Do You Really Need Private Health Insurance?

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According to Canstar, based on the latest available figures from the end of 2017, 45.6% of Australians have a private health insurance policy that will cover hospital treatment. This was a slight drop from the 46% that Canstar reported based on figures from September 2017. In real numerical terms, this equated to around 12,000 fewer Australians who were covered.

Is Australia Falling Out of Love with Private Health Insurance?

Due to the mixed delivery of Australia’s healthcare services across the public and private sectors – and the varying degree to which Medicare will cover different medical costs – private health insurance in Australia is far more popular than it is in other countries across the world.

How Much Does Health Insurance Cost?

The Finder comparison website allows consumers to search for health insurance that is tailored specifically to their needs, while at the same time highlighting the average cost across Australia as well as some of the huge fluctuations that can occur depending on where you live.

Finder reports that the average cost of health insurance in Australia was $166 per month ($1,992 per year) in 2018 for a hospital policy. At state level, health insurance in the Northern Territory for a hospital policy was the cheapest on average, at $131.85 per month, and also offers the cheapest monthly “extras” premium at $6.27. Victoria was the most expensive state on average for a hospital policy, coming in at $193.73 per month.

While Australians may be increasingly thinking about their personal bottom line and saving money by not renewing their policies, these are cheap compared to some of the most expensive policies! The priciest insurance on the Finder website comes in at a staggering $1,152.75 per month, and that’s for single person cover!

What do the Different Types of Health Insurance Mean?

You can take out three different types of cover:

  • Hospital Only
  • Extras Only
  • Hospital & Extras

What do each of these mean?

Hospital Only cover will typically get you a room in a hospital, and in some cases cover pre-existing ailments and non-cosmetic plastic surgery.

Extras Only cover will cover the costs of certain treatments up to a certain cost. Typically, your extras cover can cover you for dental and physiotherapy costs, while others may also include psychological treatment, the cost of chiropractic treatment, and optical costs. Depending on the private health insurer, you may choose an insurance that covers the cost of an ambulance.

Hospital & Extras cover combines the two, covering as many bases as possible with regards to your healthcare.

On top of these specific types of health insurance, you can also take out policies as a single, a couple, a family, or as a single parent to cover yourself and your children.

Is Your Health Insurance Policy Really Worth It?

Every health insurance policy will be different. For example, within hospital cover, some insurers will guarantee you a private room at a private hospital, while others may provide you a shared room in a public hospital. In some cases, the cost for these policies won’t be significantly different, despite one feature appearing to be far more attractive than the other, and you’d get a room in a public hospital under Medicare anyway. You should definitely be wary of paying extra for something that you’re already entitled to!

With so many different variables, it is difficult to outright say whether your health insurance policy is worth it, as it really depends on your specific policy that you have taken out and what you get with it.

Beware the Extras

As much as it is difficult to assess the true value of hospital cover, it’s easier to do so when it comes to extras cover.

When shopping around, renewing, or considering cancelling your health insurance, taking a close look at the extras is often where you can discover you’re wasting a lot of money.

Health insurance extras policies almost always have an annual limit attached to the different types of treatment. For example, looking through the Finder website again, it is possible to find extras policies – and these aren’t just a minority of them – where you can pay in excess of $600 a year for cover but the annual limits of some treatments might only be $300.

Granted, if you need to access various treatments, you may get better value. However, if you’re paying over $600 a year for insurance cover, you might expect that if you were to get a dental bill totalling $600 that you’d be covered for all of it, and not have to pay another $200 – $300 on top to cover the full cost.

After all, if you take out a comprehensive car insurance policy and you lose your car in an accident through no fault of your own, the car insurance covers the cost of a replacement, right?

Will You Actually Use Your Health Insurance? What’s the Alternative to a Policy?

Given what we now know about how you might not be covered for the full cost of treatment with an extras policy, it pays to think about the likelihood of you ever using any policy you may take out.

The old argument with any insurance is that “it’s better to have it and not need it than not have it and need it”, but given that private health insurance is not a mandatory requirement, you might consider a separate standalone hospital cover or extras cover, or choose to switch to a starter cover in order to save the additional amount you may have to pay out-of-pocket each month.

By saving even $100 a month towards future medical costs, you’ll have a significant sum to spend should you need it. If you never use it, you’ll at least have the money to spend on yourself and your family, rather than having used it to pay for something you’ve never used and achieved little other than helping the insurers to make a tidy profit from your policy!


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