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, especially if you’re making the choice between private or public healthcare. The Australian Government has a number of initiatives in place to encourage us all to take out private health insurance. These government 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 tax office to help cover the cost of their premiums. The Australian government rebate on private health insurance is income tested.
The different rebate amounts and income thresholds 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 (OVHC) or Overseas Students (OSHC).
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 taxpayers who do not have private hospital cover and who earn above a certain taxable income. To find out the income for Medicare Levy, check the government website. The surcharge is designed 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, especially for those on low income.
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%. LHC loading applies 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.
Waiting periods apply when you start a new private health insurance membership, when switching health insurance providers, or if you’re already covered and choose to upgrade to a higher level of cover.
When switching funds, waiting periods can apply to any additional benefits when you change (upgrade) your health insurance policy. There are no waiting periods for the same level of cover when switching funds.
The maximum waiting periods that insurers can set for hospital treatment is 12 months for pre-existing conditions and pregnancy, and a two month waiting period for psychiatric care, rehabilitation and palliative care, plus most other circumstances.
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.