Do I Need to Get Private Insurance?

Doboman on 09/09/2024 - 07:51

Here’s a rewritten version of your question for a forum:

I'm approaching 50 and have never had private health insurance. My partner and I are getting close to reaching the income threshold for Medicare Levy Surcharge (Tier 1). I'm finding it hard to see the value in getting private hospital cover since we've always been fine with the public system. Our kids are teenagers, and we do already have extras cover, which we use and find helpful.

When I look into private hospital cover, the Lifetime Health Cover loading (2% extra each year after 30) makes even the most basic plan quite expensive. Has anyone done the math on whether it's actually worth getting private hospital insurance in this situation? I guess not paying for private all this time i made saving.Would appreciate any advice!

Financial Health Insurance Insurance

Comments

  • holdenmg on 09/09/2024 - 08:06
    +2

    No.
    (and Yes).

    If you are both happy with Medicare and Public Hospitals (and the wait lists), then No.

    If you want PHI via Private Hospital Cover, it will cost you and even then there is a qualifying period.

    If you have put aside the funds by not having PHI all these years, you might be well ready to pay for whatever happens or happy for Medicare and the waiting game.

  • MS Paint on 09/09/2024 - 08:16
    +11

    Just use the $70k you have saved over the last 30 years to self insure.

    • SlickMick on 10/09/2024 - 09:32
      +1

      This is what we've done.

      OP, just be aware that medicare is unsustainable. The public system is becoming a 2nd rate service. e.g. my wife now pays to see a doctor rather than limiting herself to someone who bulkbills (and is critical of the level of care my bulkbilling dr provides); on multiple occassions we've paid for treatment privately rather than waiting for the public system.
      I suspect the medicare levy will just keep rising and/or the level of care the public system provides will keep falling. Medicare might become just for those on welfare and you'll be paying your way for everything. Hopefully by the time that happens you'll be on welfare??

      • larndis on 10/09/2024 - 13:31

        Medicare is separate to public hospitals though

  • EightImmortals on 09/09/2024 - 08:32
    +2

    Similar situation here but we worked out that the cost of premiums (even though we have no health issues) would be multiples of what the tier one levy was. There was also some scammy thing happening that involves a penalty for those who haven't had private health insurance before, some kind of extra levy but I don't remember the details now so watch out for that as well.

    • OMGJL on 09/09/2024 - 10:27
      +1

      yeh heard about this although I didn't pay much attention,

      it's something like if you didn't pay for private health insurance past the age of 35 then you'll need to pay some % more (and the percentage is quite chunky), compare to as if you paid for private health every year. It'll reduce each year afterwards until it reaches 0%.

  • boomramada on 09/09/2024 - 08:37
    +2

    I'm approaching 50 and have never had private health insurance

    Then don't get it. At this stage, private health insurance only gets you a bed in a hospital. Just get an extras cover.

    • Zephyrus on 09/09/2024 - 10:02

      Extras cover doesn't make you exempt from the MLS

      • boomramada on 09/09/2024 - 11:29

        I wasn't aiming at MLS, but that's all you need when you are hitting 50s lol :)

  • Fredfloresjr on 09/09/2024 - 08:51
    +6

    Not worth it, you are 50 now, few years from now, you might need hip/shoulder/knee replacement, just be in the queue right now as you will have to wait at least 3-5 years to get this sorted without PHI.

    To be honest, at your age, this is the time you would prioritised your health.

    • SlickMick on 10/09/2024 - 09:38
      +1

      Honestly. My mum suffered for years, right through covid, before they finally operated on her hip. By then, she'd destroyed her knees and looks like she'll never get her mobility back.

      My wife needs a knee reconstruction and can't even get put on the list. Did get sent to a dietician though to try to lose weight despite not being able to exercise.

  • djsweet on 09/09/2024 - 08:55
    +1

    You can work out how much extra you will need to pay in MLS. It starts at 1% of your total income when you first go over the threshold and increases from there. MLS will likely be much less than the cost of PHI if you just go over the threshold by a bit. It becomes a cost issue when you start going significantly over the threshold. However, you can see going over the threshold as a 2k per year discount on PHI.. so it depends if you think that is worth it to you.

  • onetwothreefour on 09/09/2024 - 08:59

    Same situation here, this year was the first year I had to pay the MLS. The cheapest insurance you can take out for families seem to start around $2,800 which si around how much we had to pay for the MLS.

