Medicare, the Government health insurance system, provides Australians with universal healthcare cover. Available to all Australian citizens, Medicare provides access to free or low-cost services such as doctors, outpatient care, hospital care and some dental procedures. Permanent residents who are not Australian citizens may also can qualify for the scheme.
What private health insurance offers is greater choices about how your healthcare is administered, e.g. which hospital, doctor and type of accommodation. Private cover also often offers reimbursable extras such as glasses, massages and other items.
For severe ailments, however, even private patients are put back into the public health system. The private hospitals are generally just not well enough equipped to cope with critically ill patients and specialised emergency procedures. Examples of conditions that tend to be treated within the public system are head trauma, cancer, heart surgery, organ transplants, dialysis and other items. Private hospitals usually take care of conditions like childbirth, shoulder and knee reconstructions.
What does private health insurance cover?
Depending on the level of cover, private health insurance covers some or all of the expense of being treated as a private hospital patient in a public or private hospital.
Private hospital patients are charged for their accommodation, theatre fees, drug costs and doctorsâ€™ fees, as well as many other costs, but their insurance company will reimburse them for large portions of these costs.
In addition to hospital care, private health insurance can cover some or all of the costs for many medical services Medicare does not. These may include podiatry, chiropractic treatment, dental treatment and many other procedures. It can also cover more "wellbeing" options such as glasses and contacts, as well as some natural therapies and acupuncture.
For elective surgery (non-life threatening surgery) public system waiting lists can be very long, and private patients can book into the hospital of their choice, often a lot sooner than is possible for a public patient. An example might be elective knee or shoulder surgery.
Ultimately, the decision to go private is a very personal one and tends to depend on your household income, fitness obligations and whether you are carrying any injuries or experiencing any chronic health conditions. Most Australians would benefit from private medical insurance, and it is often a case of choosing the right plan rather than whether to choose it or not.
Different kinds of medical health cover are appropriate at different times of life. From 30 years of age, preventative activities take on more importance â€“ such as gym memberships, massage, acupuncture and other â€œlifestyleâ€ extras. Whilst these may not be important in your 20s, including them in your health insurance premiums after 30 becomes important.
If you have not "settled down" in your twenties, the thirties is a decade when most people are likely to start thinking about a family. It is also an age at which you are better able to afford more comprehensive health cover. The health insurers are keen to get the mid-20s to 30-somethings on board as, generally speaking, they are still fairly fit and healthy.
Compulsory private cover
As well as the extras and family considerations from age 30 there is another important aspect of health cover to be aware of. Over the age of 30, the Government charges a penalty if you do not have private health insurance. Each year a person is over 30 and without private health insurance, a two percent loading is added to the eventual cost of their premium â€“ capped at a maximum of 70 percent. (People exempt from this penalty include those born before July 1, 1934.)
For more information visit http://www.privatehealth.gov.au/faq.htm, a Government website that explains this penalty system in greater detail.
Those who have purchased private health insurance before their 31st birthday, and maintain their cover, may be offered loyalty bonuses by their insurer for being a long-term customer. As well, the Australian Government rewards those who have had 10 yearsâ€™ continuous private health insurance membership with the removal of the loading.
Whatâ€™s it cost?
An average private health insurance policy, providing basic hospital cover and mid-range extras, can cost between $60 and $100 a month. Basic hospital cover often takes care of things like transportation in an ambulance, pregnancy and birth-related needs, major eye surgery and hip and knee joint replacements.
The top of the line benefit cover may include full cover for hospital accommodation, no excess on day surgery and night stays in hospital, and extras cover for optical, dental, orthodontic and chiropractic needs.
Sit down either alone or with your partner if you have one and identify your must-haves and nice-to-haves, or check back in with the Health Insurance blog to find checklists and other useful ways to reduce your bill.
One of the perks of having private health insurance is being treated as a private patient in any hospital. This usually means having your choice of doctor, hospital and treatment time.
And even better, you are likely to find that, when it comes to elective surgery (surgery for a non-life-threatening condition, like a knee reconstruction), you will have a shorter waiting period, as people with private medical insurance are given priority.
As a privately insured patient, there are attractive policy benefits (aka extras) to choose from. These can help reduce your day-to-day expenses for many common items like glasses, massage, dentistry and chiropractic treatments. Some providers also offer cover for natural therapies, although YMMV, so check your policy before assuming natural therapies are covered.
For those wanting to start a family, there is only one piece of advice to remember: get in early (pun fully intended).
Take out your cover well in advance of falling pregnant, as there are often penalties and fees early in your coverage. Most funds have a waiting period of at least two months before any cover actually begins and for pregnancy this waiting period is typically 12 months.
If youâ€™re going to play it by the numbers, and you like a little risk, this means it would be wise to wait at least four months after buying your insurance before falling pregnant, so that your baby will arrive after the waiting period has concluded. Obviously, the less of a gambler you are, the longer you want to wait, as many babies are born premature.
If your timing is out, and you fall pregnant early, costs for medical care during your pregnancy may not be claimable â€“ although the birth might well be. Check the fine print in your contract, and be smart about it. You may have health issues during your pregnancy that require special care, so better safe than sorry!
With health insurance costs to rise an average 6% this year, families may struggle to find the extra $200 required for private health cover.
What options are there for people who want to save money in light of rising costs? Well there are a few:
Pay upfront - Avoid the April price increases and lock in the 2009 prices by paying your annual health insurance premium upfront. If you pay your entire 12 months upfront you lock in the prices that period, putting off the affects of an increase until next year (at which point you could lock in another 12 months)
Based on the average price rise across funds / products, this could equate to a saving of 5.78% over the year (a saving of around $170 for family cover)
Pay by Direct Debit â€“ Many Companies offer a discount for paying premiums by Direct Debit. Nib give a 4% discount for direct debits paid from a cheque or savings account, ensuring that those who are not in the position to pay upfront can still take advantage of discounts and savings.
Shop Around â€“ The average price increase is 5.78%, but some of the larger organizations have only increased their prices by 5.74%, whereas some smaller Companies have increased their premiums by a whopping 7%. Always check the level of cover you are receiving and shop around for an even better deal. By combining this with the other tips above, you could be saving big time!