It is a rational question to ask at times like this.
Elisa Tubecki from iSelect chats to BB on whether Private Health Insurance is really worth it for young fit Aussies.
Does this sound like you? You’re young, fit and eat well. You take care of yourself, you’re conscious of what you put in your mouth and are (luckily) rarely ever sick.
This takes dedication and because of your efforts, you’re rarely at the doctors and can’t remember when you last saw the inside of a hospital.
Lucky you. And what a wonderful position to be in, but this may have you considering whether or not the private health insurance monthly payment is worth it as many young Aussies are facing increased financial pressures due to the coronavirus pandemic.
On April 1, private health insurance premiums were set to rise yet again by an average of 2.92%[1], but since the current coronavirus pandemic (COVID-19) health funds have put this premium increase on hold for at least six months.[2] At this stage, these increases will still happen and therefore the value of health cover is being questioned now more than ever by Aussies, especially the younger generation.
When the private health insurance premiums do go up, we estimate a typical family policy will increase on average by $127 a year, couples by $140 a year and singles to be hit an extra $59 a year.[3]
There is also the hangover from the 2019 Government Health Reforms which saw all hospital policies transition to the new Gold, Silver, Bronze or Basic tiered system. This change is still confusing health fund members who have been left wondering whether they’re still covered for what they need.
If you’re sitting there questioning your health insurance, we’ve put a list of pros and cons for those who are young and healthy, so you can make an informed choice during these uncertain financial times.
The Pros:
- Extras cover: It may be a time that you can’t use all your extras benefits, however services like optical and dental (costs that aren’t covered by Medicare) are still being used. There would be nothing worse than getting caught for expensive emergency dental treatment when the health industry is already under pressure. Not to mention, key health services will return. If you love going to the gym or playing a team sport one of the key benefits is extras cover. Seeing your physio or chiro regularly is a great way to ensure you’re in the best possible shape to keep up your physical activities. These appointments can really add up and Extras Covercould really save you money.
- Choice of doctor and hospital: If you do require medical treatment having the peace of mind that you can choose your own doctor and hospital is one less worry in a stressful time. Plus, if kids are on the horizon and you have Gold hospital cover, you can choose an obstetrician that has been recommended to you.
- Shorter waiting times for elective surgery: Although non-urgent elective surgery has been temporarily suspended, it’s important to remember that category 1 (needed treatment within 30 days) and some exceptional Category 2 (needing treatment within 90 days) surgery will still continue.[4]
- For you personally, you may be wondering why you would be going down the path of upcoming elective surgery. However, you may need a knee reconstruction due to a sporting injury, or something as common as wisdom teeth removal. (I’ve been there and was so grateful I had private cover!) Without private cover, you’ll find the wait times in the public system can be extensive and possibly even more so in today’s current climate when our public hospitals are under extreme pressure.
- Avoid paying the Medicate Levy Surcharge (MLS) (where applicable): To reduce the strain on the public health system, the Medicare Levy Surcharge (MLS) is designed to encourage Aussies to take out private health insurance. If you don’t have private hospital cover and your taxable income is over $90,000 a year ($180,000 for a couple or family), you will generally pay at least 1% (up to 1.5%) of your taxable income in additional tax.
- Under 30s Discounts: Many people aren’t aware that those under 30 may be eligible for up to 10% off their hospital cover. On a $2,000 policy this could save you up to $200 a year. Those in the 18-29-year-old bracket could also be eligible to receive a 2% discount for each year they were under 30 when they first purchased hospital cover up to a maximum discount of 10%.[5]
The Cons:
- The cost of premiums: When you see that payment coming out of your bank account each week it hurts, especially when you haven’t made a claim for a while or you’re dealing with a reduced income. Instead of ditching private cover altogether consider revaluating your policy to see if you can get better value. This is where the consultants at iSelect can help. They can assist you in comparing* and finding you cover to specifically suit your needs from its range of providers and available policies. This could be as simple as increasing your excess (your hospital admission fee) to reduce your premium, if you believe it’s unlikely you’ll be visiting a hospital anytime soon.
- Out of pocket costs: When you have private health insurance, out of pocket costs or ‘the gap’ can be frustrating, as you never really know what you are going to get back as it’s dependant on your level of cover. Gap payments are the difference between the cost of your treatment and what is covered by Medicare and your health fund.
- It can be confusing: Private health insurance can be confusing, even for those who’ve had it for years. You may be guilty of choosing your fund simply based on brand name or who your parents are with and just guess as to what you may or may not need cover for in the future. Using a comparison service like iSelect to do the hard work for you and compare* from their range of providers and available policies to help you choose an option that suits both your needs and budget.
You’re fit and healthy, and you want to stay that way, so before you ditch the cover completely, investigate re-evaluating your cover instead. This could not only save you money each month, but make sure your policy is more beneficial for you individually.
Disclaimer:
*iSelect does not compare all health insurance providers or policies in the market. The availability of policies will change from time to time. Not all policies available from its providers are compared by iSelect and due to commercial arrangements, your stated needs and circumstances, not all policies compared by iSelect are available to all customers. Some policies and special offers are available only from iSelect’s contact centre or website. Click here to view iSelect’s range of providers.
