If you’re worried about going to fend for yourself in the public health system or are approaching the age where getting private health insurance makes financial sense, you may be wondering how to find the right level of cover as a new customer. Here’s how to get private health insurance as someone new to insurance, as well as everything you need to know before you make a decision.
New to cover? Here’s what you need to know
Taking out health insurance means you will avoid the Medicare Levy Surcharge. However, if you delay taking out health insurance you may be on the hook for Lifetime Health Cover Loading. For every year you are over 31, you have to pay an extra 2% on top of the cost of a standard policy for hospital coverage on your health insurance. The government will also give you a rebate to reduce the cost of insurance, depending on your income.
Hospital vs extras cover
Many health insurance premiums are comprised of two parts – hospital cover and extras cover. Hospital premiums cover surgeries and extended hospital stays. You will also have to pay an excess (lump sum) if you need to claim on hospital cover. Extras cover is optional and covers allied health and other therapies such as dental, optical, or physiotherapy. This may reduce the out-of-pocket cost (known as the “gap”) for using these services.
Comparing different levels of cover
In Australia, there are four levels of standardised cover: Gold, Silver, Bronze, and Basic tiers. These are to help you better understand premiums. The basic tier may have restrictions or caps on what you can claim, while the other tiers will have extended coverage for certain surgical procedures or conditions. For example, diabetes management may be included in the Bronze tier and up; rebates or coverage for insulin pumps are only available in the Gold tier. The higher the tier, the more expensive the premium. For more information, click here.
Private cover for healthy people vs those with pre-existing conditions
If you are new to private health insurance, you need to know that there are waiting periods for certain pre-existing conditions which can range from weeks to months. This means you will have to wait before you can use your policy to avoid fraud and skewing the fund for other patients.
How to reduce your premiums
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If you are relatively healthy, you can reduce your premiums by improving your lifestyle such as quitting smoking. Smoking can increase your health and life insurance premiums (even if you’ve had a puff of a cigarette within 12 months.) If you are paying for a higher tier, compare and contrast the other tiers to figure out if you need them; you may be paying for family planning when you no longer need that service.
Remember to always shop around with different providers and funds to see what inclusions they offer, extras they include, and which provides the highest value for money.