Think about what private hospital cover you want so you can choose your doctor, hospital and maybe even save some money on taxes.
A premium version of Medicare is essentially what private hospital care is. It gives you the flexibility to pick your own doctor and hospital and avoid those very long public waiting lists for non-life-threatening procedures. Certain penalties or taxes such as the Medicare Levy Surcharge (MLS) and Lifetime Health Cover (LHC) loading can be avoided if you get hospital cover.
One of the many benefits of choosing hospital cover is that it allows you to choose your own level of cover which can greatly influence the price. So, for a basic policy, you wouldn’t be entitled to coverage for a lot of treatment but you’re still able to avoid tax penalties and skip those waiting lists. As for the high-level policies you’ll end up paying more, but you’ll receive cover for your pregnancy as well as some of the bigger more expensive hospital procedures.
Comparing private and public hospital cover
What does private cover have to offer you when you already pay for your Medicare (a 2% Medicare Levy is paid by nearly everyone in Australia).
You’ll experience a more pleasant and comfortable experience when you visit the hospital and when you receive treatment if you choose private cover, and it doesn’t always have to cost more. The main differences between private and public health cover are as follows:
Premiums: If you make less than 90k, its free (except for the levy); If you make 90k or more and don’t have private cover you pay $75 per month+ extra.
Doctor and hospital: Your doctor and hospital are chosen by Medicare.
Accommodation: Public hospital/room.
Waiting times: Depends on the level of urgency. You could be waiting many months for non-urgent procedures.
Hospital and medical costs: Free.
Specialised services: Services like IVF, weight loss surgery or medically necessary cosmetic surgery may fall under cover but are quite difficult to access.
Emergencies: In many states like VIC and NSW, ambulances are not covered. Unless you’re admitted to hospital, emergency room visits aren’t covered.
Private Hospital Insurance:
Premiums: If you make 90k+ your $75/month Medicare payments are cancelled out by the costs of your private hospital insurance which costs $69/month.
Doctors and Hospital: You’re able to choose your own doctor and hospital.
Accommodation: Private room in private or public hospital.
Waiting Times: As soon as your provider can schedule you in, you can skip the waiting list.
Hospital and Medical Costs: Medicare will cover 75% of your costs but the remaining 25% plus any other extra fees is then covered by your insurer and you.
Specialised services: Most specialised treatments will be covered like all other treatments from the majority of treatments.
Emergencies: Ambulance costs are covered. Unless you’re admitted to hospital, emergency room visits aren’t covered.
Private health insurance and treatments it covers
Medicare generally leads the way and private health insurers tend to follow suit and base their deals on Medicare’s official list of publicly covered procedures, this is known as the Medical Benefits Schedule (MBS). Hundreds of procedures, routine treatments and complex surgeries all come under the MBS. All treatments in the MBS may not be offered by your private policy, but even if its not, you’re still able to receive those certain services through Medicare.
Comparing the different levels of private health cover
You need to know the four main levels of health insurance so you can make better informed decisions about what cover you want:
- Public hospital cover. A next-to-nothing policy that provides partial benefits for things like rehabilitation, end-of-life care and hospital psychiatric treatment. For other treatments, it may or may not provide benefits.
- Basic hospital cover. A simple policy that covers most of the basic procedures such as digestive issues, pain management and joint reconstructions. However, the more complex treatments like those for the lungs, back, heart or blood won’t be covered. This is commonly known as a bronze level policy.
- Medium hospital cover. Essentially covers everything a bronze policy does plus a few additional treatments that are a bit more complicated such as spinal surgery, hearing implants and heart treatments. For the more complex and expensive treatments like weight loss surgery, kidney dialysis or insulin pumps, cover will not apply. This is commonly known as a silver level policy.
- Top hospital cover. Covers essentially every treatment Medicare does, even the complicated and expensive treatments like joint replacements, kidney dialysis, assisted reproductive services and pregnancy. This is commonly known as a gold level policy.
What am I not covered for by private hospital insurance?
There are a few things that won’t be covered as well as the treatments your policy excludes. Normally, these excluded treatments are able to be covered under your private extras policy, which are entirely different benefits sold separate from or with hospital cover.
You won’t be covered for:
- Long-term care (i.e. more than 35 days in the hospital)
- Eye exams, glasses and contacts
- Dental work
- Elective cosmetic surgery
- Physical therapy
- Hearing aids
- Outpatient medication not subsidised by the Pharmaceutical Benefits Scheme
- Prosthetics that are more expensive than what’s listed on the government’s prostheses list
Stay informed about the public system even if you are a private patient
Australia’s healthcare system utilizes a hybrid method that combines both public and private health care, you’ll see a lot of Medicare chatter as you search through your private options. There are three common places we’d recommend you learn about in regards to the two systems overlapping:
- Lifetime Health Cover loading (LHC). Waiting until you’re old and sick is not something the government wants for you before you decide to get private health care. By the time you’re 31, if you don’t have private cover, you’ll receive a 2% annual loading penalty on top of your premium when you eventually do get it.
- Medicare Levy Surcharge (MLS). The government will tax high-income earners through MLS for those who don’t have private cover, it’s a technique to actually promote individuals to get private cover. This will happen when you earn over $90,000.
