Getting Health Insurance for the first time

Ah, so you’ve made the decision to get health insurance! First of all, congratulations on making such a positive decision. Health insurance can benefit you in many ways by helping you to avoid lengthy hospital waiting lists, giving you increased options with regards to doctors and hospitals as well as the financial benefits offered by the Australian government. No matter how fit and healthy you are, you’ll now have that all important feeling – peace of mind.

Getting health insurance for the first time can seem like a daunting and confusing task, so lets break down some of the jargon to help you on your way!

Hospital, or a combined policy? 

Hospital cover is for when you are admitted into hospital for an operation. It allows you to not only select a hospital of your choosing, public or private, but also choose your preferred doctor. Extras (sometimes called ancillary) covers a wide range of services that might suit some people more than others, like optometry, physiotherapy and dentistry. While some people need these extras, others feel they don’t – and that’s where your choice comes in. You can purchase hospital cover on its own, or both hospital and extras. The best thing to do is to go through everything thoroughly and decide what sort of policy will suit your needs the most.

Exclusions? Sounds nasty! 

While exclusions may seem like a harsh word at first, they’re really nothing to be afraid of, and in fact make your policy more affordable! Some policies exclude things like pregnancy or hip replacements – some people desire these sorts of treatments more than others, so some policies don’t include them. Again, read the fine print and choose the policy that’s right for you.

Claiming the Private Health Insurance Rebate

For every dollar that you contribute to your private health insurance premium the Australian Government will give you a maximum of 40% (depending on your age and income) of it back as a Private Health Insurance Rebate. The easiest way to claim the rebate is to ask your insurer to provide you with a premium reduction. You could also claim the rebate through Medicare or through the taxation system but we find most people prefer a premium reduction.

What’s the Medicare Levy Surcharge? 

The Medicare Levy is a tax every Australian personal income tax payer pays regardless of whether they have private health insurance or not. It’s 1.5% of taxable income.

The Medicare Levy Surcharge is an additional tax. It can be as high as 1.5%. It’s applied to high income earners who do not have private hospital insurance. It’s to encourage higher earning Australians to take out private health insurance so as to reduce the burden on the public health system. It kicks in for singles earning more than $84,000 and for families with a combined income of more than $168,000.

Nearly 31? Best get health insurance…

Private health insurance is not ‘risk-rated’ like other forms of insurance and we cannot discriminate or refuse insurance to anyone who is entitled to apply. We must charge everyone the same premium for the same level of cover, despite their risk profile or likelihood of claiming. And of course this means their age too.

Except for Lifetime Health Cover. Lifetime Health Cover was instigated by the government to encourage people to take out hospital insurance earlier in life, and to maintain it. If you join before you turn 31 you will not be affected. If you join after 1 July following your 31st birthday then, for the following 10 years, you will pay an extra 2% on top of your normal premium for every year you are over 30.

For example: if you’re 40 when you join the cost of your premiums will be 20% more. If you wait until you’re 50, you will pay 40% more. And so on, up to a maximum of 70% more. After 10 years the premiums will revert to the normal rate.

Waiting periods will apply 

A waiting period is the time between getting health insurance for the first time or upgrading your cover during which benefits for certain services are  excluded.  While waiting periods for Extras cover can vary, ours are generally ether two or 12 months, waiting periods for hospital cover are quite universal.  For example there is a standard 12 month wait on pre-existing conditions or pregnancy related services. The best thing is that if you change health funds in the future, your waiting periods will carry over so you won’t have to serve them again!