Many people are asking ‘Do I need health insurance in Australia?’
During these uncertain times, it makes sense that many of us are looking to cut unnecessary expenses.
And, especially while you’re young and healthy, it might seem like private health insurance is a bill you don’t need to be paying.
However, health insurance has more value now than ever.
COVID-19 has created a backlog for elective surgeries as hospitals postpone non-emergency treatments to focus on managing the pandemic.
Cancelling your private health insurance now may expose you to longer waiting times for treatment as public hospitals struggle to address the backlog after the pandemic eases.
But that doesn’t mean you should be overpaying for private health insurance.
The best way to cut your expenses is to compare your current health policy against other providers and switch to a better deal for you and your family.
Here’s how you do it
Step 1: Select your current life stage below.
Step 2: Once you select your preferred coverage options, you will have the opportunity to compare quotes from multiple health funds.
1. You may pay a penalty
If you make more than $90,000 per year for singles or $180,000 for couples and don’t have private health insurance, you may need to pay the Medicare Levy Surcharge (MLS).
This starts at 1 per cent of your annual taxable income (which is a minimum payment of $900 per year) and can rise to 1.5 per cent if your family income is higher than $280,000.
People with a current private hospital insurance policy are not required to pay the MLS.
And if you wait until after your 30th birthday to take out a health insurance policy, you may also have to pay Lifetime Health Cover (LHC) loading.
This is equivalent to 2 per cent of your hospital insurance premium for every year you wait after you turn 31.
2. You may wait longer for treatment
The public health system often has long waiting lists for non-emergency treatments, such as elective surgery.
According to the Australian Institute of Health and Welfare, in 2018-19 half of all public patients waited up to 41 days for elective surgery after being added to the waiting list.
Private health insurance can ensure you are treated much sooner.
So if lengthy public hospital waiting times for non-emergency treatments like knee or shoulder surgery keep you off work for longer, cancelling your private health insurance policy could cost you more in the long run.
3. You may have less control
Private health insurance typically means you have greater control over your choice of doctor and the time and place of your treatment than is generally possible within the public health system.
Scheduled consultations and surgeries for public patients may be pushed back if more critical cases create bottlenecks, whereas private health insurance usually means you can ‘lock in’ your appointment and hospital dates.
That means fewer disruptions to your schedule and less time off work.
4. You’ll need to pay for extras
Under the public healthcare system, Medicare does not cover extras such as dental, glasses/contacts and physiotherapy.
If you cancel your private health extras cover, you may find yourself paying significantly more for basic dental care, your annual visit to the optometrist, and physiotherapy sessions if you need treatment for an injury.
Likewise, Medicare may not cover chiropractic treatment or some alternative therapies.
And if you live in NSW, ACT or metropolitan Perth, you may also find yourself out of pocket if you need to call an ambulance.
5. You’ll put pressure on the public health system
The public health system is funded by the government.
That means taxpayers pick up the bill for any Medicare-covered treatments you have.
Private health insurance helps to take the pressure off the public system to ensure those who can’t afford basic healthcare are looked after.
On the other hand, the more people there are in the public system, the greater the stress is on public hospitals.
This puts more pressure on existing resources, which may increase waiting times and could potentially impact health outcomes for the most vulnerable people in our society.
When you factor in annual MLS and LHS payments, more costly extras and time off work due to longer waiting periods in the public health system, cancelling your private health insurance could cost you more in the long run.
However, not all health insurance providers are created equal.
It pays to compare health insurance providers to ensure you’re getting the best health insurance in Australia.
Get started now
Step 1: Select your state below.
Step 2: After answering a few questions, you will have the opportunity to compare quotes in your area and could be eligible for significant savings.
This article is opinion only and should not be taken as medical or financial advice. Check with a financial professional before making any decisions.