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Why are people getting health insurance?
Posted 7 May 2019
The reasons for choosing private health insurance can be varied, however there are a few common trends that are motivating people to take out private health insurance, even when they have access to a public health system.
Here are a few of the most common reasons:
1. Jump the queue
When you’re in the public health system you’ll be added to a waiting list with other patients, who each require similar surgery or treatment. This list will be triaged in order of urgency, meaning you could be waiting in pain for months or even years.
Avoid long public hospital waits, by choosing your own doctor and timing of treatment.
2. Greater control and flexibility
One of the most significant motivators to take out hospital cover is to have greater control and flexibility when you need to go to hospital.
- You’re able to choose your specialist, as well as where and when you’ll be treated.
- You’ll have the same specialist care for you from start to finish.
3. Private room
We are often at our most vulnerable when undergoing a medical procedure, so having a private room to recover in can be invaluable.
When you receive care under the public system, there’s a high chance you’ll be allocated to a shared room which offers minimal privacy. In contrast, private hospitals may offer patients the luxury of a private room which could even include added benefits like a private bathroom, a double bed or space for a loved one to stay with you.
4. Taxes, loadings and discounts
There are four key government initiatives that are motivating people to take out cover. They are:
- The Lifetime Health Cover loading (LHC) – The LHC loading is designed to encourage people to take out hospital cover earlier in life. If you don’t have hospital cover by July 1, following your 31st birthday, you’ll pay an extra 2% for hospital cover when you decide to take it out. Each year you delay, your loading increases by 2%, to a max of 70%. For example, if you join at 35 you’ll pay 10% more for the same policy, compared to someone who joined at 30.
- The Medicare Levy Surcharge (MLS) – If you earn above a certain income (currently $90,000 for singles or $180,000 for couples or families) and don’t have private hospital cover, you’re required to pay the Medicare surcharge. Basically, if your income exceeds the MLS threshold and you don’t have private hospital insurance, you’ll need to pay an extra 1.5% tax on your income at tax time.
- The Private Health Insurance Rebate – This other Government initiative is designed to make private health insurance more affordable. Based on your age and income, the Australian Government will pay a contribution to help you manage the cost of your premiums. You can claim the rebate as either a reduction in your premiums or through your annual tax return.
- The Youth Discount – Since 1 April 2019, Private Health Insurers are allowed to offer a premium discount on hospital cover for 18 to 29 year olds. It’s an aged-based discount, meaning the younger you are when you take out hospital cover, the higher your discount. For example, if you join at 25 you’ll get a 10% discount on your hospital cover, at 26 you’ll get an 8% discount, 27, 6% and so on…
Is your cover still right for you?
Book a personalised cover review with a Health Insurance Specialist now
*Based on Health Partners Silver Hospital Plus and Gold Hospital premiums at June 2019. Amount is based on customers under 65, eligible for the base tire Australian Government Rebate, no Lifetime Health Cover Loading and incorporates the 3% direct debit discount.