Health Insurance — Is It A Good Investment?

As premiums rise faster than wages or inflation, most Australians, young ones in general, are discarding health insurance and do not consider it a top priority. Should they reconsider? Is it a good investment? 

Free healthcare 

Do you really need health insurance in a country where there’s already access to free healthcare? This depends on your personal situation. For health problems that need to be treated within the system, it will be helpful as it is designed to cover policyholders with their hospital and medical costs.

Through the public health system, Medicare partially or fully covers some of the healthcare costs. Usually, the two main areas of health insurance are hospital cover and general treatment. Ambulance cover may be 3rd depending on your state or territory. However, there are costs that are not covered at all.

Benefits of health insurance

• Skip the waiting list for treatment — This is helpful if you’re receiving elective surgery (hip or knee replacement). Those with insurance can lock-in a date of the surgery.
• Choose a preferred doctor — In the public system, the surgeon or doctor who’ll perform the operation is the one on duty at the time.
• Hospital rooms — If you’re giving birth, you may have a better chance of scoring a room with your partner.
• Avoid the Medicare Levy Surcharge — As part of most Australians’ tax, they pay the Medicare Levy of 2% of their taxable income. If you’re single or have a family, on an income of over $90,000 or $180,000, you may be subject to a surcharge of at least 1% of your income on top of the basic Medicare levy. There’s an exemption from paying the Medicare Levy Surcharge, those health insurance members with a sufficient level of hospital cover. 
• Dental work can be covered — Access to these is usually limited and eligibility varies. A clean or check-up isn’t covered by Medicare.
• Claim money back — With extras covered in your health insurance, you can receive a rebate on health services that aren’t covered by Medicare.
  
  

Drawbacks of health insurance

• Cost — With costs usually increasing every year, you could be paying thousands of dollars in premiums depending on the policy. 
• Not all treatments are covered — Some types of treatment or procedure may not be included depending on the policy. 
• Complex products — To simplify the products on offer, the government introduced the Health Insurance reforms.
  
  

Is it a good investment? 

It depends. While others may not need it for a while, some can definitely benefit from taking out cover. 

If you’re 31 years old and you don’t take out health insurance, you can be hit with the Lifetime Health Cover (LHC). For every year that you don’t get health insurance after the age of 31, you’ll be charged a 2% loading on top of your premiums. 

It’s an extra cost as the LHC loading lasts 10 years and goes up to a maximum of 70%. 

But, an 8% LHC loading would apply to the cost of your cover for the next 10 years if you decide to wait until you’re 35. 

To make sure it’s still suitable for your personal situation, don’t forget to review your policy every year if you do decide to take out health insurance.

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