Calculator
Provides a lump sum payment if you become totally and permanently disabled and are unable to return to work.
Provides a lump sum payment if you suffer a serious medical condition. Cover can be taken out for 40-60 medical conditions depending on the policy you choose.
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Compare trauma insurance from direct brands

Product details Maximum cover Maximum Entry Age Cooling-off
(days)
NobleOak Trauma Insurance
NobleOak Trauma Insurance
Get a trauma benefit up to $2 million with cover for up to 37 medical conditions. $2,000,000 59 30 Get quoteMore info
Recover Well
Recover Well
Receive a lump sum payment up to $1,000,000 if diagnosed with a serious illness or injury. $1,000,000 59 21 Get quoteMore info

Trauma VS health insurance: The breakdown

A recent survey by TAL has found that as many as 17% of Australians believed that health insurance provides the same protection as life insurance, thus there is no need for the main income earner to be insured (TAL, 2013). However, it is important to understand that both trauma cover and health insurance serve two very different purposes, and having health cover alone is not sufficient to protect you against serious illness or injury.

How are the additional costs of a serious illness covered?

Insurance typeRehabilitation EquipmentsOn-going nursing CareHome / Vehicle ModificationsLiving Expenses & Bills
Medicare
  • No
  • No
  •  No
  • No
Private health insurance
  • No
  • No
  • No
  • No
Trauma cover
  • Yes
  • Yes
  • Yes
  • Yes

What else can trauma insurance can cover you for?

The lump sum benefit from trauma insurance can be used not only to cover additional medical expenses, but also for:

  • Daily living expenses, such as food, clothing and shelter
  • Rent or mortgage repayments
  • Bills, such as utilities and telecommunications
  • Short-term debts, such as credit cards, personal loan, car loan, etc.
  • Your children’s education expenses
  • Holidays

How are hospital costs covered by each type of insurance?

1. If you are a public patient at a public hospital:

Insurance typeMedical Practitioner's FeesHospital AccommodationTheatre FeesMedicines (In-hospital)Ambulance FeesEmergency Department / Outpatient Services
Medicare
  •  Yes
  •  Yes
  •   Yes
  •   Yes
  • If you are a resident on government pension with a healthcare card
  •  Yes

2. If you're a private patient at a public hospital:

Insurance typeMedical Practitioner's FeesHospital AccommodationTheatre FeesMedicines (In-hospital)Ambulance FeesEmergency Department / Outpatient Services
Medicare
  • 75% of the Medicare Benefits Schedule Fee (MBS)
  • No
  • No
  •  No
  • No
  •  Yes
Private health insurance
  • 25% of the MBS - there may still be gap between the schedule fee and medical practitioner's charge
  • Yes
  • Yes
  • Yes
  • Yes
  • Yes
Trauma cover
  • Yes
  • Yes
  • Yes
  • Yes
  • Yes
  • Yes

3. If you're a private patient at a private hospital

Insurance typeMedical Practitioner's FeesHospital AccommodationTheatre FeesMedicines (In-hospital)Ambulance FeesEmergency Department / Outpatient Services
Medicare
  • 75% of the Medicare Benefits Schedule Fee (MBS)
  • No
  • No
  •  No
  • No
  •  No
Private health insurance
  • 25% of the MBS - there may still be gap between the schedule fee and medical practitioner's charge
  • Yes
  • Yes
  • Yes
  • Yes
  • No
Trauma cover
  • Yes
  • Yes
  • Yes
  • Yes
  • Yes
  • Yes

While Medicare and private health insurance covers the costs for the majority of immediate medical needs, trauma insurance can provide cover for ongoing treatments and care that may be required to assist an individual’s full recovery.

So should I just rely on trauma insurance?

Trauma insurance is not to be considered as a replacement of Medicare and/or private health insurance. Trauma cover can work together with your health insurance to provide you the most comprehensive coverage and minimise any out-of-pocket expenses, especially at a time of serious illness or injury, allowing you and your family greater peace of mind.


What does Health Insurance in Australia cover?

Health Insurance is available in Australia through a government funded health insurance scheme known as Medicare and also through private health funds.

Government Health Insurance: Medicare

Medicare is Australia’s public healthcare system funded by the Government with the aim to provide affordable medical care, and works as a form of universal health insurance for all Australian citizens and permanent residents. With Medicare, residents have access to subsidised treatment from medical practitioners and allied health professionals, free treatment in public hospitals and prescription medicines at reduced prices.

How is Medicare funded?

