When you’re young, fit and healthy, without the responsibilities of having a family, it might seem like private health insurance isn’t particularly important. After all, you’re in the prime of your life and your current priorities most likely revolve around your occupation and/or your social life, not your future health. With so many other, more enjoyable distractions in life, it’s no wonder that the idea of investing in private health insurance often falls by the wayside.
However, when it’s something so crucial to your long-term happiness and wellbeing, why would you risk jeopardising your health? No-one can predict the future, and accidents and injuries can happen to anyone at any time. Having health insurance with hospital cover puts on you on the right path to having optimum care if you ever have an emergency and need to be admitted to hospital, and that’s not even taking into account arguably the most valuable aspect of private healthcare – extras cover! Private health insurance is a constantly growing market in Australia, so there’s no shortage of versatile policies out there with great extras packages specifically customised for young singles without kids.
If you’re considering private health insurance but don’t quite feel convinced yet, you’ve come to the right place. This comprehensive guide details all the ins and outs of private health cover in Australia, with a particular emphasis on how having private health insurance can benefit young and independent singles.
Private Health Insurance For Singles
Many people believe that private health insurance is only truly vital when they’re thinking of starting a family. However, if you’re thinking ahead of the curve, you’ll definitely consider investing in health insurance a lot sooner. While Medicare, the Australian public healthcare system, does help you to cover many healthcare costs, private health insurance can go that one step further to ensure you have great healthcare options for your present and future needs. Your health and wellbeing should always be a top priority, no matter what your life stage or situation is. Besides, what better time to look out for number one than when you’re single, independent, and free as a bird?
You might not think that hospital cover is very important, but accidents and injuries can befall anyone, young or old. Forking out the fees for any necessary surgeries or procedures would undoubtedly be a heavy financial burden for any one person to handle on their own. While Medicare can offer a helping hand by allowing you to be treated as a public patient at a public hospital, unfortunately there are several important services it doesn’t cover, including private patient hospital costs and ambulance services. Additionally, only having Medicare under your belt might mean that you’ll simply be added to a long waiting list of patients for any treatment you require, which is clearly not conducive to a speedy recovery!
So while it might seem easier and cheaper to skimp on hospital cover, the truth is that when you’re seriously injured or unwell, the best way to quickly and effectively regain your good health is to have the best medical care and attention possible. Depending on your level of cover, this is what private health insurance ensures, by giving you access to different private hospitals and allowing you to choose your own doctor.
The same goes for extras cover. Medicare offers Australian residents some fantastic benefits for various health-related services and treatments under the Medicare Benefits Schedule (MBS) and the Pharmaceutical Benefits Schedule (PBS). However, private health insurance can help you out with the costs of necessary medical services that Medicare doesn’t cover and that you’ll likely be utilising again and again. This can include, but is not limited to, dental and orthodontic treatment, optical services, physiotherapy, podiatry, and chiropractic treatment. The bills and expenses for these can definitely add up over the years and end up costing you a fortune, which is why the extras cover on your private health insurance policy offers you such value for money.
Having a solid safety net in case your health ever fails is always a good idea, and that’s exactly what hospital cover can provide. Depending on your policy, you can choose whether to be treated at a public or private hospital, and as aforementioned, you could have the privilege of being able to choose your own doctor.
Having hospital cover will insure you for some or all of the costs of being treated as a private patient, at either a public or private hospital. This includes in-hospital treatment by your doctor and any additional costs, such as accommodation and theatre fees. In general, all the services listed under the Medicare Benefits Schedule can be covered by private health insurance, depending on the specific policy. Medicare will cover you for 75% of the costs of these medical services, and your health fund will ostensibly cover the remaining 25% – provided that you have the right private health insurance policy, of course. However if your doctor chooses to charge above the MBS fee for the service, you will be required to pay the additional cost, which is known as “the gap.”
There are four general types of hospital cover:
- Top Private Hospital Cover: covers all services where Medicare pays a benefit
- Medium Private Hospital Cover: may exclude or restrict one or more of the following, but covers any service in the basic classification – pregnancy and birth-related services, assisted reproductive services, cataract and eye-lens procedures, joint replacements, hip replacements, dialysis for chronic renal failure, and sterilisation
- Basic Private Hospital Cover: may exclude or restrict one or more of the following – cardiac and cardiac-related services, non-cosmetic plastic surgery, rehabilitation, psychiatric services, and palliative care
- Public Hospital Cover: covers default benefits for treatment in public hospitals only
There are certain exclusions and restrictions when it comes to hospital cover, and they vary depending on the individual policy. For instance, most hospital policies won’t insure you for any medical procedures or surgeries that aren’t necessary to maintain your health, such as elective cosmetic surgery. For more detailed information on what is and isn’t covered, read the Policy Brochure carefully, and if you’re still looking for answers, contact the insurer directly.
While hospital cover insures you for those hopefully infrequent occasions when you might need serious medical attention, extras cover (also known as general treatment cover or ancillary cover) is a financial safety net for your everyday health needs. This is why it continues to prove useful for people of all ages over the course of their lifetime. For example, is it almost time for your annual trip to the dentist? Or do you need some new contact lenses? Perhaps you’ve suffered a recent sports injury and need to get it checked out at the physio. Whatever health-related services and treatments you’re after, extras cover could cater to you.
The best way to get the most value out of your extras cover is to pick a policy that suits your particular lifestyle and your individual health needs. For example, if you have a highly active lifestyle, you’ll probably want to find a more comprehensive policy that covers the costs of services like physiotherapy and podiatry, in case any physical injuries crop up in the future. On the other hand, if you’re a young and independent person, you probably won’t need cover for hearing aids anytime soon. It’s all about figuring out exactly what you want from your healthcare, and because there’s such a great variety of policies on the market these days, you won’t have a problem finding the right extras cover to suit you.
