Benefits of private health insurance

When you consider how much you spend on services like dental check-ups, prescription eyewear, physiotherapy and chiropractic, it can really start to add up – even more so if you have a whole family to keep healthy! While these services can be pricey, they’re either essential (not wearing glasses when you need them isn’t recommended) or they’re vital steps in avoiding future issues.

One key benefit of private healthcare is that if you have extras cover, it will contribute towards the cost of non-Medicare services, including dental, prescription eyewear, physiotherapy and other general services. Depending on the policy you take out, you could be eligible for a 100% return on popular treatments such as prescription glasses and one or two dental checkups per year up to your policy’s annual limit. It can also help to reduce the out-of-pocket cost of services such as physio, podiatry, osteo and similar services.

Whenever you’re taking out a new policy or adjusting your existing plan, make sure you understand exactly what is and isn’t covered by your policy (in other words, your inclusions, restrictions and exclusions). Also, be aware there will be waiting periods whenever you take out a new policy or upgrade your current coverage.

We all love choice, especially when it comes to our health and wellbeing. One of the big appeals of private health insurance policies is the added flexibility these provide you and your loved ones. If you have hospital cover, some of the key ways it does this include:

• Choice of doctor or specialist. As a private patient, you may have the option to choose your treating doctor or specialist. This is subject to the availability of who you want and the situation’s urgency.
• Private rooms. Hospital insurance allows you to have your own private room (subject to availability) when you’re admitted to a private hospital.
• Ability to book times. Public hospitals often have a long waiting list for elective surgeries, but private hospitals offer more flexibility regarding booking times and dates.

Hospital cover through private health insurance could improve your experience if you need elective surgery by giving you more choice about when and where you have the procedure.

Elective surgeries are surgeries that are deemed to be non-urgent and can be booked in advance by a specialist. And while elective surgery can be performed in public hospitals, there are some potential downsides. The Australian Institute of Welfare states that in 2022-2023, there were 735,500 admissions for elective surgery in public hospitals, with 50% of these patients having to wait over 49 days.¹ That can feel like a long time, especially if your condition is causing you pain or discomfort.

Being treated through the private system helps you avoid this lengthy public hospital waiting list. With private hospital insurance, you could have your procedure in weeks rather than months.

Some examples of elective surgeries include:

• Cataract surgery
• Kidney stone removal
• Joint surgery, like hip replacements, knee surgery and similar procedures.
• Treatment for sports injuries (e.g. pulled muscles, tendinitis, bursitis, bone fractures, sprains and any non-emergency procedures)
• Colonoscopies
• Endometriosis surgery.

You don’t need to be sick or in an accident to benefit from private health insurance. Plenty of health funds have extras policies that offer support services as part of their coverage, such as weight management programs, preventative health care and quit smoking courses. Many health funds also offer discounts for members on lifestyle benefits such as gym memberships and dietic services.

Your mental health is just as important as your physical health. While it can feel like you’re alone when experiencing mental health issues, it might be a lot more common than you think. According to the Australian Bureau of Statistics, 42.9% of Australians between 16-85 years have had a mental disorder at some stage in their life.² Depending on your policy and level of cover, hospital insurance can help provide cover for mental health treatment and, if you have extras cover, may even contribute to the out-of-pocket costs for mental health support services like counselling.

Health insurance providers sometimes offer additional benefits to their members, such as discounts on other services and goodies. These can include discounts on pet and travel insurance, cinema tickets, groceries, petrol and gift cards. What’s on offer will depend on your insurer, as will the terms and conditions behind any offers.

Health insurance doesn’t just provide peace of mind when the unexpected happens; it could also save you money. In Australia, most people who don’t have private hospital cover and earn over a certain income will have to pay the Medicare Levy Surcharge (MLS). The exact amount you’ll have to pay varies depending on your income, living situation and reportable fringe benefits, but it can be as high as 1.5% of your taxable income, which could negate the amount of money you’re saving by not having health insurance. In fact, you may find it would be cheaper to pay for hospital cover than to pay the MLS!

If you’re under 30, you should consider taking out insurance sooner rather than later to avoid Lifetime Health Cover (LHC) loading. The LHC is an Australian Government initiative to encourage Australians to take out health insurance earlier in life. What happens if you take out health insurance after 1 July following your 31^st birthday? You’ll be charged 2% extra for every year after the age of 30 that you did not hold private hospital cover. For example, someone who takes out cover at 40 could pay around 20% more on the cost of their cover per year because of the LHC loading. This loading will be removed if you maintain hospital insurance for 10 continuous years.

Keep in mind that LHC can only be avoided if you take out hospital cover before your base date. If you have already past this date, LHC will stop accruing once you hold an active hospital insurance policy. Standalone extras or ambulance cover won’t exempt you from accruing LHC loading.

There are two key types of private health insurance: private hospital cover and extras cover. Hospital cover means you can choose to be treated as a private patient when you’re admitted. This comes with various benefits, including your choice of available doctor, private room (if admitted to a private hospital and if available), avoiding public hospital waiting lists for elective surgery and other perks.

Extras cover (sometimes called ancillary or general treatment) is for services not covered by Medicare. Depending on your policy, this could include dental, physio, optometry, some natural therapies and counselling, to name a few. Many policies allow you to choose what extras you want. So, for example, if you’ve always had dental issues but your back and neck are tip-top, you’ll probably favour dental cover over a chiropractor. You can adjust the extras on your cover over time so that your health insurance can keep up with the changes in your life. Just keep in mind that you will need to serve any relevant waiting periods when adding new services to your policy.

Combined hospital and extras cover is when both types of cover are part of a single policy. On the other hand, split cover is when you decide to get your hospital cover and extras cover from different providers. Each approach has pros and cons, with combined cover being easier to organise while split cover could lead to a better deal on premiums.

Everyone’s health needs are different, so there isn’t a universal policy that will suit everyone. The best approach is to find a health insurance policy that suits your needs, budget and lifestyle. Consider factors such as ongoing medical conditions, what services you’re likely to use, and whether you’re taking out cover just for yourself or if you need cover for your family as well.

How much you need health insurance will vary greatly depending on your circumstances. You may look at what Medicare covers and wonder if you need health insurance. Medicare is a fantastic service for Australians, covering many vital health services and hospital treatment. However, the public healthcare system can come with long waiting lists, and Medicare doesn’t cover all out-of-hospital medical services, which means more out-of-pocket costs for you. Private health insurance can reduce out-of-pocket healthcare costs and create more flexibility for your treatment options.