Hi guys,
I just gained my pr 2 years ago and start using medicare since (before i was on medibank). Im 31 and I dont earn more than 70k per annum.
my question is that do i need private health insurance in australia?
Private health cover and lifetime health cover loading
Anth0ny on 10/05/2014 - 13:39
Comments
I'm guessing permanent residency?
Have you got a medicare card ? Talk to medicare.
my question is that do i need private health insurance in australia?
It depends: are you planning on becoming seriously ill unexpectedly, or having some sort of an accident? It's pretty much a catch 22 situation.
The question should be: are you planning on having a non-urgent illness or accident that requires elective procedures. For urgent things the public health system isn't too bad (in my experience)
planning on becoming seriously ill unexpectedly, or having some sort of an accident
Nice wording, LOL
yup…pr is permanent residency. i got medicare card 2 years ago and i dont plan to get seriously ill nor any planned accident in the near future. if i decided to take private health ins, which one do u guys recommend for oz bargainers?
At your age lifetime loading becomes an issue.
I only took out private cover because of it - IMHO health insurance for young, healthy single people is rarely worth the money, given we have a pretty reasonable government health system. However, lifetime loading starts to change the equation at 31.
There are plenty of online insurance comparison sites out there and even a government one.
Lifetime loading doesn't apply for someone who has just gained PR.
My wife is 32 and still on a temporary partner visa, she will gain PR next year. The lifetime loading has some kind of grace period since she hasn't lived here all her life. Same would apply to OP most likely.
But in all seriousness, it's good to have at least extras cover for things like dental, ambulance, optical etc. The only time you really need full hospital cover is if you actually WANT it. Eg, you want to have a baby in a private hospital vs public, or you want elective surgery.
1 year from the date you are become eligible for Medicare. In some cases, this is when you are granted PR, in some cases it is actually when you apply for PR. I got an "interim" Medicare card (full benefits) as soon as I applied, and it took 5 months to process my application before it was granted.
If this guy has had PR for two years, he's definitely being affected by LHC loading now.
its tricky. It depends on your situation. Are you single or married? Private hospital cover is at least $1,000 per year, can you afford that?
yup still single
I assume if you start earning more than $70k at some point then you'd either have to get the insurance and pay a lifetime loading or pay the extra % for medicare. I'm not 100% sure that's how it works, but if it is, then it may be better longer term to get the insurance now.
Basic packages can be quite reasonable, a quick check on BUPA was $60 a month.
For every year over 30, your premiums rise a little. It's not until you have held private health insurance for 10 years that your premiums go to the lowest level without this loading. So if you're ever intending on having health insurance, getting it earlier, means you will pay a bit less each month than if you waited and took it out when you were 45 for example..
Definitely worth taking up if you're planning to stay in Australia if you can afford it. The sooner you get in after 30 the cheaper your premium will be across your lifetime because of the loading.
Main reasons are:
Your income will probably continue to rise - you might need it for tax purposes later on but it'll be permanently more expensive getting in later
Your health needs change over time - things like joint replacements etc you will need cover for when you are older. Get in with basic cover now, and you can upgrade when you are older without getting stung with loading. Reason why people need cover for this is to avoid long waiting lists, and because Medicare does not pay the whole fee for some things. Your private health fund steps in and pays a claim on top of what Medicare pays, leaving you with a very minimal if any gap.
These policies usually come bundled with good extras cover - if you see dentist 2x/year, wear glasses and get some physio you'll see a lot if your money come back.
You might actually need to be admitted to hospital - I'm 32 and athletic and just got the cover a couple years ago to avoid the loading. I just had spinal surgery (slipped disc) that I couldn't predict would happen. No waiting list, private room with own bathroom and tv in hospital, tons of nurses and very little out of pocket expense for 7.6k surgery fees plus 5 days in private hospital.
ok…thanks for the info. which one would u recommend? medibank or hbf or others health insurance?