There are three general categories of extras cover:
- Comprehensive Cover: has a more extensive range of services and higher benefits for claiming. Services include cover for general dental, major dental, endodontic, orthodontic, optical, non-PBS pharmaceuticals, physiotherapy, podiatry, psychology, naturopathy and acupuncture.
- Medium Cover: includes cover for general dental, major dental, and endodontic, as well as five of the following – orthodontic, optical, non-PBS pharmaceuticals, physiotherapy, podiatry, psychology, and hearing aids
- Basic Cover: includes minimum services
Extras cover is highly versatile; it can be purchased separately or combined with hospital cover. If you decide to opt for combined cover, many insurers allow you to mix and match different hospital policies and extras policies at your convenience. For example, you might choose to purchase medium level hospital cover, but opt for comprehensive extras cover. Be sure to ask your insurer for further information regarding combined packages.
Medicare does not cover the costs of emergency transport or ambulance services, so it’s a good idea to arrange for ambulance cover through your private health insurance. Generally, you can purchase ambulance cover as part of your hospital cover or extras cover, or even as a stand-alone cover.
However, depending on which state you live in, you may not even need ambulance cover, or you may be eligible for a discount. Check the Private Health Insurance Ombudsman website for further information.
Other Important Information
1. The Australian Government Private Health Insurance Rebate
If it’s the price of the premiums that’s making you a tad hesitant to invest in private health insurance, you’ll be happy to hear that the government may be able to give you a helping hand. The private health insurance rebate is income-tested and it applies to hospital, extras, and ambulance policies. Most Australians are eligible for the rebate, based on the following three conditions:
- You must be eligible for Medicare
- You must have complying health insurance product (CHIP) that provides hospital cover, extras cover, or both
- You must have an income for Medicare levy surcharge purposes below Tier 3, as shown in the table below
You can claim your private health insurance in one of two ways: as a premium reduction through your health fund, or as a tax offset when you lodge your annual tax return. If you want to use the former method, contact your insurer to discuss the matter, and if you prefer to do the latter, your insurer can provide you with the right paperwork for your tax return. More information can be found at the Australian Taxation Office website.
2. Medicare Levy Surcharge (MLS)
The Medicare Levy Surcharge (MLS) is another very good reason to purchase health insurance sooner rather than later. It is levied on Australian residents who do not have private health cover and who earn above a certain income threshold – currently, $88,000+ for singles, $176,000+ for families (refer to the table below). The MLS was devised by the government in an effort to prompt more people to invest in the private healthcare system, so as to ease the demand on the public Medicare system.
The surcharge is calculated at the rate of 1% – 1.5% of your income, in addition to the Medicare Levy of 1.5% which is paid by most Australian taxpayers. The surcharge is indexed annually, and the levels applicable for the year 1 July 2013 – 30 June 2014 are as follows:
3. Lifetime Health Cover (LHC)
If you’re a single person without children, investing in health insurance when you’re younger could end up saving you a lot of money in the long run. After all, when it comes to private health insurance, ‘sooner rather than later’ is always a good policy to adopt, but nothing proves that more than the Lifetime Health Cover (LHC) loading. This is a government initiative that encourages Australians to invest in health insurance earlier on in life, particularly before their thirties. This is because, if you decide to take out hospital cover after 1 July following your 31st birthday, you will need to pay a 2% loading on top of your premium for every year you are aged over 30.
For example, if you purchase hospital cover when you’re 40, you will be paying an extra 20% on top your premium, and if you purchase it when you’re 50, you’ll be paying 40% more, and so on and so forth. The maximum loading you can pay is 70%, and the LHC loading is removed altogether after you have paid it on your private health insurance for ten consecutive years.
The LHC loading only applies to hospital cover, not extras cover. In some cases, working out your loading can be tricky, so be sure to refer to the Lifetime Cover calculators on the Private Health Insurance Ombudsman.
4. Switch It Up
Our physical bodies and our health needs exist in a cause-and-effect relationship, and as such, we need to adjust our healthcare accordingly as our bodies continue to grow and change. Chances are, the health insurance policy you purchase in your twenties won’t still be completely suitable for your lifestyle ten or twenty years onwards. This is why it’s so important to consistently re-evaluate your private health cover as time goes on, to ensure that you’re getting the most out of your policy at the current time.
Many people think that switching from one health insurance provider to another is complicated, but it’s actually a very simple process. Comparethemarket.com.au allows you to compare a range of policies from Australia’s health insurance providers, and once you’ve found a new policy that’s right for you, your new health fund will handle the switch, including contacting your old provider.
The great news is that there’s no penalties or surcharges involved when you switch providers. Your Lifetime Health Cover status will remain the same, with any age loading or absence of loading transferred to your new policy; you will still be eligible for any rebates you’re receiving on your current cover; and best of all, waiting periods will be waived (provided you have observed the full waiting period for your previous policy and you don’t have any new or upgraded benefits).
The Final Word: The Sooner, The Better
It’s understandable that when you’re a single and independent individual, you might not be thinking about health insurance. However, no matter what age you are, taking care of your health should always be an important priority. By investing in private healthcare earlier on in life, you’ll have peace of mind knowing that your present and future health will always be in good hands. Not to mention, you may be able to take advantage of benefits such as the government’s private health insurance rebate, and you may be able to avoid the LHC loading on top of your premium.
If you’re looking for further information on private health cover, don’t forget to check out our interactive health insurance section. If facts and figures are your kind of thing, you’ll also want to have a peek at the results of our 2014 national survey on health and private cover!
So what are you waiting for? Start comparing health insurance policies today! One day, you’ll look back and thank yourself for taking this initiative so early – guaranteed.