    • djsweet on 09/09/2024 - 09:03

      Do you think the cheapest insurance is worth $800? Genuine question

      • onetwothreefour on 09/09/2024 - 09:15
        +1

        I really don't know but I know I wouldn't have claimed $800 in a year previously, but now as I am getting older that might change.

      • larndis on 10/09/2024 - 13:35
        +1

        Very unlikely as the cheapest policies pretty much only exempt you from the surcharge and don't actually cover anything, i.e. you will still get the exact same service as a public patient. It's a complete scam, we shouldn't be pushed into taking out junk insurance policies just to line the pockets of the health insurers.

        • djsweet on 10/09/2024 - 13:40
          +1

          No one cares that its junk insurance and that it doesn't cover anything. The government just wants you to give money to PHI because the more people PHI can spread the load across the better it is on average. Its just a way to prop up PHI to take load off the public system. A better idea would be to use that money to improve the public system instead of pumping it into PHI, but what can ya do. Vote I guess.

  • coffeesnob085 on 09/09/2024 - 09:17
    +5

    I advocate for PHI. I have been in pain and needed elective surgery. If I hadn't had private health insurance I would have had to wait over a year for an op to relieve the pain. Public is good for emergencies but you don't want to be stuck on a long waiting list

    • Loopholio on 10/09/2024 - 10:59

      I've often wondered about this. I rely on the public system and if I'm put on a long list could I pay to to be seen sooner or would I need private health insurance to do this?

      • larndis on 10/09/2024 - 14:32
        +2

        I think you could still pay to be seen sooner, just without getting anything back. You still have out of pocket costs with insurance - people often overestimate what their PHI actually covers.

    • pandora on 10/09/2024 - 11:58

      Very well said.

  • jv on 09/09/2024 - 09:31
    +1

    I'm approaching 50 and have never had private health insurance.

    A bit late now…

    You'll have to pay the additional LHC loading on your Hospital premium once you start your policy.

    For each year you put it off since 30yo, your loading will go up by another 2% (up to a maximum of 70%).

    • freefall101 on 09/09/2024 - 10:26
      +2

      It disappears after 10 years though. So OP can take out basic hospital cover for the next 10 years, then ramp it up once they turn 60 to get additional cover.

      Makes sure they're covered for things that might go wrong between 50 and 60 (joint reconstructions, falls/accidents, bones and muscles) then ramp it up to cover full joint replacements, heart related, spine related, etc when the loading is gone.

      Cost-wise this is when it makes sense. Bronze is about $1,500 a year, with loading that's $2,100, so $21,000 over the next decade. But if they wait until 60 it's $3k a year for silver plus or $4k for gold, that first decade they're paying out $15-20k in LHC instead. Might as well take it out now, have the safety net of that coverage. It makes even more sense if they hit the tax bracket that they need to pay extra tax.

      • jv on 09/09/2024 - 10:47
        -1

        It disappears after 10 years though.

        You're assuming they'll still be around then…

        • md333 on 09/09/2024 - 14:48
          +2

          If they are not around that long, they'll pay even less loading, don't have to pay it any more after you are dead.

    • md333 on 09/09/2024 - 14:47
      +3

      I worked out my savings from a couple of years without insurance more than makes up for the extra loadings.

      • Seraphin7 on 09/09/2024 - 14:57
        +2

        Agreed. I looked at this years ago, and the loading never comes anywhere near eroding the savings you've made along the way.

        Easy example … insurance costs $1,000 a year … don't have it for one year and then take it up in year two at a 2% premium. That extra $20 a year takes 50 years to erode the $1,000 first year saving (even without allowing for time value of money calculations).

        Extend out to 35 years … you end up paying an extra $700 a year, but you've banked $35,000 in savings along the way. Same calculation as above, just with bigger numbers.

        The 2% "penalty" is not actually a penalty. It's amazing that the "marketing" around this has convinced everyone that this is some draconian situation, but actually is a tokenistic attempt to convince people to get into PHI earlier based purely on financial grounds.

  • md333 on 09/09/2024 - 14:52

    I've been in a similar situation a few years ago. Caught up to the MLS threshold again at around 50. Even with the loading I am saving a substantial amount with an HCF policy compared to paying the levy surcharge. I don't think I'd bother if it wasn't a significant saving though. Does take a bit of shopping around to find the cheapest policies. I think there was another one slightly cheaper but it seemed to exclude just about everything that might be useful, figured I may as well get one that has a chance of being useful beyond tax.

