It is worth taking the time to work out how much more you might be paying every year by not taking out private health cover. The Australian Government has a number of initiatives in place to encourage us all to take out private health insurance. These initiatives include the Australian Government Private Health Insurance Rebate, the Medicare Levy Surcharge and Lifetime Health Cover Loading.
Many Australians with private health insurance receive a rebate from the Australian Government to help cover the cost of their premiums. The private health insurance rebate is income tested.
The different rebate amounts can be viewed at the Government website.
The rebate applies to hospital, general treatment and ambulance policies. It does not apply to overseas visitors health cover.
If you don’t have a suitable level of private hospital cover, you could be affected by the Medicare Levy Surcharge.
The Medicare Levy Surcharge (MLS) is a levy paid by Australian tax payers who do not have private hospital cover and who earn above a certain income. The surcharge aims to encourage individuals to take out private hospital cover, and where possible, to use the private system to reduce the demand on the public Medicare system.
To avoid the Lifetime Health Cover loading increase on your health insurance premium you will need to take out hospital cover before the 1st of July following your 31st birthday.
Lifetime Health Cover (LHC) is a financial loading applied on top of your hospital premium at a rate of 2% for every year you are aged over 30 when you take out hospital cover, up to a maximum of 70%. The LHC loading is only removed once you have held hospital cover and paid the loading for 10 continuous years.
Premium rises are calculated each year under intense actuarial and regulatory scrutiny. They are raised in order to ensure health insurers remain solvent. Health care costs rise as medical technologies improve and as utilisation by the growing and ageing population inevitably increases.
With over 30 health insurers, it can make sense to shop around to make sure you have the right cover for you and your family.
A waiting period is the amount of time you have to wait before you can start to claim on your health insurance. Waiting periods apply to both hospital and extras covers and you cannot claim for procedures or services that you receive during a waiting period.
Waiting periods apply when you start a new private health insurance membership, or if you’re already covered and choose to upgrade to a higher level of cover.
Navigating the health care system can be challenging. To help access the best available care and to avoid out of pocket expenses, always contact your health insurer for advice before selecting a medical specialist or provider.
The Government’s fee transparency website also provides a helpful tool to help manage out-of-pocket expenses.