What Are the Different Types of Health Insurance?
The health system has two components in Australia: Private Health Insurance and Medicare. This article is intended to give you the facts, and help to dispel any puzzlement over the issue of Health Insurance.
The public health care system in Australia is Medicare. All Australians and most permanent residents are covered.
If you go to the hospital as a public patient, Medicare will take care of 100% of the costs. A caveat or two however; a doctor will be assigned to you, and you will not have a great choice of hospitals.
Medicare will pay the entire fee when a general practitioner outside of a hospital sees you. If you require a specialist, Medicare will usually cover a portion of the fee.
Medicare will also take care of up to 75% of the fees incurred if you are admitted to a hospital as a private patient. Medicare uses the Medicare Benefits Schedule (MBS) fee to make this determination. Medicare (in the form of the PBS – or Pharmaceutical Benefits Scheme) will subsidise the costs of some prescription medications.
Those who are in a higher income bracket could pay up to 1.5% in Medicare Levy Surcharge to fund Medicare.
Medicare, like any insurance cover does not pay for everything. For example, optical or dental care is excluded. For further information, visit the Medicare website.
Private Hospital Cover
Want to be either a private or public hospital as a private patient? You’ll need this type of health insurance to avoid out of pocket costs.
Unlike Medicare, you can determine what hospital you wish to be admitted to as well as your doctor. You usually have less of a wait time for elective surgery.
Medicare will generally pay up to 75% of the fees, and then Hospital cover will pay the some or all of rest. Ambulance cover is provided under certain policies, but Medicare does not pay for ambulance transportation. The Tasmanian and Queensland state governments do cover the cost of ambulances however.
There are several private plans available, and different issues may determine the costs. Some of these issues include:
Excess – You may need to agree to pay a portion of the bill before the premium will be lowered by your plan. Your premium will be lower if the excess is higher.
- Co-payment – To be eligible to be covered by some plans, you may have a co-payment when you receive services. This could be in the form of a per case basis, or you may have to pay daily during a stay in the hospital. Some plans have a yearly cap. Thus, you will no longer be required to make a co-payment once this cap amount has been reached.
Exclusions – Certain types of treatments and illnesses might be restricted or excluded under some plans. On the positive side is that these plans often offer lower premiums.
Private General Treatment Cover
As stated previously, optical and dental care are excluded by Medicare. You can however, purchase Extrascover to help pay for these types of treatments, as well as physiotherapy, and speech therapy. Many people will depend on public hospitals and Medicare for major illnesses and injuries, and purchase this type of private cover.
Ancillary cover or general treatment cover types of plans are often packaged with hospital cover. This supplements Medicare with a wide-ranging private health plan.
Lifetime Health Cover
Australians are encouraged by the government to take out a private health cover when they are young, and to keep it for life. The younger you are when you first purchase a plan, the less your premium will be.
For every year you wait after your 31st birthday, you will pay a 2% higher premium for taking out a private hospital cover, up to 70%. However, if you take out such a cover prior to July 1st of the year you turn 31, you will not pay this premium loading.
There are different conditions that may determine the loading if you have passed your 31st birthday and do not yet have private hospital cover.
Private Health Insurance: A Summary
Private health cover provides you with many more choices for your health care than Medicare. Using only Medicare may result in long waiting periods, and leave you with limited choice of hospital or health care provider. If this doesn’t bother you, Medicare is likely a good option for you.
On the other hand, having private cover gives you the best of both worlds. Many Australians want to be able to choose their health care provider and are after the more comprehensive safety net that health insurance provides.
Disclaimer: The above information is correct and current at the time of publication.
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