Health Insurance for Seniors
Many seniors choose to have private health insurance for peace of mind as they get older and are likely to need more medical services. Indeed, “peace of mind” is frequently cited as one of the most common reasons for buying private health insurance, along with receiving treatment more quickly. Here is our guide to for helping seniors to choose the right type of health insurance.
- 1 What Does Medicare Cover?
- 2 Does the Government Offer Any Specific Support for Seniors?
- 3 The Downsides of Medicare for Seniors
- 4 The Health Issues That Seniors Face
- 5 Choosing Cover That Works Best for Seniors
- 6 The Financial Implications of Having Health Insurance
What Does Medicare Cover?
Before you compare your health insurance options, it is useful to know what is available through the Medicare system.
Does the Government Offer Any Specific Support for Seniors?
In addition to the services that are covered through Medicare, the Australian Government offers some extra health-related support for seniors.
The Commonwealth Seniors Health Card (CSHC) allows eligible Australian pensioners to access cheaper PBS prescriptions, and can also offer cheaper out-of-hospital medical expenses. To qualify for the CSHC, you must have reached Age Pension age but not be in receipt of this or a pension from the Department of Veterans’ Affairs. It is subject to an adjusted tax income test, which is now indexed in September of each year. Eligible pensioners must have an income of less than $51,500 for singles and $82,400 for couples. From January 1st 2015, superannuation pension income ise included in this.
The Downsides of Medicare for Seniors
All Australians are entitled to free public hospital treatment, while the Pharmaceutical Benefits Scheme (PBS) offers subsidised costs for prescriptions. Some seniors can get lower prescriptions if they qualify for the Commonwealth Seniors Health Card.
However, many seniors choose to purchase health insurance so that they can be treated more quickly if they need to be admitted to hospital and to have much greater freedom of choice as to where they are treated and by whom.
Joint replacement surgery can have a significant waiting time for an elective procedure in the public hospital system but this can be greatly reduced with health insurance, for example.
The Health Issues That Seniors Face
As you get older, your risk factor for developing certain conditions increases. In this section, we look at some of the most common age-related conditions and how health insurance can offer support.
As you get older, your bones will start to lose density. This is an unfortunate part of the natural ageing process but for some seniors, it will result in osteoporosis. Women are more at risk due to the fact that their peak bone mass is lower than men and additional bone density is lost after the menopause. Insufficient calcium intake is also a factor in the development of the condition.
Osteoporosis is characterised by weak and brittle bones but does not necessarily have any obvious symptoms. A fracture will often be the first indication that it has developed.
If you are diagnosed with osteoporosis, you may be prescribed medication to reduce your chances of fractures and breaking bones. Some health funds offer additional support through management programs. This can be invaluable for living with the condition.
Any condition that affects the heart is considered to be cardiovascular. Heart attacks and strokes are common examples but it can also refer to blocked arteries and valves and an irregular heart rhythm. Lifestyle can play a big part in the development of cardiovascular problems but other factors can include general health and certain medications.
Cardiac and cardiac-thoracic procedures are usually excluded from the more basic type of hospital cover but are available on most top level policies.
Rehabilitation services are included on mid to top level hospital cover but are often excluded on basic hospital policies.
Rheumatoid arthritis and osteoarthritis are autoimmune conditions that cause joint inflammation and pain. It occurs when the body’s immune system attacks the joints, although experts are not sure why this happens. It is more likely to affect those with a family history of the condition.
If you are diagnosed with arthritis, treatment may involve medications to relieve the symptoms and/or to slow down the degeneration of the affected joints. In more severe cases,
surgery to increase movement and reduce pain in affected joints. Physiotherapy and complementary therapies may also prove useful.
Joint replacement and reconstruction surgery is usually included on most top level hospital policies, while mid to top level extras cover will often include physio, acupuncture and other complementary therapies.
Cataracts and Other Eye Issues
The eye muscles start to weaken from around the age of 45, which can lead to cataracts, glaucoma and Macular Degeneration (MD), which causes progressive vision loss.
Eye tests by qualified opticians are covered by Medicare but this is the extent to which optical is covered without health insurance. Cataract and eye lens procedures are usually included in broader hospital cover but are usually excluded from the more basic policies.
Alzheimer’s Disease affects the nerves in the brain, which impacts on the way it is able to function. It is a form of dementia. Symptoms include forgetfulness, memory problems, changes to personality and mood, and difficulty in carrying out day-to-day tasks.
Diabetes is the fastest growing chronic condition in Australia, with over 1 million currently living with it. While insulin-dependent Type I diabetes usually develops before the age of 40 and often during the teenage years, the risk factor for Type 2 diabetes increases with age. Treatment varies depending on the type of diabetes; Type 1 will require insulin injections for the rest of your life, while Type 2 can be controlled through healthy eating, exercise and keeping check on glucose levels (although medication may be needed further down the line).
