Is health insurance still worth it in your 50s?

Private health insurance is an investment that truly pays off when you need it most. Indeed, older Australians tend to use their health insurance more often than younger generations, which is consistently shown in Australian Prudential Regulatory Authority (APRA) statistics.¹

Some operations can cost tens of thousands of dollars in a private hospital. If you require an operation that’s included on your private hospital insurance policy, your excess and out-of-pocket expenses could pale in comparison to the high cost of treatment when paid for outright.

While you can choose to be treated as a public patient in a public hospital, you won’t have as much choice over your healthcare. Whereas a private hospital cover policy could benefit you by:

• Helping you avoid public hospital waiting lists for elective surgeries and treatment
• Providing benefits towards being treated in a private hospital and in a private room (if one’s available)
• Allowing you to choose the doctor who operates on you (subject to availability)
• Reducing the cost of private hospital treatment by claiming a benefit from your health fund
• Helping you avoid the Medicare Levy Surcharge (MLS) if you earn over a certain threshold and hold an eligible policy
• Paying for emergency ambulance services when you include ambulance cover on your policy.

An extras policy covers those treatments outside of a hospital that you aren’t able to claim on Medicare. Depending on your level of extras cover, you can reduce your medical expenses for a range of services, including:

• Dental treatment
• Prescription glasses
• Physiotherapy
• Chiropractic consultations
• Podiatry
• Psychology
• Medications not covered by the Pharmaceutical Benefits Scheme (PBS)
• Gym memberships and weight loss programs (where medically necessary).

The amount you can claim on extras will depend on your chosen cover option’s inclusions and limits, such as lifetime and annual limits. For a full list of limits, inclusions and exclusions, check your insurance company’s policy documents.

We all have different backgrounds and family histories. As such, we all have different health needs to consider. However, there are a few trends to look out for when you’re trying to find the right health insurance for you.

For example, ageing Australians are particularly susceptible to tooth decay and vision impairments. You may also need hearing aids, joint replacements or cataract surgery, all of which can be quite expensive.

Aside from these common conditions of aging, there are also issues that are influenced by your family history and your current health status. You probably already know which of these to look out for; diabetes, prostate or breast cancer and high blood pressure are all conditions that have strong hereditary markers.

If you already suffer from these or another pre-existing condition when you start a new health insurance policy, you can rest easy with peace of mind knowing it won’t affect your health insurance premiums. However, you may still need to serve a waiting period for treatment relating to your condition.

If you’re over 50 and already have a health insurance policy, you may be able to get better value for money by considering the services you’re covered for that you no longer need. For example, if you’re currently on a policy that covers pregnancy and birth-related services, you could save significantly by switching to lower level of hospital cover.

Unlike other insurance products, health insurance in Australia is community rated, meaning that your individual risk factors and probability of making a claim won’t impact the base premium of your policy.

If you take out the same level of cover as someone in their 30s, you will both pay the same base premium for the same policy – though other factors, like Lifetime Health Cover (LHC) loading and your eligibility for the government rebate can affect the total amount you pay.

For surgeries where you’re treated as a private patient in a private hospital, Medicare covers 75% of the Medicare Benefits Schedule (MBS) cost. The MBS lists the price the government considers adequate for various medical treatments.

Your health insurance covers, at minimum, the remaining 25% of the MBS fee for treatment and services included in your hospital policy (provided you’re admitted as an inpatient, you’ve served all relevant waiting periods and the procedure is medically necessary). However, doctors, surgeons and other health professionals can choose to charge more than the set MBS price for their services. This can leave patients with an out-of-pocket cost, known as a gap payment. You will also need to consider the hospital fees, which can be partially or fully covered by your health fund, although you may need to pay an excess and/or co-payment.

The cost of medical treatments varies based on your procedure and who’s performing the operation. Let’s look at a couple of different treatments as examples to see how much they could cost.

As the table shows, the hospital and doctor’s fees can vary widely, but these out-of-pocket costs are significantly less expensive than if you paid for private treatment outright.