There are companies that find a health fund for you based on what you tell them like iselect etc, there is also a government comparison site
http://www.privatehealth.gov.auWaiting periods roll over between health funds - it's not hard to switch funds later on if you're not happy with price/service of your current fund.
Definitely use this site to compare, not the pretend comparison sites like iselect.com.au - they do not truly compare across a large range of insurers, and they get their kickback from it. The privatehealth.gov.au site is the only real unbiased comparison tool.
"Your income will probably continue to rise - you might need it for tax purposes later on but it'll be permanently more expensive getting in later"
Not true, it's only more for the first 10 years if you do decide to take up health insurance.
"Your health needs change over time - things like joint replacements etc you will need cover for when you are older. Get in with basic cover now, and you can upgrade when you are older without getting stung with loading. Reason why people need cover for this is to avoid long waiting lists, and because Medicare does not pay the whole fee for some things. Your private health fund steps in and pays a claim on top of what Medicare pays, leaving you with a very minimal if any gap."
Again spending now to save later is a false economy, see my examples below.
"These policies usually come bundled with good extras cover - if you see dentist 2x/year, wear glasses and get some physio you'll see a lot if your money come back."
For me it is significantly cheaper to pay this cash as I need it, maybe I've been lucky.
"You might actually need to be admitted to hospital - I'm 32 and athletic and just got the cover a couple years ago to avoid the loading. I just had spinal surgery (slipped disc) that I couldn't predict would happen. No waiting list, private room with own bathroom and tv in hospital, tons of nurses and very little out of pocket expense for 7.6k surgery fees plus 5 days in private hospital."
Can't argue with that, just need to decide if a private room for 5 days is something that is important to you.
Good points and calculations re: the cost saving element, I was unaware that the loading is a non issue after 10 years.
I think the bigger argument for going private than having a private room is the waiting lists for some non life threatening treatments in the public system - people not uncommonly wait for 2-3 months in agony waiting for the op I had, whereas my surgeon had mine booked in with under a week's notice.
Agree though with the positive comments on the public system, you can definitely get by on it and most people on private need it for avoiding Medicare levy or know they have something potentially expensive coming up.. if it's hard to afford it might not be worth it especially if you're young.
What is very little out of pocket expenses? My father lives in Canada (citizen) and had his prostate removed due to cancer. It cost him $0.00 out of pocket.
Not sure yet, I haven't lodged the claim just going off info from my fund. I'm pretty sure Medicare steps in and looks after anyone who needs oncology related care
It would be $0 here too, for such a serious illness, as Medicare would cover it.
It is only if you want extra features like a private room, TV etc. that you would incur costs that private insurance would pay for, and they will cover around 80% of those (varies a bit).
The extras package may make it worthwhile. If you wear glasses or contacts and visit the dentist. You are going to spend that money you pay for the premium. But you can get by with just public healthcare if not too fussy
Extras are a bit of a rort, considering you can get glasses for $15 online. If you have high health expenses, it is possibly worth it.
Actually I suggest full health insurance for all young active people especially males.
Think back to when you were young, how many close shaves did you have?
The young are more careless and risk takers.
I've had a knee reconstruction so did my little brother, both of these occurred playing sports.
There have been several times when I've been out and the idea that we might have to be helicoptered out came to mind.
I wouldn't get health insurance just to avoid the financial impact of lifetime loading, it really doesn't make sense. The savings of not paying insurance far outweigh the amount saved from avoiding the loading. IMO it's just a marketing / scare tactic to get people signing up.
Assuming your health insurance is $1000 pa and you want coverage until you are 80.
Total cost of insurance if you start coverage at…
31: $49,000
40: $41,800
50: $33,800
60: $26,000
70: $17,000As far as recommendations I'm with Frank health insurance, signed up through betterbills.com.au and it works out at $551.06 for 1 year (cheaper than the MLS!).
