Introduction To Private Health Insurance

While Australians are covered by Medicare, a government-funded universal healthcare system, you may find, like many other people, that taking out private health insurance in order gives you additional healthcare options as well as the ability to access items that may not be covered by Medicare.

The government employs a carrot-and-stick approach to encourage you to take out private health insurance. The “carrot” is a means-tested rebate which subsidises the cost of premiums while the “stick” is the addition of 2% additional cost to premiums per year (known as the Lifetime Health Cover loading) for every year that you fail to take out a policy after you turn 31.

In addition, high-income earners – that is individuals with a taxable income above $90,000 and couples with a taxable income above $180,000 – must also pay the Medicare Levy Surcharge (MLS) if they don’t hold a policy.The majority of Australian households do not pay the MLS and won’t save on tax if they purchase private health insurance.

It’s not our job to tell whether you should have private health insurance – we’ll leave that weighty decision up to you. Our concern is simply whether general treatment cover, which covers dental services, is worth your money and whether it should be a part of your overall policy package.

The 3 types of private health insurance cover

1. HOSPITAL

This covers you for some or all of the extra costs of being a private patient in a public or private hospital. Medicare generally covers you for 75% of the Medicare Benefits Schedule (MBS) fee while private health insurance funds cover the remaining 25%. However, many doctors charge more than the standard MBS fee, meaning there is a “gap” between what Medicare and your fund will cover. Some funds offer “gap cover” but generally any amount beyond the MBS fee will have to be paid by you. In addition to the hospital charges, you may charged for all or part of the cost of theatre fees, intensive care, drugs and pharmaceuticals to name a few.

2. GENERAL TREATMENT (also known as EXTRAS or ANCILLARY)

This covers you for treatment by what are known as “ancillary health service providers” such as dentists and dental specialists, chiropractors, phsyiotherapist and optometrists. Policies vary widely between the funds so what may be covered by one will not be covered by another and rebates, which is the amount you receive back from a fund when you make a claim for a service, also differ depending on you are with. There are also limits on the amount you can claim back in a year.

3. AMBULANCE

Medicare does not cover you for ambulance services so you either need to have it included as part of your hospital or general treatment policy, or you can take out a separate ambulance-only policy. The type of cover offered by the funds varies depending on the state in which you live.

For more information on private health insurance, visit privatehealth.gov.au and for the types of things you should be taking into consideration, visit choosing the right policy.

Private Health Insurance Ombudsman

Provides access to the Standard Information Statements which every insurer must have available by law, as well as supplying a list of every registered health fund in Australia.