I'm now 31... So what's the deal with private health cover?

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  toniyellow on 11/03/2015 - 08:12

  +2

  I recently learnt from a post on Ozbargain, of the '3 year minus one day rule' which means you can delay this decision for a few more years if you want. That thread is a good read https://www.ozbargain.com.au/node/178894

  As someone who makes well under the Medicare levy surcharge threshold, and is nearing 31, and I am incredibly excited about being able to hold off for a while. I don't however have any ongoing medical needs at the moment or forsee elective surgery, so it is any easy choice for me not take out cover until perhaps I earn more and the surcharge makes the cost benefit analysis different.

  I do have ambulance-only cover, which is the minimum you should get when you go off the HCC as ambulances aren't free. But it is only $50 a year or so.

  • 

    CryssieJade on 11/03/2015 - 23:13

    This is exactly what I was thinking. I would rather hold off until I'm earning more than now. Truth is, my elective surgery is available publically, but with a 2 year wait. So, if I get on the list now, I should be golden (considering the extent of my injury, getting on the list immediately shouldn't be an issue. And I can live with the injury until then, through Physio)

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  jaybmate on 11/03/2015 - 11:00

  +2

  Its not really as bad as you would think, to just put it off till later. You still end up paying much more in health insurance overall if you start it earlier compared with starting later.

  Work out the numbers, of total health insurance paid between years of 30-50 and compare with 40-50, and compare how much you end up paying.

  It works out to be not too far off double if you have it for the whole 20 years. (I did the numbers a few months ago but forgetten them).

  Note, this assumes you don't really get sick that much, healthy etc.

  Also to add, I'm not sure if the poster above has interpreted the '3 year minus one day' rule correctly. If I understand correctly, that is for 'gaps' in your health insurance, I don't think you can 'start' the 31+ year using your '3 year leeway'.

  • 

    CyberMurning on 11/03/2015 - 11:46

    interesting. yeah better to confirm if the rule is gaps or not.
    what i have done:
    before 31yo i started taking extras and hospital,
    after one month i cancelled the hospital,
    change the extras to the cheapest available, (because my income was under the medicare levy surcharge, no need to have hospital but i like to glasses, dental cleaning etc).
    keep doing this for 3 years less 1 day, assessed my situation, and decided to continue without hospital.

    yes i will take hospital one day when bit old, and get slap with penalty, but it works out cheaper this way.

  • 

    toniyellow on 11/03/2015 - 15:06

    Mmm, could require a gap. I haven't researched thoroughly as I'm not affected yet, I was quoting the post I linked.

    If I have to take out insurance for one month so I'm technically insured on the date, then let it lapse so the three years is technically a gap, I'm happy with that to give me longer to decide / longer for my salary to increase. I can see possibly wanting PHI in a few years if I was in a position to have a family then.

    Otherwise I am pretty healthy and would not take it up for a long time unless Medicare changes significantly.

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  jaybmate on 11/03/2015 - 12:02

  Another thing to work out would be to take into account is the amount of tax saved, as as far as I know, if you pay health insurance, you don't have to pay medicare levy.

  • 

    CyberMurning on 11/03/2015 - 12:20

    only if your taxable income (so not just gross salary) goes over the tresshold, current for single is $88k
    https://www.ato.gov.au/individuals/Medicare-levy/Medicare-le…

    The MLS rate is applied to:
    your taxable income
    your total reportable fringe benefits, and
    any amount on which family trust distribution tax has been paid.

    • 

      jaybmate on 11/03/2015 - 13:37

      +1

      Thats for the Medicare Levy Surcharge, which is in addition to the standard medicare levy. pretty much everyone who earns above about 24k will payy the surcharge, unless exempted for other things.

      https://www.ato.gov.au/Individuals/Medicare-levy/In-detail/M…

      • 

        CyberMurning on 11/03/2015 - 14:25

        oh yeah sorry! so just take any cheapest extras only private health insurance, and you will be fine. just not the hospital. correct?

      • 

        jaybmate on 11/03/2015 - 15:26

        Correction to above, i meant everyone will pay the standard medicare levy.

      • 

        OldBugger on 11/03/2015 - 15:33

        @jaybmate: Correct. You have to pay the surcharge if you earn over $88,000 ($90K next FY)

        If you are under that then taking out PHI with the aim to simply reduce tax won't have any benefit.

