5 Health Insurance Myths, Demystified
Though it is not compulsory in Australia to have private health insurance, a Medicare Levy may be imposed on those above a certain age without private hospital cover. Australians are better off financially to commence cover as early as possible, especially as the longer you wait, the more Medicare Levy Surcharge is accumulated on a pro rata basis.
Despite this, a considerable percentage of Australians have chosen not to be covered due to a set of false beliefs they have gathered from hearsay and misunderstandings. Here are some myths revolving around health insurance, and the relevant facts:
- 1 Myth #1: The government will look after me if I am ill
- 2 Myth #2: I’m too old or young to be covered
- 3 Myth #3: I don’t need private health insurance as I’m young and healthy
- 4 Myth #4: It’s cheapest to buy health insurance through an employer’s group insurance
- 5 Myth #5: Health insurance companies are driven by profit
Myth #1: The government will look after me if I am ill
Fact: While Centrelink provides assistance for people who suffer a serious disability, the Disability Support Pension doesn’t offer any further assistance and rules apply around those who are eligible for it. Offering about a quarter of the average full-time income, the financial assistance rendered leaves one with a funding gap in covering bills, mortgage or rent and medical expenses.
Myth #2: I’m too old or young to be covered
Fact: No one is too old or young to be covered by health insurance. We can never predict when we’ll need that health cover if the unexpected happens. Health insurance provides coverage for people of all ages. The younger you are, the more you’ll save on premiums as those who join from age 31 on will pay a higher premium on basic cover for each year that they are over thirty. There is no age limit for starting a new policy, and insurers will continue to insure subscribers for as long as they require cover.
Myth #3: I don’t need private health insurance as I’m young and healthy
Fact: Even though you are young and healthy it doesn’t mean that you can’t get injured from sports or any other activities. Health insurance protects you financially when you are in need of medical attention such as tonsil removal, a broken leg or knee injury due to sports. Having a private health insurance may also reduce waiting times for treatment, and offer you the choice of your preferred doctor or surgeon.
Myth #4: It’s cheapest to buy health insurance through an employer’s group insurance
Fact: If your employer provides your health cover as part of a group health insurance policy, with money taken from your wage packet to pay your premium, you may be paying for:
- Annual increases in premiums
- Increases in your out-of-pocket expenses
- Benefits that you don’t need
Individual health insurance may save you money in comparison, as coverage can be selected based on your individual health care needs. On the other hand, group health plan must abide by state health insurance mandate which includes coverage for a wide range of treatment and auxiliary care such as hearing aids and obstetrics coverage.
Myth #5: Health insurance companies are driven by profit
Fact: Medicare administrative costs are similar those of private health insurance funds. The escalating cost of prescription drugs goes some way to explain the cost of private health insurance. When patients use a government-subsidised health care such as Medicare, health care providers shift more costs to those who have insurance. This may result in higher premiums overall for two categories of insurance consumer – those who purchase insurance on the individual market and those who receive insurance through their employers.
As explained above, private health insurance is useful for Australians regardless of age mainly because it provides financial coverage for medical attention we may need if the unexpected occurs. In addition, purchasing a private health insurance may give us access to treatments and services that are not covered by Medicare such as theatre fees, accommodation, dental care and ambulance services. Now that we’ve cleared up a few misconceptions, take a look at your options and decide what type of health insurance suits you.
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