Private Health insurance in Australia a boon or a curse FINANCIALLY

[Dazken Amac]

Hi everyone..

I know this topic may have come up quite a few times.. I also understand that Health is wealth.. Lets keep the health factor aside for some time and strictly look at the monetary side of things .. Being a strict non believer in insurance I have been pondering on something since quite sometime.. The pros and cons of private health insurance..

 

I am 36 and I have recently migrated to oz on a 189.. As of now for the 1st year my medical expenses are partly taken care by medicare..

 

AA) From next year onwards they say if I don't have private health insurance I would have to pay a 2%loading for every year I am above 30 years.. I believe this means if I don't take private health insurance within the next year and i take it at the age of 50 i would be paying a additional (2x20=)40% extra on the normal premium price.. I hope and would like to confirm my understanding is correct.. My concept is don't take health insurance at all for life time. Understanding the fact that doctor visits frequent as we grow older I still say treat the ailment as it comes, I understand medical costs in Australia are escalating by the day.. Incase of any severe ailment or an operation like hernia or heart surgery it would still be cheaper to fly to Asia, (Singapore Malaysia India) and get treated in a good hospital for that particular time..

 

 

 

BB) Considering a couple who is thinking of starting a family lets say Mr. and Mrs X don't have PHV (private health insurance).. They decide to go to a private hospital and pay by themselves for the tests and delivery by a private doctor..is that possible.. Medicare rebate gives back about 30 % of the costs for specialists. I understand that for a period of upto 5 years the pediatrician visits would be frequent. All these will add to the cost..

 

On the lowest side Considering paying an Annual average net premium of 4000 Aud (after the government rebate) over a period of 20 years {its definitely going to be more than that as the age and inflation increase the cost will escalate} we pay a total of 80,000 Aud .. Considering a major ailment once every 4 years costing 10,000 Aud over the same period of 20 years , we still spend 5X10,000 = 50,0000 Aud.. You still land up paying 30,000 Aud extra (incase of any other contingency else you still have those 30K to spend on your self in those 20 years).. moreover this calculation is without interest.. incase you invest the same amount of money in a term deposit every year it may be yield you some more money!!!

 

 

So now the Question still remains is it beneficial to take health insurance I understand it has an effect on the tax you pay and you get some rebate but is it worth ?? Would love to hear your comments... But please stick to the monetary aspect only..

[Skani]

 

BB) Considering a couple who is thinking of starting a family lets say Mr. and Mrs X don't have PHV (private health insurance).. They decide to go to a private hospital and pay by themselves for the tests and delivery by a private doctor..is that possible..

 

Yes.

 

 

I understand that for a period of up to 5 years the pediatrician visits would be frequent.

 

Most childhood ailments are treated by your local family General Practitioner. If yours uses bulk billing in general (or bulk billing for children) then Medicare will cover the complete cost.

 

The general financial benefits or otherwise of your post I will leave to someone who is more interested in that aspect.

[Cliffy43]

I am not sure you have a complete understanding of how medicare works.

Briefly

Private health insurance is a supplement which gives you a choice of being treated at a time, place and by whom you choose, if you need hospitalisation or surgery.

Medicare covers visits ti doctors, some specialists, some medications and procedures at public hospitals. You cannot choose where or when you are seen or admitted and sometimes may wait years.

For that reason you cannot compare them financially. It is not comparing like with like.

[Dazken Amac]

Thanks Cliffy,

I understand the concern behind "You cannot choose where or when you are seen or admitted and sometimes may wait years." but what I was thinking is emergency situation wont be a quarterly affair..

 

Lets consider an example of a person hit with a heart attack, to save that patient immediate surgical procedures will be performed at a govt hospital under emergency.. After the patient is saved he would be advised that we need to carry out some further procedures for which you will have to wait inline for 3 years say..

 

Ofcourse no one wants to live with an ailment.. So in the above case I go overseas and get myself treated i would be better off.. Follow ups for sure can be done here via medicare..

