Health insurance offers valuable peace of mind, especially for young families with changing medical needs.
Here is our guide to buying health insurance for your family and making sure that it stays relevant for your situation as your family gets older.
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How Medicare Helps
Medicare offers some support for families, including:
- Free treatment in public hospitals as a public patient
- 75 per cent of the Medicare Benefits Schedule fee for being a private patient in a public or private hospital – this does not include theatre fees, medicines or accommodation fees
- Free or subsidised treatment by doctors and specialists, and optometrists
This means that you won’t be charged for being treated in a public hospital, if any member of your family needs to be admitted. If you choose to be a private patient, you can expect to pay some out-of-pocket costs regardless of whether you are treated in a public or private hospital.
If any member of the family needs to see a doctor, Medicare covers 85 per cent of the Medicare Benefits Schedule (MBS) fee for specialist consultations. Medicare covers 100 per cent of the MBS fee for GP visits.
For the most part, Medicare only covers dental treatment in exceptional circumstances. It does offer some support for kids’ dental services through the Child Dental Benefits Scheme (CDBS), although this support is limited. It is capped at a maximum of $1,000 over two consecutive years) and therefore will not go very far if orthodontics and other significant dental work is needed. Given the very limited support provided by Medicare, Extras cover with dental benefits is a must-have for keeping your family’s dental health in check.
Eye tests are covered by Medicare, as long as they are performed by a qualified optical specialist. However, Medicare does not cover vision correction. If any of the family need glasses and/or contact lenses, you’ll need to have Extras cover with optical benefits to avoid out-of-pocket costs.
The Pharmaceutical Benefits Scheme (PBS) means that Australians only a small contribution towards the costs of subsidised medicines (on presentation of a valid Medicare card).
If your family are likely to need a lot of medications, the PBS Safety Net can lower the costs for the rest of the calendar year if the threshold is met.
The Downsides of Relying on Medicare
Medicare offers some great benefits for families, notably for free public hospital treatment and lowering the costs of out-of-hospital services and PBS medications. Relying solely on the public healthcare system does have a few significant disadvantages though.
Public hospital treatment will avoid out-of-pocket costs if any of the family need to go to hospital but for elective surgery, waiting times can be significant. Depending on the type of procedure and the clinical urgency of the situation, patients can wait anything up to a year for surgery – and sometimes more. Many families therefore choose to buy hospital cover so that treatment can happen much sooner.
Because Medicare does not cover everything, you can expect to pay some out-of-pocket costs – particularly for out-of-hospital services. The Medicare Safety Net and the PBS Safety Net can go some way towards helping out with this if your family reaches the relevant thresholds but will not actually prevent out-of-pocket costs altogether. With the likes of dental and optical services only being marginally covered by Medicare, many families choose to buy ancillary (Extras) cover to cover the areas that Medicare doesn’t.
How Health Insurance Can Help
There are two types of private health insurance: hospital cover and ancillary/Extras cover. The former can help your family to cut waiting times and avoid out-of-pocket costs for hospital admissions while the latter covers out-of-hospital services that are not available through Medicare and would otherwise lead to significant out-of-pocket costs. Some of the services that may require Extras cover include dental, optical, physiotherapy, chiro, osteopathy, podiatry and speech therapy.
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Depending on where your family live, you may need to buy private ambulance cover for emergency ambulance transportation. QLD and TAS have state ambulance schemes, and residents in these states do not need to arrange private ambulance cover but it is definitely needed in SA and VIC. Rural parts of WA are covered by a state ambulance scheme but those living in the Perth metropolitan area will need to be covered privately. If your family’s location requires you to have emergency ambulance cover, it is available on the majority of Extras policies and can also be bought as stand-alone cover with many health funds.
Why It Pays to Buy Health Insurance As Soon As You Can
If you have a young family, it’s far better to invest in private health insurance sooner rather than later. This is because the Australian government’s Lifetime Health Cover (LHC) initiative means that you will pay more for hospital cover if you buy it when you are older. A 2 per cent loading fee will be added to premiums for every year that you were without hospital cover beyond the age of 30. Waiting until you are 35 will add an extra 10 per cent loading, for example. Buying health insurance before you hit your 30s means that you will lock in the cheapest premiums for life.
How Long Can Children Stay on Your Policy?
With some health funds, dependent children can be covered on your policy up to the age of 24 – if they are full-time students. This will sometimes be at no extra cost but may incur a slightly higher premium. It is therefore worth checking how long your children would be able to be covered on your policy when you shop around.
At the very least, most families will benefit from having health insurance to reduce or avoid out-of-pocket costs for services that are not covered by Medicare. This could otherwise make a sizeable dent in the family budget, especially as children’s health needs are liable to change regularly as they get older. From a financial point-of-view, it’s definitely better to buy hospital cover as soon as you can to avoid Lifetime Health Cover loading on top of premiums.