Depending on the health fund, Extras cover can include health aids and appliances such as blood glucose monitors. You may also be able to access healthy living services towards the cost of gym memberships and weight management programs to help to keep your diabetes in check.
Poor circulation can become an issue for seniors. In the legs and feet, this is known as Peripheral Vascular Disease (PVD) and usually occurs because the arteries that supply blood to these areas have been damaged. This can happen because the artery walls have thickened or hardened, or if the artery walls have become clogged. Diabetes, high blood pressure and high cholesterol can all contribute.
Complications relating to poor circulation can be avoided with good foot care, including podiatry. For those who feel that they are at risk of potential complications, podiatry is available on some Extras cover. The more basic Extras policies don’t always include podiatry but it is usually readily available with mid to top level Extras.
Choosing Cover That Works Best for Seniors
If you are buying health insurance for the first time as a senior, Lifetime Health Cover (LHC) means that you will pay more than your younger counterparts (due to loading fees for having delayed far beyond the age of 30). This makes it even more important to avoid paying for services that are not relevant to your situation, such as obstetrics cover.
A generic top level hospital policy will usually include joint replacement surgery, cataract/ eye lens surgery, cardiac surgery and other procedures that become more likely as you get older but it is also likely to include obstetrics (and other services) that seniors will not need.
If you shop around for health insurance, you can find hospital policies that are aimed solely at older couples. These include the type of services that you may need to access while excluding those that are irrelevant at this stage of your life. This type of policy will therefore tend to be less expensive than generic counterparts and much better suited to seniors. Shopping around and comparing your health insurance options can therefore save you money on your premiums.
The Financial Implications of Having Health Insurance
Lifetime Health Cover (LHC)
Buying hospital cover later in life can be much more expensive due to the effects of Lifetime Health Cover. This is intended to encourage Australians to take out hospital cover in their 20s and means that there will be financial penalties for doing so later on.
There is a 2 per cent loading fee added to premiums for every year that you delayed beyond the age of 30, up to a maximum of 70 per cent. Waiting until you are 50 will result in a loading fee of 40 per cent, for example.
If you plan to have hospital cover as you get older, it makes much more sense to buy it while you are younger to avoid the financial implications of LHC.
Medicare Levy Surcharge (MLS)
If you don’t have hospital cover and you earn above the MLS income thresholds, you’re obliged to pay the Medicare Levy Surcharge. As with Lifetime Health Cover, the MLS is intended to ease the burden on Medicare by encouraging greater take-up of private health insurance.
An “eligible” hospital policy is one which has an excess of $500 or less for singles and $1,00 or less for families. If you have this, you’re exempt from paying the MLS.
Your MLS income tier also affects the tax rebate that you can expect to receive, although rebates are also impacted by your age.
For the 2017/18 financial year, the MLS thresholds are:
|No Tier||Tier 1||Tier 2||Tier 3|
|No Tier||Tier 1||Tier 2||Tier 3|
|Singles||≤ $90,000||$90,001 - 105,000||$105,001 - 140,000||≥ $140,001|
|Families||≤ $180,000||$180,001 - 210,000||$210,001 - 280,000||≥ $280,001|
Medicare Levy Surcharge
|Standard||Tier 1||Tier 2||Tier 3|
Tax rebates have been available for several years to encourage more Australians to buy health insurance and reduce pressure on the Medicare system. It has been means-tested since 2012. As well as income, it is also affected by age.
The rebate that you can expect to receive depends on the MLS income tier that you fall into. It is more generous for those aged over 65, especially for seniors with low income. However, age has no effect for higher earners, who are exempt from earning a rebate across the board.
For the 2016/17 financial year, the income tiers for tax rebates are:
|No Tier||Tier 1||Tier 2||Tier 3|
Rebate – 1 April 2017 – 31 March 2018
|Age||No Tier||Tier 1||Tier 2||Tier 3|
|Singles||< $90,000||$90,001 - 105,000||$105,001 - 140,000||> $140,001|
|Families||< $180,000||$180,001 - 210,000||$210,001 - 280,000||> $280,001|
|Base Tier||Tier 1||Tier 2||Tier 3|
|Age < 65||25.415%||16.943%||8.471%||0%|
Private health insurance offers valuable peace of mind and practicality as you get older and are more likely to need medical treatment. A broad level of hospital cover can significantly cut the waiting times for joint replacement surgery compared to the public hospital system, for example. A comprehensive level of Extras cover can also become increasingly important for seniors, and can offer additional support for some of the conditions that can develop in later life. As a senior, you can receive a higher level of rebate (depending on your Medicare Levy Surcharge income tier) to offset some of the costs of your premiums, and having hospital cover will exempt you from paying the Medicare Levy Surcharge.
Disclaimer: The above information is correct and current at the time of publication.
Disclaimer: The above information is correct and current at the time of publication
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