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Health Insurance for Parents Whose Children are Leaving Home

Jonathan January 5th, 2015 0 comments

When major life changes happen, your health insurance needs change. Having the right coverage for you and your family is essential to protect your finances and, most importantly, your health. Reevaluating your needs is important when major milestones occur, and there is peif yrhaps no milestone more significant than when kids leave the nest.

If your children are leaving home, this guide can help ensure that both you and your kids have the health insurance coverage you need.

Age When Children Leave Home

What are the benefits of having private health cover?

Medicare provides universal health insurance coverage to Australian citizens. However, private health insurance makes broader healthcare options available.

Benefits of having private health cover include:

  • The option to be treated in a public or private hospital and to choose your doctor, which you can’t do if you are on Medicare. On Medicare, you may not even get to choose when you are admitted to the hospital.

    Public vs. Private Hospitals

  • Coverage for dental exams and treatment. The Medicare Child Dental Benefits Schedule pays up to $1,000 in dental expenses over two years for children ages 2 to 17, but no other dental services are covered.
  • Coverage for speech therapy, physiotherapy, occupational therapy, acupuncture, glasses, contact lenses, hearing aids and nursing home care, none of which Medicare will generally pay for. Acupuncture costs will be paid for only as part of a doctor’s consultation, and while eye exams are covered, no glasses or contact lenses are paid for if you need them. Other services like occupational therapies are also not covered at all.

    What Will Your Procedure Cost

As you get older, your health needs change. Seniors need more medicine, more adaptive devices and more care. Private health cover provides this when Medicare won’t.  If your kids are leaving the nest, you may be reaching an age where the ability to get advanced treatment becomes important to you.

Why should you reevaluate health insurance coverage?

When your children leave home, this is a major shift both for you and for your kids. Reevaluating health insurance coverage needs is important because:

  • Your children will need new insurance. Kids are covered on a family policy until age 21. If they are student dependents, coverage continues until age 25.  If your children are no longer covered on a family policy, they need coverage of their own.
  • You (or your kids) may need help with the transition. Leaving home is difficult for parents and kids. Mental health counseling can help. Medicare rebates are available for up to 10 individual and group services, but you may need more care or a different type of treatment than is provided.

  • Your medical needs will change. Adult children often need help with family planning issues. Seniors whose kids have left home frequently need more medical help, especially if children were serving in a caregiving role.
  • Your insurance costs will change. If your children no longer need to be covered by your insurance, a couples or singles policy is cheaper than family coverage.

For the sake of your finances and health, changing your insurance is important when your life changes.

How should you choose the right coverage?

When looking for new coverage, it is important to determine:

  • What your new premiums will be. Can your children afford premiums on their own policies? Can you provide financial assistance?

    Policy Cost Calculator

    How it works

    This policy cost calculator is designed to convert a typical monthly health insurance premium into daily, fortnightly, quarterly, and yearly increments.

    Please input amount





    Your Medicare Levy Surcharge is 1% of your income, or $2050
  • What is the waiting period? There is generally a two month waiting period for the majority of services, but hearing aids and dental services can have a longer waiting period. How Long Is the Waiting Period?
  • What extras are included? Look for hearing aids; health aids; eye therapy; optical coverage; detail coverage; chiropractic; natural therapies; home nursing; and physiotherapy among other extras.

  • What are the annual limits? This refers to the number of times you can claim an extra or the amount you can claim. Annual limits reset each year.
  • What is the percentage back? Percentage back is the amount you get back on the extra medical treatment received. The percentage back generally ranges from 60 to 75 percent back up to annual limits.
  • Who are the recognised providers? Coverage is only available when claims are made with recognised providers. Make sure the doctor you want to see is included.

What types of coverage do seniors need?

People between the ages of 55 and 74 in Australia make the most use of extra healthcare coverage.[1]

Your coverage needs will depend upon your health status and what you plan to do now that your kids have left home. For example, you may want to consider:

  • Travel insurance in case you decide to spend your retirement seeing the world. Travel insurance is sold separately from standard health insurance. Frequent traveler policies are available that can cover multiple trips over 12 months, or you can buy individual policies for each trip you take.
  • Nursing care if you have medical issues you need help with now that your kids are not at home to assist.
  • Nursing home coverage in case you need to enter an assisted living facility.

