When you make a decision to share your life with your partner, health insurance might not be the most important priority on your to-do list. Perhaps it hasn’t even occurred to either of you yet. After all, there are so many other interests and activities to pursue when you’re a young couple in the modern world. During this time, family, friends, and work tend to come first – not necessarily in that order!
There’s no doubt that sharing your life with another person is a special, intimate experience. However, it’s equally true that building a life together takes a lot of hard work and responsibility. If you’re looking towards the future, there are some important considerations to take into account. You might be having conversations revolving around what city you want to live in for the next few years, whether you should buy an apartment or a house, or even when you want to have children. Amidst these significant life decisions you and your partner will be making together, there is one more topic that the two of you should discuss – health insurance.
At such a busy time in your lives, being in tip-top shape is more imperative than ever. If you’re at the stage where you and your partner have a shared income and you’re both trying to save money for the future, the possibility of having to fork out funds for expensive healthcare is definitely not ideal. The future is unpredictable, and both major and minor health issues can pop up unexpectedly. Having private health insurance by your side will allow you to concentrate on taking care of each other without having to stress out about medical and pharmaceutical bills.
Private health insurance for young couples
Investing in a health insurance policy as a couple is both pragmatic and convenient. After all, if you lead fairly similar lifestyles and you’re already sharing other aspects of your life, why not suss out your health needs together? The great thing about health insurance is you have plenty of choices when it comes to tailoring your hospital and extras cover to suit your shared routines and priorities. Whether you just want the most basic cover as a safety precaution, or you want to go all out with a comprehensive policy to cover all the bases, it’s easy to shop around and find the right health fund for the two of you.
Young couples who are considering starting a family in the near future should strongly consider a higher level of cover as soon as possible. However, regardless of whether or not you and your partner are picturing children on the horizon, it may be in your best interests to invest in private health insurance earlier on in life.
While Medicare helps you cover many healthcare costs, private health insurance can go one step further and ensure that the two of you have the best healthcare possible for all your present and future needs. Your health and wellbeing should always be your top priority, no matter what your life stage or situation is. After all, being in the best of health will only help you to truly enjoy your life together that much more.
You might not think that hospital cover is very important, but accidents and injuries can befall both young and old. Forking out the fees for any necessary surgeries or procedures would undoubtedly be a heavy financial burden for any young couple to tackle. While Medicare can guarantee public hospital treatment, unfortunately, there are several important services it doesn’t cover, including private patient hospital costs and ambulance services. Additionally, only having Medicare might mean that you’ll simply be added to a long waiting list for any treatment you require, which won’t necessarily help you recover quicker.
So while it seems easier to go cheap on hospital cover, the truth is that when you or your partner are seriously injured or unwell, the best way to quickly and effectively bounce back from a recent decline in health is to have the best medical care and attention possible.
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 Scheme (PBS). However, private health insurance can help you out with the costs of necessary medical services that Medicare doesn’t cover and that your family will likely be utilising again and again. This can include, but is not limited to:
- Dental and orthodontic treatment;
- Optical services;
- Podiatry; and
- Chiropractic treatment.
The bills and expenses for these can 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. That way, you and your family can concentrate on putting your hard-earned savings towards more important life expenses, be they a bigger home, a family holiday or a nest egg for the future.
Having a safety net in case your health ever fails is always a good idea, and that’s exactly what hospital cover provides. Depending on your policy, you and your partner could choose either public or private hospital treatment, or even your own doctor.
Private health insurance generally covers all services listed on the MBS, depending on the specific policy. Medicare will cover you for 75% of the costs of these medical services, and your health fund will cover the remaining 25% – provided that you have the right private health insurance policy. 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.” If you and your partner are planning on having children and want financial protection, it’s important that you look for a policy that covers pregnancy and birth-related services. Most basic hospital policies will not cover these services, so it’s a good idea to shop around for a much higher level of cover in preparation for the future. Most policies also have a waiting period of at least 12 months, so the sooner you organise cover, the better. This way, you can rest assured knowing that whenever you get pregnant, your health will be in good hands during this demanding time.
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. These vary depending on the individual policy. For instance, most hospital policies won’t cover you for any unnecessary medical procedures or surgeries, 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 when you might need serious medical attention, extras cover (also known as general treatment cover or ancillary cover) is more suitable as 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. That way, you and your partner will be able to take advantage of your extras cover for multiple purposes.
For example, is it almost time for your annual dentist visit? Or does your partner need some new contact lenses? Perhaps one of you has suffered a recent sports injury and needs to get it checked out at the physio. Whatever health-related services and treatments the two of you are after, extras cover can cater to you.