- Medical Gap Scheme. Medicare has a standard rate that is charged for public treatment – it isn’t much more, or any less. However, if you have private cover, your insurer and Medicare essentially work together to pay the doctor the same standard rate. Technically though, private doctors are allowed to charge you however much they want and thus, you will have to cover the gap created by any additional amount they charge over the standard rate. In some cases, insurers will offer their assistance with the extra fees if you are treated at a hospital or by a doctor in their particular network.
When you’re looking to compare hospital insurance policies, look out for these things
Looking at what treatments are covered isn’t all there is to comparing hospital insurance. Other factors will make one policy more valuable to you than others. Once you’ve got your eyes set on a few policies that offer procedures you want, then you can go away and compare them based on these:
- Are special hospital agreements something your insurer includes? There are a number of insures who have certain agreements with different private hospitals around the country. These hospitals are not compulsory but if you do choose to be treated there, there can be extra benefits and you might be able to avoid some of the unexpected expenses that can frequently happen in the private system. The Medical Gap Scheme explained above is essentially what these networks are.
- Do I know my out-of-pocket expenses? From doctor to doctor you can find gap payments depending on how much each one charges, and there are two more particular out-of-pocket expenses you will need to consider in your policy. Firstly, the excess, which is the set amount you pay every time you are admitted to hospital. Secondly, the co-payment is the set amount you are responsible to pay for your hospital accommodation. In simple terms, the cheaper these costs, the more you’ll end up paying for cover. Make sure to take these costs into consideration when looking to compare policies.
- How is your policy with ambulance cover? The majority of policies, including the simple ones will generally cover any emergency ambulance trips, but not every one will have you covered if the paramedics at the scene deem the situation, not an emergency. There are a few policies that will cover you in emergency situations, to make sure to keep this in mind when looking to compare policies. It could also be a good idea to check and see if you’re covered for emergency air transport, seeing as it’s not something that’s involved in every policy.
- How much cover does my insurance provide? There are restricted services on some policies where the insurer is not obligated to pay out as much as they normally would for a treatment that’s fully covered. If you’re admitted to a private hospital and treated there, your insurer will only have to pay the minimum required amount for the procedure, and leave you with the rest of the other additional costs, such as the cost of renting the theatre or the remaining treatment costs.
- Does hospital combined with extras come with the insurance? The hospital cover your insurer provides is only half of what they have to offer. They can also provide extras cover for things like optical, dental and physical therapy. If extras cover is something you want, look into your policy and find out if the insurer will bundle your hospital cover with a discounted price.
When am I eligible to make a claim on treatments?
On receiving a new cover or upgrading your current level of cover, there is a bit of a wait you’ll have to serve before you can make claims on the brand-new benefits that you didn’t originally have. This ruling is in place to stop people from abusing the policy by joining a health fund last minute just to make a big claim and then proceed to cancel their membership immediately after.
Here are some common waiting periods you can expect to see, but check your own policy just in case it is different in some way:
- 12 months: childbirth, pre-existing conditions
- 2 months: hospital treatments such as end of life care, rehabilitation and psychiatry.
- 0-2 days: ambulance and accidents
According to the law, waiting periods that you have already served under previous policies will be carried over to the new policy so you will not have to wait all over again.
Is it possible to avoid waiting periods?
Switching from one policy to a new policy means you’re eligible to avoid some waiting periods. These are the most likely of those situations:
Changing insurers. If you’ve already served a lot of waiting periods, changing to a new insurer who offers the same treatments means you can skip the new waiting periods too (barring it is the same waiting period). However, if you have decided to upgrade your policy during a change over, you will unfortunately have to server the waiting periods on the newly attained treatments that you didn’t previously have before.
Mental health treatment upgrades. If you are upgrading to a policy that does cover certain mental health treatments such as rehab and psychiatry, you can skip those waiting periods if your previous policy did not cover those treatments. Whether this happens through a new insurer or a completely different one. During an upgrade, these treatments are the only waiting periods insurers must allow you to avoid, but you cannot skip them if it is your first time taking out an insurance claim on the said treatments.
Some helpful tips for finding affordable hospital cover
A low-cost option for hospital cover may be something you want if you’re in shape and young, or you genuinely just want to avoid the Lifetime Health Cover loading and Medicare Levy Surcharge. This is a perfectly good reason. So, we suggest you think about some of these ways to saving you money when looking for the correct and cheap hospital cover:
- Don’t pay for services you won’t access. If you have top level hospital cover and you are not planning on having any children, pregnancy costs that comes with the cover could be an expense you could look to cut and save money.
- Pay ahead of time. Paying for the entire year up front will in some cases provide discounts by the insurer.
- Stay ahead of the annual increase for premiums. If you pay all your annual rates before March 31st, you can save money seeing as premiums increase around that time.
- Frequently use your direct debit. If you make life easier and less of a hassle for insurers by using direct debit, some insurers will even give you a discount.
- Get out-of-pocket expenses to increase. Choosing a cover with co-payments and a higher excess will help you save on your premium. Just ensure that the future out-of-pocket costs are affordable if you ever find yourself in a situation where you need to pay them.
- Joining via an industry group. These can sometimes have higher benefits and lower premiums. They are known as restricted funds and can be accessed by members of industry groups such as teachers, doctors, armed services or police.