+1 for telling us about Frank health insurance and betterbills.com.au
Nice one. Commenting here so I can refer back
I like this line of thinking. Ozbargain style. Do you mind posting your maths for us?
Lifetime loading is 2% per year of not being insured over 31 up to a maximum of 70% (35 years). The lifetime loading is charged for the first 10 years of coverage.
Maths is pretty simple.
31 = 49 years at $1000
40 = 10 years at $1000 * 118% (2% for every year over 31) + 30 years at $1000
= (10 * 1000 * 1.18) + (30 * 1000)
= $41,80050 = 10 years at $1000 * 138% + 20 years at $1000
= (10 * $1000 * 1.38) + (20 * 1000)
= $33,800and so on.
akpv, can you enable PM?
I don't think private hospital cover is worthy enough pay $$$ for young single male.
(Different story for extra cover, it worth every penny if you know how to sqeeze it.)What it really worth, IMO, is for pregnancy related things as there's huge difference between private and public hospitals for that. - and trust me, my wife is a nurse in public hospital.
Also Fast ER access for kids, you certainly don't wanna put your kid in longer waiting and/or possible pain.
The thing is those all plans have certain waiting period to get covered so suggest plan wisely if you are planning to form a family.
What it really worth, IMO, is for pregnancy related things as there's huge difference between private and public hospitals for that. - and trust me, my wife is a nurse in public hospital.
Our family's experience with Public Hospital for childbirth was exemplary! Cost us nothing and had a private room with excellent nursing staff and prompt attention any time of day/night.
The only difference between our experience and my sister (in a Private Hospital) that I could discern was carpet on the floors, and Thousands of dollars out of pocket expenses (for my sister)!Cost us nothing and had a private room with excellent nursing staff and prompt attention any time of day/night.
Are you living in regional area in sort? I think it's fairly exception case.
Public hospitals in metro area has an issue with bed number, when it referred in hospital world it means staffing and resources required to allow one extra patient for the bed, so they tend to kick out newborn and mother out of hospital after a few days and it's even becoming worse and worse due to recent federal budget cut.
So even my wife's coworkers get private insurance for that reason. - It's not like they and we have some sort of employee special benefit :P
Nope, inner metro Adelaide at the largest suburban hospital.
We were out after 3 nights (slight complication, standard is 2), but it wasn't a problem. While it was scary to go home, it was also more comfortable and you've got to do it at some stage.
Depends where you live.
Our local public hospital varies wildly in quality of care. There certainly aren't any private rooms, heck you are sometimes lucky to even get a room. I know a woman who ended up in a hallway for hours waiting on a spot in a ward, just after giving birth to twins - hardly the place to be sitting trying to breastfeed newborn twins.
I paid to go privately so that I knew I would be managed by an experienced ob whose judgement I trusted completely, and in a hospital with an excellent reputation and facilities.
If you earn less than $80k individually or $168k as a couple you won't be charged the medicare levy surcharge. This is NOT the medicare levy.
If you earn more than that and don't want to be charged the surcharge you need basic hospital cover which can generally be had for $500 a year.
Bupa is quite popular as is AHM. Give them a look
The medicare levy surcharge for those who don't have appropriate cover and earn more than $80k individually is 1% of your ATI
Therefore if you don't have PHI and you earn $80k you'll have an additional $800 payable on your Tax Return. This amount is on top of any offsets or deductions
If you get basic hospital cover which is ~$500 then you are SAVING yourself $300 each year!
The OP is only earning 70k so it doesn't sound like it's an issue but your income for medicare levy surcharge is actually your Taxable Income + Reportable Fringe Benefits + Any Amount that family trust distribution tax has been paid. This year the threshold is $88k and depending on how much you earn the surcharge is between 1%-1.5%. Your income for MLS purposes will also affect the rebate you get.
as i said…
ATI —> adjusted taxable income which is Income + Reportable Fringe Benefits + Reportable Super Contributions - Investment losses if applicable.The reason I pointed it out was saying
earn more than $80k individually is 1% of your ATI
is a little ambiguous. What does earn mean? Taxable income? Total income?