  • Mental healthcare coverage if you or your kids need help with the transition out of the home.
  • Chiro and physio coverage if you want to try to reduce pain and live a fuller life during retirement
  • Surgical coverage if you have aging joints and may want a replacement in the future

The right plan should be tailored to your needs both now and in the future.

How can you make sure your kids remain covered?

Children can remain on their family’s health insurance until age 21 or until age 25 provided they qualify as a full time student. To qualify as a full time student, a child must be:

  • Single (Neither married, nor in a defacto relationship)
  • Enrolled in a full time academic program

If your children do not fit this criteria, some insurance companies will allow parents to continue coverage for them at an extra cost. Children can also find their own insurance in a separate singles policy.

Avoiding a break in coverage is essential for kids losing access to a parent’s policy. If there is a break in coverage, there is a waiting period for services. This can be avoided by choosing a level of coverage that is:

  • At least as good as the family policy.
  • Backdated to the child’s 25th birthday or until the time when the child was no longer covered by the parent’s policy

Surveys have shown that most children in Australia become financially dependent at age 23.[2]  Whether your kids are above this age or below it, they may need help from mom and dad in understanding insurance coverage options. Talk to your children when they are moving out about getting coverage.

What if you (or your kids) don’t have private coverage?

Without private coverage, you face:

  • Longer waits for some types of care

    How Long Will You Wait for Care?

    Health Insurance Waiting Period Estimator

    You will have to serve a waiting period when you start a new private health insurance policy or increase your level of cover. A waiting period protects members of the fund by ensuring that individuals aren't able to make a large claim shortly after joining and then cancelling their membership. This kind of behaviour would result in increased premiums for all members.

    Use this calculator to choose a hypothetical date in the future (or leave it on the default setting, which is today's date) to determine when you will be covered for various types of coverage.

    Most health insurance funds will apply the following waiting periods to new members taking out a hospital cover product:

    (These are the maximum waiting periods allowed by law for hospital cover.) These waiting periods also apply to any additional benefits on your new product if you transfer to a higher level of hospital cover, with your existing fund or with a different fund.

    Note: If you are moving to the same or a lower level of cover, you will NOT have to re-sit waiting periods.

    Some funds also apply Benefit Limitation Periods for some types of treatment on some of their hospital covers.

    Months Standard Waiting Period
    0
    • Accidents
    • Ambulance
    2
    • Chiropractic/Osteopathic
    • Alternate/Natural Therapies
    • Dietetics
    • Eye Therapy
    • Hospital Treatment
    • Occupational Therapy
    • Pharmaceutical Perscriptions
    • Physiotherapy
    • Podiatry
    • Speech Therapy
    • General Dental
    6
    • Optical
    12
    • Orthotics
    • Major Dental
    • Pre-Existing Conditions
    • Pregnancy Related Services
  • More restrictions on your care. You will have to be treated in a public hospital and won’t have control over who your doctor is.
  • Gap fees, which can total in the thousands of dollars, if you get treatment outside of a public hospital.

  • Extra Medicare surcharges if you earn $90,000 or more.
  • High costs for things not covered by Medicare. You’ll have to pay 100 percent out of pocket.

Your kids also need to get coverage before they turn 31, or they will face a Lifetime Health Cover load when they eventually get insurance. The longer the delay, and the older you are when getting coverage, the higher the cost.

How Much Will Your Children Have to Pay if You Wait to Get Coverage?

Medicare Levy Surcharge Calculator

The Medicare Levy surcharge is an additional fee paid on top of the 2% Medicare Levy Surcharge that most Australian taxpayers pay. You can avoid the surcharge if you have Private Health Insurance (Hospital Cover).

The exact surcharge level you'll need to pay depends on your income level and relationship/family status. Use the slider and dropdown menu below to determine what surcharge you're liable for if you don't have private hospital cover.

Please select status

Your Medicare Levy Surcharge is 1% of your income, or $2050
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
Medicare Levy Surcharge
Standard Tier 1 Tier 2 Tier 3
All ages 0.0% 1.0% 1.25% 1.5%

Don’t hesitate- get yourself, and your children, the health coverage you need.

Disclaimer: The above information is correct and current at the time of publication.

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