 

OR

 

(if its landing upto the same expense including flights & accommodation)

Can I pay for the surgery and get it done at a private hospital, with a doctor of my choice??? here??

 

Still you would land up saving instead of paying premium for 20 years...

 

I am not sure you have a complete understanding of how medicare works.

Briefly

Private health insurance is a supplement which gives you a choice of being treated at a time, place and by whom you choose, if you need hospitalization or surgery.

Medicare covers visits ti doctors, some specialists, some medications and procedures at public hospitals. You cannot choose where or when you are seen or admitted and sometimes may wait years.

For that reason you cannot compare them financially. It is not comparing like with like.

[Bungo]

Thanks Cliffy,

I understand the concern behind "You cannot choose where or when you are seen or admitted and sometimes may wait years." but what I was thinking is emergency situation wont be a quarterly affair..

 

Lets consider an example of a person hit with a heart attack, to save that patient immediate surgical procedures will be performed at a govt hospital under emergency.. After the patient is saved he would be advised that we need to carry out some further procedures for which you will have to wait inline for 3 years say..

 

Ofcourse no one wants to live with an ailment.. So in the above case I go overseas and get myself treated i would be better off.. Follow ups for sure can be done here via medicare..

 

OR

 

(if its landing upto the same expense including flights & accommodation)

Can I pay for the surgery and get it done at a private hospital, with a doctor of my choice??? here??

 

Still you would land up saving instead of paying premium for 20 years...

 

Of course you can pay for a procedure privately if you want to in Australia.

 

It's insurance. It's about the unknown. You could opt not to buy house content insurance and decide to cover any damage or losses from your own savings if something happens. Who knows, maybe you will be better off that way in the long run. I have certainly paid out more in house insurance over the last twenty years than I have ever got back. The insurance is there to limit risk and provide peace of mind, because it could have gone the other way. Same with health insurance.

[Dazken Amac]

Of course you can pay for a procedure privately if you want to in Australia.

 

It's insurance. It's about the unknown. You could opt not to buy house content insurance and decide to cover any damage or losses from your own savings if something happens. Who knows, maybe you will be better off that way in the long run. I have certainly paid out more in house insurance over the last twenty years than I have ever got back. The insurance is there to limit risk and provide peace of mind, because it could have gone the other way. Same with health insurance.

Spot on @Bungo absolutely my point. .. Thanks for confirming and giving a ray of hope that my thoughts could be positive. ..[emoji3] [emoji2]

 

Best regards

Nick

[evets]

Dazken, another thing to consider when taking out PHI make sure you read the small print and what is covered. Many stories I have read recently about people finding out a claim or health issue they have is not covered.

 

Also review the extras part of the policy, and work out if it makes a positive addition and how much the gap fee would be(ie what you are out of pocket). If you can see a fair bit of dental work over the coming years, have glasses, visit the Chiro/massage/osteo a lot then may be it work's out to add it. Then again it could be worth a trip to Thailand for the major dental work, as dentists very expensive in this country.

 

Regarding starting the family, not long after I moved here. The Chiropractor I was using at the time, she had not long had a baby. Cost using Medicare $0, cost using her PHI upto $8k. She was more than happy about the service and everything else required using Medicare.

 

I see you are based in Melbourne, do you or have you considered Ambulance cover, as not covered by Medicare. And I only recently noted on my PHI only 1 callout per year is covered. Was a little shocked as this is the top cover, provided by my employer. So in your case of a heart attack and no PHI and NO Ambulance cover, you would be hit with a big bill for the Ambulance to take you to the hospital.

[Dazken Amac]

Dazken, another thing to consider when taking out PHI make sure you read the small print and what is covered. Many stories I have read recently about people finding out a claim or health issue they have is not covered.

 

Also review the extras part of the policy, and work out if it makes a positive addition and how much the gap fee would be(ie what you are out of pocket). If you can see a fair bit of dental work over the coming years, have glasses, visit the Chiro/massage/osteo a lot then may be it work's out to add it. Then again it could be worth a trip to Thailand for the major dental work, as dentists very expensive in this country.

