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Last Updated on 24 May 2018

How to Maintain Private Health Insurance After Losing A Job


The professional landscape is always changing, and nobody’s job is truly safe. Companies crash out of nowhere which forces layoffs, and you might find yourself on the chopping block.

If you’re worried about losing your job or have recently fallen victim to a series of layoffs, you might be wondering: what happens to my private insurance when I lose my job?

The loss of income often means you’ll have to scale-back spending for a while. Sometimes, this means your health insurance premium might be too high to pay.

Thankfully, there are a few ways to avoid completely losing your private health insurance. Ahead, we detail what to expect when you no longer have enough money to afford private health insurance.

Key Points
  • There are systems in place that can help you avoid losing coverage where possible, or you may be able to put a temporary suspension on your premiums.
  • Redundancy insurance can also help you avoid gaps in coverage.
  • If you do lose your private insurance, you can remain uninsured for a total of 1,094 days without impacting your Lifetime Health Cover status.

Healthcare Assistance

Losing your job and primary income doesn’t need to be the end of the road for your private health insurance.

There are a couple of ways insurance providers can assist you in keeping up with your premium payments. We stress that you check the specifics of your health cover before buying, especially if you foresee layoffs coming down the line.

Redundancy Insurance

If your employer makes you redundant or you otherwise find yourself involuntarily unemployed, your first line of defence will be redundancy insurance or unemployment cover.

If you’re in a position to save your money, we recommend you do so. You never know when you’re going to find yourself out of work, and having a few months of expenses covered in a safety net savings fund will make a world of difference.

Since it’s hard to save money while purchasing necessities and planning for the future, unemployment cover can be incredibly useful for unexpected job loss.

Redundancy insurance is a relatively new concept. General insurers have only started offering Australians the option recently. Competition in the marketplace has forced companies to create more beneficial programs, and redundancy insurance is one of them.

Unemployment cover offers limited financial protection if you lose your job. This is often enough money to cover some expenses, including a private health insurance premium.

Some plans will even cover the cost of your premiums for up to a year, depending on how long you’re unemployed.

While this is a fantastic benefit and one that everyone should consider, it only applies to the person earning the primary income in your home.

If your husband or wife contributes more money to the household income, they’re the person who needs redundancy insurance. The loss of secondary or supplemental income won’t be enough for insurance companies to cover your health insurance premiums.

Suspending Your Cover

Another reason we recommend comparing private health coverage before you buy is that some private health funds allow you to suspend your coverage in times of need.

If your health fund allows you to suspend your coverage, you won’t have to pay premiums for a designated period, but you also won’t be able to claim any benefits.

While you’re looking for work and suspending your premiums, you’ll maintain coverage through Medicare. You won’t be able to take advantage of the benefits of private health insurance at this time but can claim them again once your suspension is over and you find a new job.

If you handle the suspension properly and your health fund allows you a suspension under your circumstances, you shouldn’t have a waiting period once you reclaim your coverage.

If your skillset is in-demand, suspending your premium payments is probably the best option. Of course, you’ll have to make sure your health fund allows the suspension of premium payments.

Click here to compare coverage to ensure you can suspend payments if you lose your job. Plan for the worst, so you’re ready if the unexpected happens.

Worst Case Scenario

Redundancy coverage and suspended premiums are fantastic if you have them, but a lot of people won’t. Some private insurers don’t allow you to suspend payments, and most people don’t plan for layoffs with redundancy insurance.

If you lose your job and don’t have one of the above safety nets, you’ll face losing your private health coverage while you search for a new source of income.

Lifetime Health Cover

Lifetime health cover (LHC) is one of the systems that the government put in place to incentivise buying private health insurance.

Here are some quick facts to help you better understand LHC:

  • Your “LHC age” starts the 1st of July after your 31st birthday.
  • To incentivise early buying, those who buy insurance with private hospital coverage before that date can avoid the Lifetime Health Cover loading.
  • Good samaritans injured while performing a good samaritan act
  • The younger you are when you sign up for private hospital cover, the less you’ll pay in loadings.
  • Gaps in coverage can affect how much you’ll end up paying.
Losing Private Health Coverage

Private health insurance has a long list of benefits attached that are hard to let go of. When you rely solely on Medicare, you can’t skip waiting lines, choose your surgeon, or possibly afford “elective” treatments and surgeries without potentially waiting months or even years.

While it’s the “worst case scenario” to lose your private health coverage, it isn’t the end of the world. Medicare provides a substantial safety net for people who can’t afford to pay their premiums.

Medicare may be your only option if you can’t seem to find suitable employment after an extended period.

If you fall into this category, you can expect to see the following coverage differences in Medicare and Private Health Insurance.

There are, of course, other benefits to choosing private health coverage, such as the ability to choose your doctor and have a private hospital room.

If the bare-bones benefits of Medicare are enough until you find a new job, though, you don’t have too much to worry about. Medicare covers almost any emergency you could need, so you’ll have coverage if disaster strikes.

Planning for the Worst

It’s worth planning for the possibility of losing your job – even if you’re secure in your position.

Compare insurance plans to ensure they allow you to suspend coverage in case of an emergency. If you’re already committed to a plan, investigate redundancy insurance as a possible backup.

Avoiding gaps in your insurance is ideal, so it’s essential that you choose an insurance plan with the most flexibility.

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


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