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  spersephone on 11/03/2015 - 12:19

  Basically when you take out cover, you will pay over the standard rate due to your age. You will always pay more than anyone else (who took it out before they turned 31) on the same cover, until you've held it long enough (10 years?) to revert to the lowest premium,

  The younger you are when you start, the smaller this premium increase will be. This is the benefit behind the lifetime loading.

  This page has the information you will find informative for your decision:
  http://www.privatehealth.gov.au/healthinsurance/incentivessu…

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  OldBugger on 11/03/2015 - 15:28

  +2

  This forum I started a wee while back may help:

  Is Health Insurance worth it?

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  CryssieJade on 11/03/2015 - 23:04

  Yeah, see in a nutshell, I don't think I see the value in paying that much, or anything for that matter. I feel I'm better off just funding things as they come. I mean, if I ever need glasses, those free ones that the elderly get are just fine. The nanna look is super fashionable anyway :)

  I've had ambo cover for 6 months, already used it once and it's paid for itself.

  Seems that private health is a whole lot of paying out of pocket anyway.

  I literally know nothing about private health, so I thought that this turning 31 business meant that if I don't have private health cover, I would have to pay money my entire life as a penalty for not having it. Thanks for clearing that up for me, that it only means I pay a penalty if I have it, and sign up later than 31.

  Thanks OldBugger…had a read through, but might have another read. I don't think its worth it for me. What was your decision in the end?

  • 

    OldBugger on 12/03/2015 - 01:45

    +2

    My wife and I opted to self insure for a few reasons. I earn under $88k ($174k as a couple) so no tax benefit. We are healthy with a good family history. I've used the emergency room a few times for me and with others and contrary to what we read, I think we have it pretty good on average. My wife is an emergency nurse which can come in handy. I've personally heard of more good stories than bad in emergency rooms in regards to treatment and waiting times in the larger public WA hospitals. With PHI you usually still pay for gaps where as a public patent you would pay nothing. If you are in an emergency you'll most likely go to a public hospital anyway with our without PHI.

    Child birth is another area to think about. We paid nothing when having our child in one of the smaller public hospitals. We also had a community mid wife come visit our house for a few weeks after. It was a slightly complicated birth and we had a senior doctor with us and also a specialist obstetrician was called in to oversee the procedure. We also ended up with our own room afterwards. My brother went private and had to pay $3k for their dedicated obs who wasn't even there at their birth as it was a Saturday. So they had someone they never met before. They had to pay out of pocket for other simple items like meds.

    The money we've saved now not being on PHI would already cover a large number of elective surgeries, if we couldn't stand any waiting list. On saying that, I have had friends getting in to have elective surgery in a public hospital within a month just by asking the right specialist. This is a good read about paying for elective surgery http://www.rogerbrighton.com/no-health-insurance-dr-roger-br…

    I also believe the public system has access to higher qualified specialists who are usually working within the hospital at any given time, rather than having to be called in.

    I do have just extras cover for $20/m which paid for itself when I was endulging in sports massages a while back plus as you said, covers for any ambo service. But I'm not using it much these days and just calculating the odds of needing an ambo more than once every four years.

    But each to their own. If i was earning over $100k I'd definitely look more into it. Good luck in whatever you decide!

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      CryssieJade on 12/03/2015 - 09:03

      Oldbugger, the link you sent me is absolute GOLD. From the bottom of my heart, thank you, thank you, thank you.

      One of the injuries he talks about is what I will eventually need (ACL reconstruction). I'm going to call his office and see what the costs are. I'm in Melbourne and he is Sydney, but I think that flying interstate will be worth the money.

      Incidentally, you've given me the best birthday present I could have asked for :)

      And for the record, I'm earning less than $88k, so PHI really isn't worth it for me. Thank you for all your personal experience and insight!!

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  Kevan2 on 12/03/2015 - 09:30

  -2

  All the discussion is well and good. The real question being overlooked is one word.

  Insurance.

  If you make any decision on tax advantage you will stuff yourself. Tax benefits come and go.

  Sh*t happens to all of us at one time or another.

  I suggest we all revisit on our birthday yearly the "insurances" we have and need life, die,trauma,car and third party, will, advanced health'
  ,house, contents,listed items, aldult toys (boats sect) future insurability of children and health.

  There will be other according to your needs. Why this comment Mum cancelled health cover ( I was not told till too late) wrong hospital, wrong treatment, did not come out front door. Had friend who took up cover, my nagging, found cancer, beat the odd with non qued treatment.

  Only suggestion, ensure you review yearly , on the only day you remember birthday, take care.