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Health Insurance for Couples

Jonathan January 5th, 2015 0 comments

Purchasing private health insurance limits out-of-pocket costs and gives you broader choices than Medicare cover. If you are legally married, in a registered relationship or living in a de facto relationship, you have the option of either purchasing singles’ policies or purchasing a couple’s policy. There are advantages and disadvantages to each option and you need to carefully shop around for the health insurance fund that is right for you.

Couples vs. Singles Health Insurance Policies

Couples in a homosexual or heterosexual marriage have the option to purchase couple’s health insurance cover, as do individuals living together in a de facto relationship.  A couple’s policy refers to one private health insurance policy that covers both partners.  Each member of a couple may also purchase his or her own single’s cover instead of purchasing couple’s cover.

Purchasing a couple’s policy has some advantages:

  • The cost of insurance premiums is almost always lower for a couple’s policy than for two singles
  • You can choose a policy with a combined annual limit so each partner can select the extra services of his choice. For example, one spouse could get dental treatment and the other mental healthcare services or occupational therapy.
  • Couples policies often have more extensive coverage for family planning needs. Lower-cost singles’ policies may exclude cover for things like fertility treatments or pregnancy services. You can choose a couple’s policy that includes these extras.

When Do You Become a Couple for Health Insurance Purposes

In Australia, you are eligible for couple’s health insurance coverage provided that you are:

  • Married
  • In a registered opposite sex or same sex marriage
  • In a de facto relationship

A de facto relationship exists any time two unmarried and unregistered partners live together in a romantic relationship. There is no minimum time period that you must live together before you are viewed as being in a de facto relationship.

The Australian government provides a rebate to most individuals who purchase private health insurance coverage. This rebate is income tested. If you are in a registered relationship, are married or in a de facto relationship, you will be subject to the family tier limits rather than the singles limits when determining your income for purposes of rebates.

A levy surcharge is also assessed on Australian taxpayers who make above a certain income and who do not have private hospital coverage. Married and registered partners as well as people in a de facto relationship must combine their incomes and are subject to family tiers for purposes of assessing their  Medicare levy surcharge.

Couples’ Policies and Age Loads

The Australian government has a system in place called Lifetime Health Coverage, which is designed to encourage young people to become insured.

If you have purchased private coverage prior to age 30, you can lock in a lower rate. If you do not have coverage prior to age 30, you are subject to  two percent age loading for each year over 30. For example, if you are 35 when taking out coverage for the first time, you would incur a 10 percent age loading cost.

It is common for partners to be different ages and have different insurance coverage histories. If either party is over 30 and has not had prior coverage, the age load cost must be considered when taking out a couple’s policy.

Age at Marriage Chart

The age loading of each spouse or partner is averaged when a joint policy is purchased. For example, if the wife purchased insurance at age 25, she has no age loading. If the husband purchased insurance at 35, he has a 10 percent age load cost. When the couples policy is purchased, the spouses have an average load of five percent and will pay five percent above the base premium rate for shared coverage.

The age load is dropped after 10 years of continuous coverage, so the average load for the couple will need to be recalculated when this milestone is reached.

Your Life Stage and Your Couple’s Coverage

When purchasing couple’s coverage, the needs of both individuals need to be taken into account. These needs can change as you both age and experience life milestones.

Younger couples often look for coverage for obstetrics, fertility treatments and pregnancy. Premiums for policies covering pregnancy services may be higher and this coverage can be dropped once you have had children.  Most funds have a 12-month waiting period for pregnancy coverage, so planning ahead is essential if you are thinking about starting a family.

Once you have had children, purchasing family coverage is important to provide needed health benefits for children. Children can be covered until age 21 on a family policy, or until age 25 provided they are student dependents.

Family Structure Chart

After children leave home, you can return to a couple’s policy. For senior couples, pregnancy coverage is no longer necessary. Extras that senior couples may look for include hearing aids; chiropractic care; and home nursing care.

Each partner’s individual medical needs may differ, so couples should look for policies that have a combined annual limit and that permit each spouse to select the extra coverage of his or her choosing.

Pregnancy and Family Coverage

Medicare provides coverage for pregnancy only in public hospitals. A referral is required for Medicare to provide pregnancy coverage.

Private hospital cover provides broader coverage for pregnancy and birth-related services.  However, some lower cost funds pay only restricted benefits that cover private patients in public hospitals.  If you want to have your baby in a private hospital, you must look for a health fund policy that provides this coverage.

Delivery Suite at Mater Hospital in Australia

Pregnancy coverage can be purchased as part of a single’s policy or as part of a couple’s policy. Not all policies for either singles or couples offer obstetrics cover.

All health insurance funds have a 12 month waiting period before providing any type of coverage for pregnancy. This means you must have coverage for obstetrics treatments well before you fall pregnant.

How Many Babies are Born in Australia Each Year?

Insurance with obstetrics cover generally provides payments only for pregnancy-related treatments and does not pay for medical care for the infant.  Healthy babies are not formally admitted to a hospital so no charges are raised for the babies care. If the baby requires any treatment, however, he or she may be admitted as an in-patient and charges will apply.

For parents who have twins or multiple births, at least one baby is formally admitted to the hospital as a matter of policy. This results in excess costs unless you have family coverage.

Switching to family coverage before the baby is born is advisable to protect your finances in the event that your infant incurs unexpected medical costs.  Most funds require switching to a “family” level policy between one and three months prior to the birth of the baby.  However, some require you to switch to a family level as early as 12 months before giving birth to provide coverage for congenital conditions.

Does Pregnancy Cover Provide Coverage for Fertility Treatments?

 Not all policies that provide obstetrics cover offer coverage for assisted reproduction treatments like in vitro fertilization (IVF).  Even when IVF is covered, typically only aspects of the treatment requiring admission to a hospital are paid for by hospital insurance. IVF treatment has multiple steps, many of which do not require hospital admissions.   These outpatient treatments often need to be paid out of your own pocket.

The standard waiting period for IVF coverage is 12 months; however some policies impose a waiting period of up to three years.

Tax Implications for Couples Insurance

Health insurance rebates are available from the government to assist with the payment of private health coverage premiums. Becoming a part of a couple affects your eligibility for health insurance coverage rebates.

The amount of your health insurance rebate is based on your income and there are different income thresholds for individuals versus couples. Anyone who is married, in a registered relationship or living in a de facto relationship is subject to family tiers.  It is important to understand that living as a couple may affect your ability to claim rebates. Rebate income limits for individuals and families are as follows:

Singles
Families
$90,000
$180,000
$90,001-105,000
$180,001-210,000
$105,001-140,000
$210,001-280,000
$140,001
$280,001
Rebate
Standard Tier 1 Tier 2 Tier 3
age 65 25.934% 17.289% 8.644% 0%
Age 65-69 30.256% 21.612% 12.966% 0%
Age 70+ 34.579% 25.934% 17.289% 0%

Australia also charges a Medicare levy surcharge on higher income individuals who do not purchase private hospital insurance coverage. Individuals who are living in a couple relationship must use the family tier to determine if they are subject to a surcharge based on their combined income:

  Unchanged Tier 1 Tier 2 Tier 3
Singles $90,000 or less $90,001-105,000 $105,001-140,000 $140,001 or more
Families $180,000 or less $180,001-210,000 $210,001-280,000 $280,001 or more
Medicare Levy
Surcharge Rate
0% 1% 1.25% 1.5%

Your rebate your obligation to pay a surcharge may change when you go from being single to becoming a member of the couple. Be sure to calculate your combined income and review both the limits for rebates and the income thresholds for the surcharge.

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