Health insurance mitigates the financial risk of you becoming ill or injured and requiring anything from basic to advanced medical care. The Australian healthcare system offers free medical treatment to all residents in the public hospital system. However, in the public healthcare system it is the hospital administrators who determine which doctors treat you and in which hospital they treat you in. When you elect to be treated in the private healthcare system, you are given more choice over your medical care, but without adequate health insurance the cost of this option can run into the tens of thousands of dollars.
Health insurance policies in Australia come in three broad classes; hospital, ancillary and combined. Hospital cover will payout toward the cost of emergency care in the private health system. You will have full discretion to determine which doctors treat you and in which hospital you are treated, subject to the availability of beds and the doctors’ schedule. Without health insurance, you can still be treated in the private hospital system, but you will be liable to pay for it out of your own pocket.
Apart from the healthcare benefits a hospital health insurance policy will cover, there is also a significant tax benefit. Single people who have a taxable income of more than $80,000 will be liable for the Medicare Levy Surcharge if they do not have a hospital private health insurance policy in place for the full year. The Medicare Levy Surcharge is 1% of taxable income, so starts off at $800. A quick search of private health insurance policy prices shows that your better off having a policy in place than having to pay the surcharge and receiving no additional benefit.
Ancillary health insurance cover covers the medical expenses you incur outside hospital, which are generally concerned with ongoing health issues and maintenance. This includes expenses such as dental and optical, and are generally subject to certain annual limits. Most health insurance policies will offer full ancillary treatment from their selected practitioners, but if you choose to see your own health practitioner you will be rebated a fixed amount depending on the type of treatment you receive. As such, those with ancillary health insurance policies do not usually receive the full cost of the treatment but will generally receive anything from 50% to 80% of the total treatment cost.
The range of health services covered by ancillary policies can be wide and all encompassing, or narrowed to reduce your premium. HCF have marketed a health insurance policy to young singles that doesn’t cover expensive procedures unlikely to be needed by young people, the rationale being that they can subsequently offer a cheaper policy. If you reduce the number of ancillary procedures and treatments you are covered for, you can reduce your health insurance premiums significantly.
A combined health insurance policy combines both hospital and ancillary expenses and will give you the maximum health protection for you and your family. Health insurance is a relatively inexpensive outlay and you will usually make at least a few claims in the year to reduce the net annual cost to you.