How Does Health Insurance Work? Tips and Advice

Wondering what the big deal is about health insurance? You may not have put much thought into it, or think it’s something you don’t need to worry about. But even the youngest and healthiest people can get sick or injured, and if you want to be well looked after and seen to quickly, health insurance is something you should seriously consider.

What Is Health Insurance?

Health insurance helps to cover the costs of medical bills when you are admitted to hospital or need to visit a GP or other medical professional. It also provides you with more options when it comes to your healthcare, like seeing specialists and accessing certain services.

There are two main types of health insurance, hospital cover and extras cover. Hospital cover provides insurance if you need to go to hospital. Extras cover includes additional healthcare items like dental, optical, physio and more. A lot of health insurance packages will enable you to access both types of cover as part of your premiums.

Why Should I Get Private Health Insurance?

We are very lucky in Australia to have Medicare: the public health system that allows you to access some healthcare – like visits to the GP, public hospital visits, and some tests and scans – free of charge. So why get private health insurance?

Firstly, private health insurance gives you more choice and control over your healthcare. With private health, you are able to choose your doctor, preferred hospital, and even when you have your procedure. If you stay within the public system, you may face a long wait, with public hospital waiting lists often stretching out for months. And if you can’t wait, there will be a hefty fee for going to a private hospital without insurance.

Even if you think it’s unlikely that you will end up in hospital, you may need dental work, glasses, physio, and other allied health services. Extras cover allows you to claim money back and even choose to be covered for extra services such as remedial massage, acupuncture and dietitian consultations.

And if you think private health insurance is an expense you can’t afford, consider this: you may actually end up saving money when you take out cover. If you take out hospital cover before July 1st following your 31st birthday, you can avoid paying the Australian Government’s Lifetime Health Cover (LHC) loading. Plus, most Australian residents pay a Medicare Levy of 2% of their taxable income. If you don’t have cover, you may need to pay an extra 1.5% in tax for the Medicare Levy Surcharge. Depending on your age and income, the government may pay a rebate towards your health insurance premiums, and you may qualify for an Age-Based Discount.

What Should I Look For In A Health Insurance Provider?

The type of cover you choose for your private health insurance will depend on a lot of factors. It’s important to compare all the options available and find one that is right for you. Some of the things you need to consider include:

• Your medical history. If you have any existing medical conditions, you need to choose cover that will provide for these. Consider any procedures or care you could need, and check for policy exclusions around pre-existing conditions.
• Your desired extras. Maybe you wear glasses, use physio, or need some fillings in your teeth. Extras cover can turn these otherwise expensive services into bonuses to take advantage of.
• Your stage of life. The older we get, the more likely we are to need healthcare. Older people should consider higher levels of cover that allow for conditions affecting their age group.
• Your plans around children. Planning on starting a family? Pregnancy is only covered in higher levels of health insurance. This will allow you to choose your obstetrician and other baby-related healthcare.
• Your work, lifestyle and activities. If you have a physically demanding job, you may want to consider cover that will help if you get injured at work. You should also consider this if you play a lot of contact sports or other activities that can relate in muscle strain and injury.
• How soon you need healthcare. Different insurers will have different waiting periods for specific services. A waiting period will apply when you are a new customer or you upgrade your policy. If you need care soon, check to see which fund has a shorter waiting period for the procedure you need.