  • AussieDaddy on 09/09/2024 - 15:36
    +3

    I'm 45 and never had PHI too. Thought about it a year or so ago, but the LHC loading put me off. I'll take my chances with the public system rather than getting "fined" 2% for each year I didn't have PHI after 30 for the next 10 years. That type of penalty is probably what's keeping a lot of people who never had PHI from getting a cover.

  • BigBirdy on 10/09/2024 - 08:52

    Having PHI might be debatable if you’re young, healthy and not subject to MLS. It’s a gamble, and it’s not just about pain management while on a wait list (as I found out). Some (life changing) health options are only available in the private system.

    However, you’d be mad not to get PHI once you’re subject to MLS. Even if it’s a cheap scammy policy, at least it will save you tax and reduce your LHC so eventually you can get a decent policy free of the LHC surcharge

    • SlickMick on 10/09/2024 - 09:45
      +1

      PHI>MLS [edit: for those of us that would have a heap of loading.]. Once you have cheap insurance, I understand that you start paying top ups for services that were free under medicare.

      I'd rather pay the levy and get some more $$ into medicare than give it to a private insurer.

  • VW-Kombi on 10/09/2024 - 11:00
    +1

    You must put aside your PHI savings to pay for elective surgery if you really need it. Its all a gamble - some you win, some you lose. We have PHI since 2002, always mid hospital and extras, kids all grown and left now.

    Wife has had separate ankle and knee surgery in last two years. Still had an out of pocket amount to pay though - which I imagine puts more people off actually using it - but she was in pain, but not enough pain to get any sort of early access to public. Likely she will need a hip or two next also. She is 53 now.

    Next door needed a double hip and they just paid 30K of their own money as the pain was just too much of an impact on their life and still was an unknown wait on public hospital. My dad however got his hips for $500!

    I had sepsis 4 years ago, wife drove me to one of our private hospitals, no waiting at all, straight in - just a gamble as if you are NOT admitted, you pay about $300 or something. If admitted, nothing to pay - so you have to know your 'illness' to gauge which hospital to go to.

  • pandora on 10/09/2024 - 11:50
    +4

    100% YES! Long story short I’m 65, hubby 60, both consider ourselves pretty fit & healthy. Apparently not so for me and I need spinal surgery asap. My GP said no way I’d get through the public hospital system - it’s broken (but that’s another story).

    Hubby and I have been working on the theory of self-funding should the need arise and so my GP referred me to the specialist surgeon as a self-funded private patient. Specialist “regretfully declined” to see me. So did the next one we tried. I rang both doctors to find out why they would not see me despite my being able to throw a large sum of money at it. Both were upfront saying they declined because of the increased risk of complications that could arise from spinal surgery, thus blowing out the cost. I said I can STILL fund it (empty the super, whatever it takes) but for them it was simply an easy pass, they were not prepared to take the risk. I thought the risk here was mine but I totally see where they are coming from. There’s so many patients out there they can afford to pick and choose. I don’t like it but I get it.

    We both took out private health cover the next day, yep it hurts especially with the 70% wack for not insuring earlier in life. In our defence we simply couldn’t afford it when we were raising our kids and since then we’ve been running with the self-funding route.

    It’s all good and well if you only ever need the less expensive procedures but for anything involving the spine, the heart or the brain, self-funding is quite likely not going to be an option. And who has the crystal ball?

    I’ve now got another 46 weeks to wait before I can have the surgery I need and in the meantime I’m in considerable pain. Please learn from my experience and don’t hesitate to take our private health asap.

    • BigBirdy on 10/09/2024 - 12:42
      +2

      Yep, have had that experience with specialists. An expected $10K surgery could turn into a $1000K cost.

      Life’s good, then suddenly you have a serious heath issue that the public system can’t resolve. Fortunately I had PHI to deal with mine. 30 years insurance without a claim, but it’s now very reassuring to have it.

  • screensaver on 10/09/2024 - 12:45

    Ypu can take the cheapest available hospital cover and churn 4 times per year to start burning off your loading. (6 weeks free each time). Any pre exisiting conditions require 12 month wait. Then start familiarising yourself with all the categories you might need, and who has the cheapest rates. I am 5 years into burning off a loading, then I will go to silver cover

  • BigBirdy on 10/09/2024 - 12:51

    If you want a cheap cover for all categories, ie GOLD, look at St Luke’s and Mildura. The cheapest is St Luke’s $1000 excess GOLD, not suitable for avoiding MLS, for around $160/month (single)

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