Medicare is partially funded by an income tax surcharge. Australian taxpaying residents are required to pay a standard 1.5% tax levy based on their taxable income that are above a certain threshold amount. High income earners without adequate private health cover are required to pay an additional 1% on top of the standard Medicare levy. This surcharge will apply on taxable income greater than $80,000 for single persons without dependants and $160,000 for families. Non-residents, single parents, families and individuals with income less than $22,828 are not required to pay the Medicare levy.

The Medicare levy is set to increase from 1.5% to 2% to fund the Government’s new disability support system - DisabilityCare.

Medical Treatment Available through Medicare

Medicare generally provides cover for:

  • Treatment by doctors, specialists, dentists, optometrists, and allied health professionals, such as physiotherapists, dieticians and speech pathologists, either for free or subsidised
  • Treatment and accommodation in a public hospital for free, when admitted as public Medicare patient
  • 75% on the Medicare Schedule Fee for the costs for service and surgical procedures in a public or private hospital, when admitted as a private patient
  • Health care services (with limited access) in countries such as United Kingdom, Republic of Ireland, New Zealand, Sweden, Netherlands, Belgium, Finland, Norway, Slovenia, Malta, and Italy, which have a Reciprocal Health Care Agreement (RHCA) with Australia.

What's not included by Medicare?

Medicare is designed to provide the basic level of medical care and hospital treatment for Australians. Some other treatments and services required to cover more complex care needs will incur out-of-pocket expenses, which can be covered with private health insurance. Some of the costs that are not covered under Medicare include:

  • Ambulance service
  • Accommodation at private hospitals
  • Theatre fees
  • Cosmetic surgery
  • Psychology services

Private health insurance

While Australia’s Medicare is considered to be one of the world’s best public health system, it does not cover medical costs for more specialised care and services at private hospitals. Some treatments and surgeries are accessible by patients at a public hospital for free, but there is usually a long waiting list, which is why private health cover is encouraged for a much quicker admission for treatment.

How does Private Health Cover work?

Private health insurance policies are usually made up of a number of different components that you can tailor to your needs. Coverage for specific medical costs will often differ from one provider to the other. Private health insurance cover usually includes:

Hospital cover

Services that may be covered include:

  • Doctor’s fees: 75% of the fees will be reimbursed by Medicare, while the remaining 25% will be covered by private health cover
  • Costs of accommodation at a private hospital
  • Theatre fees
  • Pathology tests undertaken at a hospital
  • Costs of medicines taken while treated at a hospital

Extras cover

Provides coverage for out-of-hospital services and often complementary therapies, which may include:

  • Dental
  • Physiotherapy
  • Chiropractic
  • Podiatry
  • Naturopathy
  • Osteopathy
  • Acupuncture

Ambulance cover

This provides coverage for ambulance costs

Can these cover types be combined?

Yes. Policies will usually offer the option of combining hospital, extras and ambulance cover.

As an effort to further promote the importance of having private health cover by the Government, Australian residents will receive a Private Health Insurance Rebate to cover 30% of the premiums paid and up to 40% for those over 65 years old. To be eligible for the rebate, you have to be a registered member of a health fund and must be able to claim Medicare benefits.


What's the benefits of having trauma insurance in addition to your health cover?

There are many advantages of having trauma insurance in place in addition to financial benefits and these include:

Coverage for a wide range of critical medical conditions

Some trauma insurance providers offer cover for up to 40 trauma conditions, although they may vary between insurers. Most companies will cover common conditions, such as:

  • Cancer
  • Heart attack
  • Open heart surgery
  • Coronary artery bypass
  • Stroke
  • Parkinson’s disease
  • Motor neuron disease
  • Multiple sclerosis
  • Major organ transplant
  • Dementia
  • Loss of independent existence
  • Quadriplegia

Additional protection on your existing life cover

If you already have a life cover policy in place, you may want to consider a trauma rider for more comprehensive cover. It is more cost-effective than having a standalone trauma cover and you can get access to all the important features and benefits. If your trauma cover is linked with life cover, it is essential to consider the Buy-Back feature, which will enable the policyholder to re-purchase the sum payable following a trauma claim.

Cover for homemakers

Trauma cover is a form of protection that can really benefit individuals who perform household duties on a full-time basis. While they may not get paid for what they do, losing a stay-at-home parent to an illness or injury can have devastating effects, both emotionally or financially. With trauma insurance in place, you can hire a housekeeper to maintain your household and/or a nanny to care for your children while you are still recovering.

Ability to take time off work without the financial worry

Trauma insurance can provide you with financial support while you take time off work to recover, without having to worry how you and your family can keep on top of your financial commitments.

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Richard Laycock

Richard is the senior insurance writer at finder.com.au and is on a mission to make insurance easier to understand.

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