Making the right call on health insurance can be a minefield when sizing up the countless number of options on the market.
While many people rely on the public health system, others choose private health insurance to avoid a hefty bill if they become sick. But it’s not as simple as ringing up and buying a policy over the phone. There is a lot of detail to be aware of when making your decisions.
Generally, when taking out health insurance you have the option of hospital cover, extras, or a combination of both.
Extras Cover can come in handy as it might include access to a range of services from dentists, physiotherapists, and chiropractors.
Many people invest in private health insurance to give themselves a wider range of health care options and comprehensive cover.
The government also encourages Australians to take out health insurance in a bid to reduce the demand on the public system.
The Medicare Levy Surcharge (MLS) is an additional tax on top of the two per cent Medicare Levy everyone already pays that affects taxpayers who earn above certain thresholds and don’t have private hospital cover.
For example, if you’re an individual earning $90,000 a year and don’t have hospital cover you will have to pay an extra $900 in tax.
So depending on your circumstances you might be able to get basic hospital cover that’s cheaper than the surcharge you’ll be hit with. Here’s the lowdown on getting the best out of your health insurance.
Do your homework
It’s important to work out whether you just want hospital cover or extras like physiotherapy and dental services.
“People must make sure they do their homework and select a level of cover they can realistically afford and will make the most of,” says Mitchell Watson, of financial research group Canstar.
“Extras cover is great for certain people but not everyone will need it. The more inclusions there are the higher the premiums and no one wants to pay for something they don’t use.”
Review your cover
Life can change at an alarming rate so Health Insurance Consultants Australia CEO Suzanne Still recommends consumers keep on top of their policy as years go by.
“It’s important you review your cover as your circumstances change,” Ms Still says.
“You might have joined a policy ten years ago and in the mean time there’s been changes made to the limits, the co-payments, to the benefits, which you may not be aware of.”
Select an excess
Excess is what you have to pay each time you are admitted to hospital.
“While increasing the excess can make premiums lower it does mean people could be left with a large sum to pay at a bad time,” Mr Watson says.
“The excess should be an amount people can always afford if necessary.
“Premiums are a hugely significant element of health insurance policy decision making, so it’s crucial people choose the product that’s right for them.”
Read the fine print
Many policies contain exclusions so be aware of pitfalls.
“You might take out a policy and it says this excludes cardiac or intensive care,” Ms Still explains.
“You might go to hospital for an appendicitis and find your heart does a flutter in the cardiac ward. Your health fund will pay for the appendicitis but not for that expensive cardiac care.
“You’ve really got to understand the product, especially when it comes to those things that could be a big out of pocket for you.”
Learn your family medical history
If you’re susceptible to a particular condition you need to know about it so you can make sure you’re covered for it in the future.
The same goes for your current situation.
If you play sport regularly where injuries could occur then coverage that includes physio or knee reconstructions should be high on your priority list.
Top rating products
Canstar’s 2014 report into health insurance analysed more than 26,000 quotes from 707 insurance products offered by 22 health insurers.
It measured results over 13 demographic profiles including young couples, mature singles, and establishing families.
The report rated Bupa health insurance the best overall provider in the country due to its low premiums and features.
When it came to hospital cover, the Hospital Contribution Fund of Australia (HCF) was rated on top.
The company’s top performing products were its Top Plus Only and Budget Hospital, with the latter providing low premiums for a basic level of cover and no excess for accidents.
Medibank was commended for Extras Cover across several states, the report finding it offers a superior range of features and lower out-of-pocket costs for extras policies, and competitive premiums for package policies.