 

Regarding starting the family, not long after I moved here. The Chiropractor I was using at the time, she had not long had a baby. Cost using Medicare $0, cost using her PHI upto $8k. She was more than happy about the service and everything else required using Medicare.

 

I see you are based in Melbourne, do you or have you considered Ambulance cover, as not covered by Medicare. And I only recently noted on my PHI only 1 callout per year is covered. Was a little shocked as this is the top cover, provided by my employer. So in your case of a heart attack and no PHI and NO Ambulance cover, you would be hit with a big bill for the Ambulance to take you to the hospital.

That was excellent advise ... I will definitely look out for those points. .. I already have my ambulance cover with ambulance Victoria. .

 

Best regards

Nick

[deryans]

That was excellent advise ... I will definitely look out for those points. .. I already have my ambulance cover with ambulance Victoria. .

 

Best regards

Nick

 

 

Private Health worked for us, because we took it out many years ago, infact we had to take it out as part of my visa requirements and we just kept it up as the product we bought in 2004 was a very comprehensive one.

 

x3 kids later, all in public hospitals but with paid for private (I like that model as the public system benefits), x1 cancer including treatment and op, 16 pairs of glasses (2 each year), 2 years of psych (6 visits per person per year, used as support for aspergers child, you kind of have to wrangle the system to get it to work) , x1 child op on adenoids and tonsils, x1 child op on accident , x1 child op on plastic surgery (different accident) think first op on child might have been public

 

probably worth it, we used to pay 3K per year for say 10years, the cancer op would have come to at least 20K, each birth would have been 8k odd. we certainly used 4-5k per person per year on educational/OT/aspergers visits, infact I used all of my allowance, all of my aspie childs allowance and my wife's allowance on these visits over a 2-3 year term as the receptionist simply asked which one to place the charge against 1-5, so that worked out well.

 

 

Bupa tried numerous times to change our policy and I flatly refused, pinning them the benefits and extras package we took out in 2004.

 

When we moved back to the UK, I'd bet they were happy to see us go....

Edited November 19, 2016 by deryans

[evets]

Private Health worked for us, because we took it out many years ago, infact we had to take it out as part of my visa requirements and we just kept it up as the product we bought in 2004 was a very comprehensive one.

 

x3 kids later, all in public hospitals but with paid for private (I like that model as the public system benefits), x1 cancer including treatment and op, 16 pairs of glasses (2 each year), 2 years of psych (6 visits per person per year, used as support for aspergers child, you kind of have to wrangle the system to get it to work) , x1 child op on adenoids and tonsils, x1 child op on accident , x1 child op on plastic surgery (different accident) think first op on child might have been public

 

probably worth it, we used to pay 3K per year for say 10years, the cancer op would have come to at least 20K, each birth would have been 8k odd. we certainly used 4-5k per person per year on educational/OT/aspergers visits, infact I used all of my allowance, all of my aspie childs allowance and my wife's allowance on these visits over a 2-3 year term as the receptionist simply asked which one to place the charge against 1-5, so that worked out well.

 

 

Bupa tried numerous times to change our policy and I flatly refused, pinning them the benefits and extras package we took out in 2004.

 

When we moved back to the UK, I'd bet they were happy to see us go....

 

You done really well out of it. By chance did you take out PHI with Bupa on you arrival back to the UK or are you just using the NHS?

[deryans]

You done really well out of it. By chance did you take out PHI with Bupa on you arrival back to the UK or are you just using the NHS?

 

 

forgive me a smile, but using that much private health care is not really doing well out of it! :wink:, I managed to make it to 30 without a scratch and then well, life took over, but you're correct , financially it was certainly good for us.

