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Last Updated on 17 November 2018

5 Private Health Insurance Myths Blowing your Budget


Confused Couple Looking Over Health Cover

Health insurance can seem like a confusing, messy and scary business – especially when you could quite literally pay for your mistakes.

If you’re not sure what to look out for in terms of mistakes not to make, you may fall victim to higher-than-necessary fees and complications with your health fund. Below are some of the most common myths and misconceptions that could be blowing your budget.

#1 – “Medicare is all I need”

Relying entirely on Medicare for financial support when it comes to health services is a common mistake.

While Medicare covers free public hospital treatment, provides subsidised treatment as a private patient and accessibility to general practitioners and specialists, there are a large number of health services falling outside these basic essentials that aren’t covered.

Overlooking the need for the more expansive cover of private health insurance can result in some hefty out-of-pocket fees when services like dental, optical, physio, chiro and many more sneak up in your schedule.

What to do: research the ins and outs of what Medicare offers before deciding it’s enough to cover your routine health services on top of emergencies.

#2 – “I don’t need insurance”

You’re fit and healthy – exercising regularly, eating well and taking care of your body, so why would you need health insurance?

Thinking being being in good shape means a free pass from accidents, injury, illness or emergencies is a potentially bank-breaking myth. Without private health insurance, the full cost of any of the above incidents will fall almost entirely on your wallet.

What to do: think about private health insurance in a different light – rather than being another ‘unnecessary’ thing to pay for, you might find you have a lot to gain in sickness and health through tailoring extras to suit your lifestyle. Some insurance companies even provide cover for gym memberships.

#3 – “I’m already covered, so I don’t need to think about it” (lives change and so do health needs – update)

You’ve got private health insurance cover, so you don’t need to do anything else, right?

While your current policy was likely a great fit at the time you chose it, that may not be the case forever – or even now.

Lives change and so do our health needs, and the cover you settled on a decade ago likely doesn’t suit your needs now as well as it did then, especially if you went for family cover when your kids were young and haven’t changed policies as they’ve grown or left home.

What to do: review your policy frequently (at least once a year) to make adjustments appropriate to the changes in your life and keep it cost effective.

#4 – “Once I choose a health fund, I have to stay with them”

er buying a policy, you’re not alone – many people have the misconception that they’d be stuck with the health fund they start with.

In reality, there’s no contract involved in buying policies and you’re free to switch health funds whenever you like.

Better yet, you can avoid waiting periods when switching to a policy that’s similar to your existing one.

What to do: when reviewing your cover, shop around with other health funds to see if you can make any improvements to your value for money – don’t be afraid to switch if you find something that suits you better.

#5 – “I have hospital cover, so I’ll never pay if I’m hospitalised.”

Hospital cover seems to imply full coverage over any hospital services, but out of pocket costs can still exist and spring up unexpectedly.

You may fall victim to out-of-pocket expenses as a result of a “medical gap” if a doctor charges above the Medicare Benefits Schedule (MBS), and your health insurance can help cover some or all of this.

What to do: pay close attention to the fine print in your policy – it should detail the extent to which your health fund is willing to pay in the event of a medical gap, if any at all. If you’re unhappy with what you find, think about switching to a health fund that better meets your needs.

Confused about health insurance? Our advisors are here to provide you with all the information you need to make the right choices for you. Phone us on 1300 643 355 Monday-Friday 9am-8pm AEST for expert advice on health insurance.

Frequently Asked Questions About Health Insurance

There are three types of health insurance in Australia. They are:

  • Hospital Cover
  • Extras Cover (also known as general or ancillary cover)
  • Ambulance Cover

Hospital cover can ensure any unexpected surgeries, treatments or hospital stays you may require will be covered. With appropriate cover you will have the flexibility to choose your own doctor and the option of receiving treatment in a private hospital.  Most hospital covers allow you to stay in a private room. One other perk is skipping the public hospital systems’ waiting list, which can be lengthy for non emergency treatment.

Extras cover pays benefits for a a range of services, often including treatments and procedures related to the fullowing:

  • Dental/oral health
  • Glasses and contact lenses
  • Podiatry
  • Physiotherapy
  • Psychulogy
  • Acupuncture
  • Remedial massage
  • Chiropractic
  • Hearing aids
  • Travel vaccinations

Ambulance cover, as the name suggests, will cover you should you require emergency ambulance transport. In an emergency, there is enough to worry about. Having the expenses covered for provides security and peace of mind. Many hospital covers include emergency ambulance transport If yours doesn’t, you will need to shop for this separately.

Life is unpredictable. You never know when you might need cover. No matter what life stage you’re in, there’s a policy out there for everyone. You can select as much or as little cover as you want, depending on your health needs and requirements. It’s a small price to pay for the peace of mind health cover provides.

There is no one answer here. Costs vary across providers and policy types. Just because a policy is cheap, that does not mean it is ‘value for money’ and vise versa. Make sure you check what’s included and excluded in a policy before signing up, as you want to purchase a policy that best fits your specific needs.

Premium: A premium is the price you pay for your insurance policy (it may be paid annually or on an ongoing basis).

Policy: An insurance plan. In other words, it is the type of insurance you choose to select.

Policy Holder: The owner, or ‘holder’ of a policy.

Claim: In the event that you require treatment for a service covered by your policy, you can lodge a claim for reimbursement of all or part of the cost of that treatment.. These days, most claims are submitted electronically by the health care provider (dentist, physio etc)

Lifetime Health Cover: Lifetime Health Cover was put in place to encourage young Australians to seek out and maintain ownership of private health insurance early in their lives. If you do not take out a policy before you turn 31, extra charges will be applied should you take out a policy at a later time.

This means you will pay a 2% loading on top of your premium for every year that passes after you turn 30. For example, if you take out a policy for the first time at age 32, you will be charged 4% of your premium as an extra, then at age 40, 20% and so on, up to a maximum loading of 70%.

The loading is payable for 10 consecutive years of cover - after which it is removed and you premiums will be reduced.

Pharmaceutical Benefits Scheme (PBS): Medicare offers assistance for Australians with many of their their prescribed medication costs through the PBS. This assistance is in the form of subsidies towards the cost of many medications. You can check if your prescribed medication is on the list of subsidised items here.

Medicare Levy Surcharge: The Medicare Levy Surcharge is an additional charge (tax) applied to single Australian taxpayers who earn over the income threshold of $90,000 per year, or families/couples who earn over $180,000 per year. This surcharge is only applied to those who choose not to have a private health insurance policy.

The surcharge is designed to reduce pressure on the public health system by encouraging those with higher incomes to invest in private health cover.

Private Health Insurance Rebate: The government’s Private Health Insurance rebate lowers premiums for most Australians with private health insurance Older Australians may enjoy an even higher rebate. Our calculator can help you estimate the Government health insurance rebate you may receive.

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


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