The best way to get the most value out of your extras cover is choosing a policy that suits your lifestyle and your health needs. For example, if you and your partner are both physically active, you’ll probably want to find a more comprehensive policy that covers the costs of services such as physiotherapy and podiatry, in case any injuries crop up in the future.
On the other hand, while you’re both young and healthy, you won’t likely be needing cover for health products like hearing aids. It’s all about figuring out exactly what the two of you want from your healthcare, and because there’s such a great variety of policies on today’s market, 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 opt for combined cover, many insurers allow you to mix and match different hospital policies and extras policies at your convenience. Have a chat with your partner about it and decide what works best for the both of you. 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 important 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 premium cost that’s making you a tad hesitant to invest in private health insurance, you’ll be happy to hear that the government can lend you a 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; and
- You must have an income for Medicare levy surcharge purposes below Tier 3, as shown in the table below.
Health insurance income thresholds
|Base Tier||Tier 1||Tier 2||Tier 3|
|Singles||Less than $90,000||$90,001-$105,000||$105,001-$140,000||$140,001 and over|
|Families*||Less than $180,000||$180,001-$210,000||$210,001-$280,000||$280,001 and over|
|Age||Base Tier||Tier 1||Tier 2||Tier 3|
|70 and over||34.579%||25.934%||17.289%||0.00%|
|* This includes single parent families. The income thresholds are adjusted for families with more than one child, being increased by $1,500 for every dependent child after the first. Table information from the Department of Health current as of 24/02/2017|
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. Should 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 an excellent 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, $90,001+ for singles and $180,001+ for families (refer to the table below). The MLS was devised by the government in an effort to prompt more people to get private health cover and ease the pressure 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 2% paid by most Australian taxpayers. The surcharge is indexed annually, and current applicable levels are as follows:
|Medicare Levy Surcharge – Income Thresholds|
|Singles||Under $90,000||$90,001 – $105,000||$105,001 – $140,000||$140,001+|
|Families ^||Under $180,000||$180,001 – $210,000||$210,001 – $280,000||$280,001+|
|Retrieved from Privatehealth.gov.au | Information current as of 03/04/2017
^ For families with children, thresholds increase by $1,500 for each child after the first.
Families include couples, de facto couples, and single parents.
When it comes to the Medicare Levy Surcharge, couples are again subject to family tiers. You can work out you and your partner’s tier using the Australian Taxation Office’s MLS calculator.
3. Lifetime Health Cover (LHC)
When it comes to private health insurance, ‘sooner rather than later’ is always a good policy to adopt. However, 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. The maximum loading you can pay is 70% after you’ve reached 35 years of age, and the LHC loading is removed altogether after you have paid it on your private health insurance for ten consecutive years, provided that you’ve kept your hospital cover.
Young couples should aim to invest in private health insurance as soon as possible, in order to avoid having to pay for the loading at all if you decide to purchase a policy later on down the line.
The LHC loading applies only 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 need to exist in a cause-and-effect relationship, and as such, we need to adjust our healthcare accordingly as our bodies continue to change. Chances are the health insurance policy that you and your partner purchase in your 20s won’t still be completely suitable for your lifestyle ten or twenty years onwards.
This is why it’s important to re-evaluate your private health cover as time goes on. That way, you ensure that you’re getting the most out of your policy at the current time. For example, you might not be considering having children at this point, but that may change a few years down the line. At that point, having a basic health insurance policy won’t give you the kind of cover you need for pregnancy and birth-related services.
Many people think that switching from one health insurance provider to another is complicated, but it’s actually a very simple process. We give you an opportunity to compare a range of policies from Australia’s leading health insurance providers. Once you’ve found a new policy that’s right for you, your new health fund will take care of the switch – including talking to your old health fund.
The great news is that there are 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. In addition, you and your partner 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: Start in the here & now
It’s understandable that when you’re a young and healthy couple, you might not be thinking about health insurance. However, no matter your future plans, taking care of your health should always be important. By investing in private healthcare earlier in life, the two of you will have peace of mind knowing that your health will always be in great hands. You’ll also be able to take advantage of benefits such as the government’s private health insurance rebate, and avoid the LHC loading on top of your premium.
When you’re looking towards the future, it’s always best to have a safety net in place. This is why it’s a good idea to have a chat with your partner about health insurance as soon as you can. This way, you can make a head start on shopping around for health insurance policies to suit your lifestyle.