As you probably know, every Australian has access to the public health system at no additional cost. All taxpayers pay a Medicare Levy that funds it for everyone. So why pay for health insurance on top of this?
Health insurance provides you with more choice and control when it comes to your healthcare, and it may provide tax benefits. But it can also be expensive so it’s important to understand what you need before you sign on the dotted line.
For anyone in their mid-20s or early 30s, it’s possible you’ve shopped around to see what’s involved and how much it will cost you. Basically, there are only two types of cover you need to think about: Hospital cover and Extras cover
Each type pays benefits for different types of treatment. Most people take out combined hospital and extras cover, but you can choose one or the other depending on your needs.
Hospital cover – pays benefits toward the cost of treatment in hospital. It gives you control over:
WHO you’re treated by – some people prefer a surgeon recommended by their doctor.
WHERE you’re treated – access to a private hospital close to home and a more comfortable environment.
WHEN you’re treated – because waiting times are usually shorter in the private system
The level of hospital cover you choose determines the types of procedures you’re covered for (like pregnancy or heart surgery). The higher the level of cover, the more procedures you will be covered for.
When a procedure is “covered”, that means that 100% of the cost (minus any excess) of your hospital admission, and a proportion of your doctor’s fees, are paid by your health fund.
Extras cover – pays benefits towards treatment for things that Medicare doesn’t cover. This includes non-GP services like general dental, major dental, optical, physio and more.
Extras is all about your lifestyle and it’s the area where you can claim benefits more often. It’s the cover that you’ll actually use, whereas hospital cover is there just in case.
There are two different ways that health funds calculate benefits for extras treatment:
– as a percentage of the fee charged by the provider (eg. 65% back from a dental consultation) – which works out best for occasional treatment
– as a fixed dollar per visit (eg. $30 per Physio visit) – which can be more cost-effective for frequent treatment
Choose a cover with the option that’s going to suit you best. Then enquire about the total annual limits your cover will provide across different services.
If you never use these types of services, then maybe extras cover isn’t a ‘must have’ for you.
There are also two types of health funds you need to be aware of
Once you know whether you want hospital or extras cover, or a combination of both, you need to think about which health insurer will give you the best peace of mind and best value.
1. Not-for-profit & mutually-owned – these funds are the unsung heroes of health insurance. To cut a long story short, they’re run to benefit their members so premiums are invested back into increasing benefits and improving customer service
2. For-profits – who answer to investors or overseas owners. Enough said. The big, familiar ‘for-profits’ are Medibank, BUPA, nib and AHM. Their advertising completely dominates our TV screens but that doesn’t mean that they’ll offer you the best value coverage.
The not-for-profits give their members more than the big for-profits, so it’s kind of a no-brainer.
The Members Own health funds are a collective of not-for-profits and mutuals that provide superior value through better coverage and more benefits, which is why they have happier members.
Now, here’s one of the best kept secrets in health insurance
There are also not-for-profit funds connected to specific industries that millions of people qualify for but many Australians don’t realise they are eligible to join them.
This is a big deal because some of these funds (also known as ‘Restricted’ funds) can provide the best value. You can find out more about these health funds through the Members Own Health Funds comparison service.
Members Own operates the only not-for-profit health insurance comparison service in Australia
You’ve seen the advertising from iSelect and Compare The Market – you may have even contacted them for advice on your health insurance. But wouldn’t you rather use a service that’s focused on its customers rather than generating profits for shareholders? Finally, don’t underestimate how much time and money you’ll save by speaking to a real person that works for a company that’s more concerned with your needs than just making a quick sale and a profit.
They can ensure you’re going to be able to benefit immediately from your health insurance by exploring your waiting period options and take the time to properly explain the tax benefits you’ll receive.