Choosing private health insurance can feel like a complicated process. With so many products available, it can be confusing to work out which one will provide the best benefits for you.
But it doesn’t have to be that way.
With some research and planning, you’ll usually be able to find a health insurance policy that works for you. We’d like to help, so we’ve listed eight essential tips to assist you in finding insurance.
- Find cover for services you’ll actually use
- Learn how much you can claim and when
- Seek out discounts and rebates
- Understand the implications on tax and your long term costs
- Think about what life stage you’re at
- Adjust your policy to make it more affordable
- Be certain about your ambulance cover
- Review your policy
1. Find coverage for services you’ll actually use
There’s no one-size-fits-all product when it comes to private health insurance, so it’s essential to find a policy that offers medical services you’ll use or think you might need.
With the introduction of hospital insurance tiers, Australia‘s private health insurance reforms have made it easier than ever to understand the inclusions and exclusions of your private hospital insurance policy. You may find that the services you need are included in Bronze or Basic levels of cover, which could have significantly lower premiums than higher-tiered products.
Gold and Silver products are more comprehensive private hospital cover options that you should consider if you want peace of mind knowing you‘ll be covered for a broader range of medical treatments as a private patient.
You should also take the time to consider the level of extras cover (sometimes called ancillary cover) you need. While extras can be beneficial if you use them, you could be wasting money if you’re covered for services you don’t use. It might be worth making a list of the health services you think would be the most beneficial to you (e.g. dental check-ups, physiotherapy consultations, orthodontics) and the services you don’t think you’ll need (e.g. podiatry).
You also have the option of a combined policy, which includes both hospital and extras cover.
An excellent place to start is to talk with your doctor to discuss what type of private health insurance you should consider for your healthcare needs.
2. Learn how much you can claim and when
If you’re taking out private health insurance for the first time or upgrading to a higher level of cover, you’ll be subject to waiting periods. This is to stop people from claiming on their policies immediately after signing up, and then cancelling before they pay any premiums (which would drive up premiums for everyone).
Both extras and hospital policies are subject to waiting periods, so consider this when choosing a health insurance product. These are:
- Between 2 and 12 months for most hospital and extras products
- 12 months for any pre-existing condition
- 12 months for pregnancy and birth-related services
- 2 months for palliative care, rehabilitation and psychiatric care.
You’ll also need to enquire about any limits your extras policy may be subject to. For example, items subject to an annual limit will means that you can only claim up to a certain amount for each service, which resets every 12 months.
3. Seek out discounts and rebates
The federal government wants you to take out health insurance because it eases the burden on the public healthcare system if you’re being treated in a private hospital. Because of this, there are several incentives to entice you to sign up for private cover:
- Private health insurance rebates. Many Australians who take out a hospital, extras or combined policy are entitled to a rebate from the Australian Government to help pay for premiums. The rebate is income-tested and can either be deducted from your premium or claimed as a tax offset when filing your tax return.
- Aged-based discounts. Australians aged between 18 and 29 can receive discounts on eligible hospital policy premiums for merely taking out cover while they’re younger.
4. Learn how private health insurance can impact tax and your long term costs
Conversely, there are also levies imposed on some who don’t have appropriate levels of cover:
- Lifetime Health Cover loading (LHC). People who don’t take out private hospital insurance by 1 July after their 31st birthday will pay more for cover when they do take it out. The LHC loading is 2% of your health insurance premium for each year you didn’t hold cover from the cut-off date (e.g. 35-year-olds pay a 10% loading).
- Medicare Levy Surcharge (MLS). High-income earners are subject to a surcharge of up to 1.5% of their taxable income (depending on the income threshold they are in) on top of their income tax if they don’t hold valid hospital cover. This is separate from the Medicare levy, which most taxpayers pay regardless of whether they have insurance or not.
5. Think about what life stage you’re at when choosing health insurance
Where you are in life can have a big impact on the type of cover that will best meet your needs.
Here are some questions to ask yourself which could help you determine which policy you choose:
- Do you have any pre-existing conditions that may require treatment in the near future?
- Are there any hereditary health conditions in your family that could impact you?
- Are you planning on starting a family and will you require access to obstetrics cover? Remember, this cover is subject to the 12-month wait.
- Do you also need to take out health insurance for partners or children?
- What kinds of out-of-hospital services do you regularly use that may be covered by an extras policy?
- How will your health needs change as you age, and which services will you need access to?
Private health insurance is all about giving yourself more options for treatment when you need them. As such, you’ll need to ask yourself these questions again in the future to make sure your cover still works for you.
6. Adjust your private health to make it more affordable
You can usually tweak aspects of your private health insurance to make your insurance premium more affordable. Consider the following:
- Customise your excess. If you choose a higher excess (what you agree to pay if you make a claim and are treated in hospital), it’ll usually reduce your premiums. Because your excess is a fixed amount, it won’t change whether you require treatment for one day or one month.
- Choose a co-payment. A co-payment is a fee you agree to pay for every day you’re admitted as a patient in a hospital. If your co-payment is less than what the excess would be and you know how long you’ll be staying at the hospital, it could be the more affordable option. Some co-payments will be capped at a maximum charge per person, despite the length of your stay.
7. Are you covered if you need an ambulance?
Did you know that ambulances aren’t free in all Australian states and territories? While the Queensland and Tasmanian state governments cover residents in these states, Australians elsewhere will require specific ambulance cover to avoid footing the whole bill.
This means you could be left with some hefty out-of-pocket expenses if you require an ambulance but don’t have ambulance cover. This is another thing to think about when choosing health insurance. Keep in mind though that ambulance cover may also be taken out separately to private health cover, which may be more comprehensive.
Our final tip: insurance doesn’t have to be forever. Reassess it regularly!
Whether it’s an industry-wide premium rate rise or your health fund wants to increase the price of your policy, it’s always a good idea to reassess your cover. In addition to making sure you still require the services your health insurance covers, it’s an opportunity to assess whether you could pay less for the same or similar product elsewhere.
This can be achieved through research or using useful tools like our health insurance comparison service. It allows you to compare policies, extras, benefits and costs from a variety of providers in one convenient location. It’s simple to use, free and takes just minutes to reach a result.
Curious how private health insurance compares to Medicare? Learn more about the difference between the public and private health system with our guide.