 

Yes, we have private here (might review this, i'd much rather pay the 300 into NI contributions than private), if only to cover off any real serious issue, but kids have had x2 NHS ops here (both dental) and we've not needed it, we pay about 300+ a month and whilst the kids are still young, we ride bikes, play sports, break things including windows with cricket balls, stack themselves on MTB's etc , I think it's a little peace of mind. I also ride a road bike and fly so there is a slight chance of kinetic energy halt.

 

all kids public in Aus, with the same midwife delivering each one !! at RPAH sydney, how about that!

 

Mind you, our experience in east sussex the NHS really does stand up to the level of care we had in Sydney, can't speak for adelaide (but did get hit by a car so private paid for the physio) as we did not use any hospitals there. I'm impressed with the NHS.

Edited November 20, 2016 by deryans
midwife!

[Guest]

If you have a high family income then you will pay a medicare levy in your tax, for us PHI was less than this.

 

Check the

ATO site for current rates - it was 1% if you earned over $150k

 

Also may want to consider dental cover as this is not covered by medicare.

Edited November 20, 2016 by Lady Rainicorn

[Dazken Amac]

The rebate and surcharge levels applicable from 1 April 2016 to 31 March 2017 are:

[TABLE=width: 629]

[TR]

[TH]Singles

Families[/TH]

[TH]≤$90,000

≤$180,000[/TH]

[TH]$90,001-105,000

$180,001-210,000[/TH]

[TH]$105,001-140,000

$210,001-280,000[/TH]

[TH]≥$140,001

≥$280,001[/TH]

[/TR]

[TR]

[TD=colspan: 5]Rebate[/TD]

[/TR]

[TR]

[TD][/TD]

[TD]Base Tier

[/TD]

[TD]Tier 1

[/TD]

[TD]Tier 2

[/TD]

[TD]Tier 3

[/TD]

[/TR]

[TR]

[TD]< age 65[/TD]

[TD]26.791%[/TD]

[TD]17.861%[/TD]

[TD]8.930%[/TD]

[TD]0%[/TD]

[/TR]

[TR]

[TD]Age 65-69[/TD]

[TD]31.256%[/TD]

[TD]22.326%[/TD]

[TD]13.395%[/TD]

[TD]0%[/TD]

[/TR]

[TR]

[TD]Age 70+[/TD]

[TD]35.722%[/TD]

[TD]26.791%[/TD]

[TD]17.861%[/TD]

[TD]0%[/TD]

[/TR]

[TR]

[TD=colspan: 5]Medicare Levy Surcharge[/TD]

[/TR]

[TR]

[TD]All ages[/TD]

[TD]0.0%[/TD]

[TD]1.0%[/TD]

[TD]1.25%[/TD]

[TD]1.5%[/TD]

[/TR]

[/TABLE]

[h=4][/h]Single parents and couples (including de facto couples) are subject to family tiers. For families with children, the thresholds are increased by $1,500 for each child after the first.

The income thresholds are indexed and will remain the same to 30 June 2021.

 

[h=4][/h][h=4]Currently, you have to pay the surcharge if you are:[/h]

 

• a single person with an annual taxable income for MLS purposes greater than $88,000 in the 2013-14 financial year or $90,000 in the 2014-15 or 2015-16 financial years; or
  
• a family or couple with a combined taxable income for MLS purposes greater than $176,000 in the 2013-14 financial year or $180,000 in the 2014-15 or 2015-16 financial years. The family income threshold increases by $1,500 for each dependent child after the first;
  
• and do not have an approved hospital cover with a registered health fund.
  

 

You must also pay the surcharge if you are a prescribed person with a taxable income over the threshold, and have any dependents who are not prescribed persons and who are not covered by an approved health cover policy as described above.

This means if you are a family, have a combined income of more than $180,000 in 2015-16, and don't have hospital cover for you, your partner, and your children, you will pay the MLS.

