Private Health Dissected
By Jodie Douglas, Apr 25 2016 07:25AM
If you’re anything like most Aussies, there would be some questions about Private Health Cover you would have asked yourself. Questions like; why should I cough up the cash for private health care? And what exactly are the government incentives encouraging me to have it?
Well, I’m glad you asked because there are a few key differences between public and private health care -
The public system is covered by Medicare and is available to all Australians making it affordable and accessible. This is fantastic in an emergency situation however if you have an illness that is not life threatening well…..be prepared to wait or pay up to skip the queue.
With private health insurance you have more choices available to you. Such as: choice of a wider range of hospitals, choice of doctor and you also have more choice of when you want the procedure done. But and there is a big BUT coming – watch that gap.
Medicare will cover 75% of the bill and your private health fund will cover the remaining 25% of what is called the Medicare Benefits Schedule (MBS). If your doctor chooses to charge more than the MBS (and it is well within their rights to do so), then you foot the rest of the bill. This is when your suaveness needs to come into play. Check what your doctor charges and what you will be paying.
And don’t forget the extra cover like ambulance (not all states are lucky to have this covered by the state government), dental, optical, physio etc. Medicare doesn’t necessarily cover these.
Now, what about these government incentives? Why the big push and how do they affect you? Well, a major reason they are in place is to take the pressure off public hospitals.
There are currently three incentives in operation –
a) Medicare Levy Surcharge – at tax time you might need to pay a little extra if you don’t have private health cover in place. But wait, this may not apply to you because if your single and your taxable income is less than $90,000 or if you’re a couple and/or have dependents and your household income is less than $180,000 then you are free from paying the surcharge. So depending on your circumstances you either don’t need to worry about this tax or you may be able to get basic private health cover that is less than the surcharge.
b) Lifetime health cover – This perk is to encourage people to take out Private health cover earlier in life and keep it over their lifetime. If you don’t take out private health insurance before 1 July following your 31st birthday you will end up paying more if you decide to take private health cover out later in life.
You might end up paying an extra 2% (up to a maximum loading of 70%) on top of your premium. So for example, if you take out cover at 45 years of age you might pay 30% more than someone who took it out at age 30.
c) Australian Government Health Insurance Rebate - This aims to make private health insurance more affordable and accessible by providing rebates on your premium (which you can claim immediately to reduce your insurance premium or you may choose to claim it at tax time).
It is all dependent on income and age. So for example, if you are under 65 years of age, single and earning under $90,000 or if you are a couple and/or family earning under $180,000 you are entitled to a rebate of 26.791%. This means if you are paying $1000 a year for your insurance you would be entitled to a rebate of $267.91.
What other personal protection is available to me and/or my family in the event of illness or injury?
Trauma / Critical Illness Insurance – This valuable insurance benefit is usually recommended by a Financial Adviser and it can cover you from the early age of 2 years old (Yes, it’s available for kids too – our greatest asset!). Trauma Cover may provide a lump sum benefit if you suffer an insured critical illness event like a Heart Attack, Cancer or Stroke which you could use to help with the medical expenses associated with such serious conditions.
Income Protection can assist by replacing some of your income should you be unable to work due to illness or injury up to age 70 (depending on product) & Total Permanent Disability Insurance can assist by providing a lump sum should you be permanently disabled and unable to return to work which you could use to help out with medical expenses, house modification, ongoing care & additional expenses.
Your own cash savings buffer – Yes you could choose to put some money away in an accessible investment account for a rainy day, to create your own self funded insurance.
Whether or not to take out private health cover is a very personal choice & also depends on your individual needs and circumstances.
As you can see, there are many options available to ensure that if something unexpected happened to you that you have choice, peace of mind & financial freedom to focus on your treatment & recovery without the added financial stress.
If you’re unsure where you stand financially or if you’d like to design a financial risk plan to suit you, then we would recommend speaking with a Trusted Financial Adviser about your personal protection needs.
Contact Mad About LIFE today to arrange your complimentary financial review! We are mobile and will travel to you!
Phone: 1300 971 192 or firstname.lastname@example.org
Please note that Mad About Life Pty Ltd is not able to provide advice specifically in relation to private health insurance and you should consult an appropriate professional in this area should you have any questions.
The information in this communication is provided for information purposes and is of a general nature only. It is not intended to be and does not constitute financial advice or any other advice. Further, the information is not based on your personal objectives, financial situation or needs. You are encouraged to consult a financial planner before making any decision as to how appropriate this information is to your objectives, financial situation and needs. Also, before making a decision, you should consider the relevant Product Disclosure Statement available from your financial planner.
The views and opinions expressed in these articles are those of the authors and do not necessarily reflect the views of Mad About Life Pty Ltd or Affinia Financial Advisers Limited.
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