Is it Worth Having Private Health Insurance Cover?

Although some Australians still agree that private health cover is essential, we aren’t all convinced. In 2014, 65.8% of Aussies with private health cover said it was non-negotiable; in 2018 that number fell to 56.9%.

According to research from Roy Morgan, Australians are struggling to see the value in private health cover. These mixed feelings are due in part to uncertainty over what is covered – understandably, we aren’t comfortable spending money on a service we don’t have confidence in.

Is it worth having private health cover? If you’re part of the growing segment of Australians who are on the fence about it, there are a few things you should know before you make a decision.

First, we’ll look at the foundations of health cover, which are just as beneficial as they were four years ago. Then, we’ll look at the current round of reforms that might impact the way you feel about your cover.

Health cover can save you money

In Australia, we’re lucky to have access to Medicare. It’s widely understood that Medicare is an important part of health care, but it doesn’t cover everything.

Medicare doesn’t extend to common everyday treatments and services like most dental and optical. If you need to see a dentist or get glasses or contacts—not to mention visit a chiro, physio, or psychologist—you’ll need to pay out of pocket without adequate health cover.

30% of Australians are currently skimping on regular dental care due to cost, and public dental patients are more likely to have dental decay than other Aussies.

But no one should skimp on their basic health needs. An extras policy can easily be taken out as a standalone health cover or as part of combined hospital cover. Depending on your level of cover, you could get a 100% rebate on regular checkups. 40% or higher on your services.

Consider the fact that a simple filling can cost anywhere from $100 – $300 without cover, and you’ll see how the savings can add up.

Save on time

If you need surgery, you probably want to get it done as early as possible, right? Well, if it’s elective (non-emergency) surgery, you may find yourself facing long wait times if you don’t have health cover.

The Australian Institute of Health and Welfare reported that the median elective surgery wait time for public patients in public hospitals is an astonishing 42 days – that’s six weeks of waiting!

With private cover, you can expect a median wait time of 21 days, cutting your wait time in half. If you don’t like to wait in queues – especially when it comes to your health – private health cover offers a clear advantage.

Tax benefits

There are three clear tax benefits to taking out private health cover, because the government wants to encourage Australians to purchase private health cover.

First, there are rebates for having private cover. The Australian Government Private Health Insurance Rebate is in place to help you pay your premium. You can claim the rebate at tax time or by paying a lower premium throughout the year.

The rebate is income-tested, so you can save up to 33.887% on your health cover depending on your age and income. Use our health insurance rebate calculator to find out what your rebate is.

Second, having private hospital cover can help high income earners avoid the Medicare Levy Surcharge, or MLS. This is an additional tax of up to 1.5%, levied on singles and families who earn over a certain income each year and who do not have an eligible private health cover policy.

Third, by joining private health cover early in life you won’t face a Lifetime Health Cover loading, or LHC. If you don’t have hospital cover by 1 July following your 31st birthday, the government will slap an additional 2% loading fee on your premium for each year that you don’t hold cover.

Drag your feet on getting covered, and there could be a hefty loading fee on your premiums when you do eventually take out cover.

Health care reform is on the way

The benefits we’ve discussed so far are all good reasons to hold onto your health cover, but they don’t address the fact that the system can be confusing.

After twenty years of discussion, private health insurance reform is finally on the way. New changes are being implemented in 2019 and should make the system more efficient and easier for all of us to understand.

Comparing health cover has long been a smart way to save on your premiums, but it can be hard to compare when the policies are so different. That’s set to change with the introduction of new product tiers, which will create a standard for comparison.

There are four tiers to be aware of: Basic, Bronze, Silver, and Gold. Each tier will have rules about what must be included, so you’ll know what you’re getting when you shop around. This should make it easier to identify which fund is offering the best price on the product you want.

Young people under 29 years of age will also be able to access youth discounts of up to 10% on their premiums on some covers. When every little bit counts, it’s nice to know that there are ways to save.

Is it worth having private health cover?

Many Aussies find private health cover not only worth it, but an essential part of their lives. The key to getting the most out of your cover is doing your research, comparing policies, and picking one that fits your current lifestyle and health needs.  

Need help coming up with a shortlist of options? We’ve made it easy for you.

Comparing health insurance policies online with Health Insurance Comparison is a quick and easy solution to finding health cover that suits you and your family best, at the right price