[h=4]You must meet one of the following requirements to avoid the Medicare Levy Surcharge:[/h]

 

• your taxable income for MLS purposes is below the income threshold (see above),
  
• your taxable income for MLS purposes is over the income threshold and you have hospital insurance (see below) for you and all of your dependents with a registered health fund, with a total yearly front-end deductible or excess no greater than $500 for singles or $1,000 for families/couples,
  
• you are normally exempt from the Medicare levy because you are a prescribed person and you do not have any dependents. Your income level is not considered in this case,
  
• you are a high-income earner who had already purchased a hospital insurance product with a total yearly front-end deductible or excess greater than $500 for singles or $1,000 for families/couples, on or before 24 May 2000. In this case you will continue to be exempt from the surcharge as long as you maintain continuous membership under the same hospital treatment policy.
  

 

[newjez]

If you have a high family income then you will pay a medicare levy in your tax, for us PHI was less than this.

 

Check the

ATO site for current rates - it was 1% if you earned over $150k

 

Also may want to consider dental cover as this is not covered by medicare.

second what lady rainicorn said. If it's dead money, you may as well buy insurance with it. Your choice then if you use it. You may also question whether you want to go flying around with a serious medical condition or after a serious medical procedure. Edited November 21, 2016 by newjez

[robfromdublin]

Personally I reckon you would be much better off putting money into income protection insurance rather than health insurance.

 

Health insurance gives you the ability to avoid queues for elective procedures and have a nicer room in which you stay in hospital, but for anything serious you will get just as good care in the public system in Australia. I've never really understood the 'peace of mind' approach because the public system will give you the care you need for free. All health insurance does is give you the option to have it in a nicer hospital for more money.

 

However, income protection will give you true peace of mind because let's say you get sick and can't work. Suddenly you will be reliant on whatever sick leave you've built up and then Centrelink for income, which will probably be a much lower income than you currently have. If you have good income protection insurance then you'll have guaranteed money coming through the door and that is true peace of mind. Imagine having chemotherapy in a nice private hospital but then having to sell your house because you can't work to afford the mortgage??

[Dazken Amac]

Personally I reckon you would be much better off putting money into income protection insurance rather than health insurance.

 

Health insurance gives you the ability to avoid queues for elective procedures and have a nicer room in which you stay in hospital, but for anything serious you will get just as good care in the public system in Australia. I've never really understood the 'peace of mind' approach because the public system will give you the care you need for free. All health insurance does is give you the option to have it in a nicer hospital for more money.

 

However, income protection will give you true peace of mind because let's say you get sick and can't work. Suddenly you will be reliant on whatever sick leave you've built up and then Centrelink for income, which will probably be a much lower income than you currently have. If you have good income protection insurance then you'll have guaranteed money coming through the door and that is true peace of mind. Imagine having chemotherapy in a nice private hospital but then having to sell your house because you can't work to afford the mortgage??

I like your approach. .. almost similar to mine... but I was thinking more on the lines of stocks.. or mutual fund investments...

 

Income protection sounds good will definitely give it a thought as it sounds a bit more of a practical approach

 

Best regards

Nick

[robfromdublin]

Well your approach works better if you have built up enough stocks, etc. to provide you a good income even if you don't work. And you get to keep your 'premiums' whereas I 'lose' mine. Yours takes a long time though, so if you get sick before then it's a problem.

 

It all comes down to appetite for risk. I have a low appetite because I'm the primary breadwinner and have kids, mortgage, etc. If I was earning the same money when single and debt-free then I would definitely be following your approach.

[Paul1Perth]

Depends what's wrong and how soon you want to get better. We are a lot older than you and recently my wife had been getting pins and needles and lack of feeling in her hands and feet. She got referred to specialists and MRI done really quickly.

Within a week she was booked in for a pretty major op on her neck because her spinal column was being compromised. The surgeon was brilliant and gave me a ring at home to let me know all had gone well.

The health cover paid for nearly everything, didn't have much out of pocket at all.

Wife is recovering well but if she had left it a few weeks longer she could have ended up a quadriplegic.

Don't think we would have got such prompt action without health insurance.

Having said that it's the first time we've really used it, medicare and A&E have been fine for our ailments up to now, even childbirth was a good experience.