WHICH WAY: Before premium go up on April 1, consider why you have a policy.
WHICH WAY: Before premium go up on April 1, consider why you have a policy.

Time to check out your health insurance cover

AS PRIVATE health insurance funds go about the job of explaining cost premium increases, it's timely to take a moment to look at what is offered and why you are retaining or considering taking out a policy.

The premium increase on April 1 will be on average 3.95 per cent. This is a hefty additional cost for seniors who are on a limited income, but increasing health troubles and the need for continuity of care can become an important wellbeing issue.  

Certainly, the private health insurance's offer of shorter waiting times and more choice of service providers is attractive, however, the recent announcement by Bupa which plans from August to restrict insured patients to Bupa-contracted hospital or day-stay facility, and both HCF and Bupa reducing benefits on some services, is reminder to carefully review each fund's offerings.

Private health insurance offers gap payments which cover some or all fees for both hospital and general treatments, depending on what policy you take out. It's important you check the policy details to ensure that you are being covered for what you need as a senior, not what you no longer require such as pregnancy costs.

As a private patient in a public, private or day hospital you are covered for some of the hospital treatment costs, including doctor's charges and accommodation.

General treatments are described as non-medical services such as physiotherapy, podiatry, dental and optical services. Often you can choose which of these services are covered.

Better care

There is a belief that private health insurance ensures a better quality of care and a less stressful experience, especially when being treated in hospital. But, that all depends on the level of cover you purchase and the medical condition you are dealing with.

In most cases you are able to choose your doctor and hospital. Again, these choices can be driven by finding the right specialist and then being directed to a hospital that they operate in. With Medicare, these choices are not available.

Waiting times for specialist treatment is usually quite high on any patient's list of concerns. It's generally understood that waiting times in the public sector will be a lot longer than for those in the private health sector.

Medicare does not cover the cost of emergency transport or other ambulance services while private health insurers offer ambulance cover as an option.

What does Medicare cover?

Medicare covers a benefit payment towards the cost of hospital (emergencies and surgeries), medical (doctors and treatments), and pharmaceutical (medicines). It covers more than 5700 services.

As a public patient in a public hospital you are assigned a doctor who will decided what types your examinations, treatments and surgery. Medicare will pay 100 per cent of the Medicare Benefits Schedule fees for those hospital services which are covered by Medicare. Services not covered are items such as theatre fees for private patients or accommodation in a private room, surgeries or treatments that are not medically necessary, medical and hospital costs while you were travelling or living overseas and ambulance services.

Medicare covers part or all of your doctor or health practitioner visit, and covers several non-hospital services.

Under the Pharmaceutical Benefits Scheme you may only need to pay part of the cost of most prescription medicines purchased at pharmacies. The amount you pay varies with the medicine, up to a standard maximum.

A complete list of what is and isn't covered is on MBS Online.

What about the Lifetime Health Cover penalty?

This is complicated to start, but then gets slightly easier to understand; the bottom line being the longer you leave it to take out private hospital cover, the more that insurance is going to cost you as a loading on top of the advertised premium.

Consider this - If you purchase hospital cover earlier in life and keep it going, you will end up paying lower premiums compared to someone who joins when they are older.

How it works is that every year from the age of 31 that you don't get private health insurance, the government is forcing health insurance companies to add an extra two per cent on top of their premium. 

The loading will be removed from your premium after 10 years of continuous hospital cover. There are conditions around this removal which are documented the Department of Health website.

But there is more…

The Medicare levy surcharge is required to be paid by taxpayers who don't have an appropriate level of private hospital insurance and who earn above a certain income.

The ATO advises, "The base income threshold (under which you are not liable to pay the MLS) is $90,000 for singles and $180,000 for families. However, you do not have to pay the MLS if your family income exceeds the threshold but your own income for MLS purposes was $21,655 or less."

The Medicare levy is charged at two per cent on your income depending what you earn. This levy is reduced if your taxable income is below the threshold. In the 2016/17 year this was $34,244 for seniors and pensioners entitled to the seniors and pensioners tax offset. Part-payment of the Medicare levy can occur if your taxable income is between $34,244 and $42,805 for seniors and pensioners who are entitled to a tax offset.

The ATO notes, "If you do not qualify for a reduction in the Medicare levy, you may still qualify for a Medicare levy exemption."

Be aware that if you don't pay the MLS, it will be included with the Medicare levy and shown as one amount on your notice of assessment called Medicare levy and surcharge.

Is it all worth it?

If you take the time to consider your health issues and what support and treatment you need soon or in the future, then private health insurance could be a wise investment, for you.

Before you get to April 1, it's a good idea to review your annual health insurance checklist, looking for inclusions and exclusions -

  • Revisit your cover by calling your fund and asking for details of the cover you have now.
  • Review the existing list of items covered based on your age and your specific health issues. You need to ensure you are covered for treatments and any possible complications.
  • Some health issues you should consider within your cover are heart disease, diabetes, arthritis, orthopaedic, cataracts and eye disease, hearing and dental.
  • Under Extras look for a generous dental care option. Cover for hearing and eye tests are also worthwhile including.
  • If using a broker website, such as iSelect or Compare the Market, pick from the list a health fund and then call that fund directly to double-check your health issues are covered by the product being promoted by the broker.
  • Check in advance with your doctor if they have an arrangement with health funds to cover the cost of the gap when you are in hospital.

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