To be clear if your income for MLS purposes is more than $88k and you don't have appropriate cover then you will need to pay the surcharge. The surcharge is
* 1.00% of your income for MLS purposes is $88k-$102k
* 1.25% of your income for MLS purposes is $102k-$136k
* 1.50% of your income for MLS purposes is $136k+ATI and Income for MLS purposes aren't quite the same but they are pretty close. You can see the difference here:
Income for MLS purposes: https://expertsystems.ato.gov.au/scripts/net/RITUI/MLS/scMLS…
ATI: https://expertsystems.ato.gov.au/scripts/net/RITUI/ATI/scATI…
i gave up hospital cover. im 36. its too exxy. if my kids needed ED i would bring them to Children hosp which is public. i think the quote is $260 per mth. I admit PHI is great. I had top cover for many IVFs and 2 pregnancies, received the best quality care, had access to my chosen ob throughout pg. in public, its shared care with GP and public hospital doesnt triage you until past 20 weeks.
I really got my moneys worth. However for the past. 5 yrs i have not needed hospital once. Thank god. I work in a medical clinic and know the system well. Im happy to go to public hospital.
However, everyone should have Extras cover!! we pay. $80 per mth for top Extras and its we claim more thsn we pay each year. That covers a family of 5. I suggest that you go with who your dentist uses, your accupunturist etc. there's no out of pocket expenses. All my providers are affiated with Medibank. We get $3 k pp for Orthodontics. Glasses, and We use up $1 k + is natural medicine each year.
My son has an Ataps referral for 5 sessions of speech therapy at school which reduces the cost from. $165 per session to $80 per session, paid by medicare. Then i claim the rest back from medibank private.
i believe kids under 16 and ppl with concession receive free dental from community dental clinics. my kids love the dentist experience at private clinics. they receive gift bag , freshly baked muffins, play on ipad and watch movies. all for $0 out of pocket with extras cover.
we claim so much more than we pay each year.
Depending on where you live, fronting up with your kids to the children's hospital may not be as simple as it sounds…
http://www.theage.com.au/victoria/children-left-untreated-as…
That said, if you were putting away that $260/mth saved, you could probably pay to go privately if your kid was in pain and waiting too long publicly.
My hubby had an infected cyst that required surgery to remove it, it's a common problem that mainly young men get - he was told it would be a 4 month wait at least because it was 'non-urgent'. He was so ill from the infection that he couldn't walk 50m and couldn't work. It's quite scary the amount of pain and debilitation you can be left in for months or years on a waiting list, that's why we have the cover even though we struggle to afford it.
Yes it does depend on your category. My mum had breast cancer and they scheduled her operation within 2 weeks. She requested it to be delayed for 1mth. Received amazing care. Did not spend a cent.
My daughter fell over and split her chin in the evening. It was quicker to go to ED than call after hours doctor. She was treated within 2 hrs.
even though we struggle to afford it.
This shouldn't happen in a developed Commonwealth-based country this affluent!
So as long as you take up insurance before 31, you avoid that lifetime loading?
Is there any difference in insurance premiums at say 26 or 30?
Nope. Premiums are the same, they aren't age based (unless you have a loading).
I thought to avoid the loading it had to be taken up before the end of the financial year after your 31st birthday?
I am 31 now, and that is how I understood it, that I need to get it before July.
That is my interpretation also. I turned 31 September 2013, and will (likely) be taking out PHI before 1st July 2014 to avoid any (so-called) extra fees/charges.
While you will avoid fees / charges (i.e. lifetime loading) it will cost you more money overall. It's like having car insurance for a car that you haven't yet purchased to get a no claim bonus sooner. Doesn't make financial sense.
pr?