Health Insurance 8
Check with the fund before you buy.
As a general rule, it’s better to save money by choosing
Private Health Insurance with a high
excess or a co-payment rather than one that excludes treatment for some
conditions.
Self insurance
It's important to remember that, under Medicare, all Australians are entitled to
free treatment in a public hospital, regardless of their insurance status.
Self-insurance involves meeting your own costs for private treatment. This may
mean saving the money you would have spent on insurance in a separate account or
an accessible investment.
The problem with self-insurance is you don’t know how much you’ll have to pay.
If you’re in hospital for longer than you expected you could end up with a very
large bill. If your money runs out, you may have to become a public patient in a
public hospital, which could be unsettling and complicated partway through
treatment.
One possible incentive for self insuring is you can claim a 20% tax rebate on
your medical costs if you spend more than $1500. For more information check the
fact sheet on the ATO's website.
Self insurance traps:
You can’t make use of any of the government incentives like the 30% rebate.
You may have to pay the Medicare levy surcharge if you’re above a certain
income.
You may have to pay a higher premium if you decide to take up hospital insurance
after you've turned 31.
Compare products
A key factor in choosing hospital insurance is the private hospitals you can go
to with a particular fund. It’s becoming common for funds to have an ‘agreement’
with certain hospitals.
If you have full cover and stay in these hospitals, 100% of your accommodation
costs will be paid (apart from any excess or co-payment).
The cover you get in a non-agreement hospital depends on the fund. Some only pay
a basic rate set by the government, while others pay a bit more. Either way
you’re likely to incur extra costs during a stay in a non-agreement hospital.
If you’re looking for hospital cover, make sure you get a list of the hospitals
the fund has an agreement with. If your preferred hospital or the hospital your
specialist has an agreement with isn’t listed you should probably choose a
different fund, but bear in mind that agreement hospitals can change over time.
Check periodically that the one you want is still covered.
If you're in a rural area, it’s especially important to check how far you’d have
to travel to the nearest agreement hospital.
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