Tips for finding great health insurance

Just as with any other financial commitment or utility you decide to take on, when it comes to health insurance for you and your family, you should take your time to find the best product for you and your needs. Here’s some pointers to help you to do just that.

Beware the taxman

He (or, indeed, she) is not actually going to hurt you, but if you get a significant pay rise you may have to part with some more of your taxable income via the Medicare Levy Surcharge (MLS).

If, in the 2020–2021 tax year you stand to earn more than $90,000 (or $180,000 for couples, families and single parents), you might have to pay another one per cent in tax on top of the two per cent you’re already paying for the MLS. This MLS charge is usually applied if you don’t have private healthcare.

If you earn more than $105,000 ($210,000 for couples, families and single parents) or more than $140,000 ($280,000), this additional levy will rise to 1.25 per cent and 1.5 per cent.

Give your current private plan a once–over

There are lots of great health plans out there, so it’s not a big deal to switch your policy. You’re also protected by law, if you switch, from having to wait out a qualifying period before you can claim, as long as you’re already covered for a particular service.

Lots of people stay with an old policy that’s not that great for them anymore simply because they think they’ll have to re–serve a waiting period for services they already had cover for. They don’t, thanks to continuity of cover. If you add or include a service that wasn’t on your old policy then there’ll be a waiting period, but certainly not for any services that you already pay for.

Check out your extras

Lots of health insurance consumers opt for extras beside hospital cover, such as dentistry, optical help and physiotherapy. Health funds tend to vary with their offerings, their extras and their rebates on any expenses you may have, so choose your cover carefully to make sure it’s worth it. Is the cost of the premiums worth the services you get back and are there any benefit limits which might be restrictive?

Mix and match according to your needs

You don’t have to buy your hospital cover and your extras from the same provider or insurer. It might work out better for you to buy your “general” hospital cover from one provider and more specialised cover, such as orthodontics, from another. You could save money on the premiums, or you might find that your extra policy offers better and more comprehensive services that meet your needs more than those included with your general policy.

Review your premiums once a year

This is a simple step to make sure that you’re not paying too much and also make sure that you’re paying enough in the directions that are priorities for you. Your usual provider might be able to offer you a reduction on your hospital cover premiums, for example. It may also be the case that as you get older, have another child or recover from a health issue, that you need to pay more or less for some services.

Avoid making both co–pay and excess payments if you can

Excess and co–payment schedules vary between health funds and you will usually pay one or the other. Some policies, however, need you to pay both co–pay and excess if you’re admitted to hospital and this can end up being very expensive. You should, if you can, avoid such policies.

What are co–pay and excess payments

Your excess is the upfront payment that you’ll pay out of pocket in order to access the health benefit payments you’re insured for. Your excess is billed for each hospital admission you have each year, although many policies cap your annual excess charges so you’re not spending a fortune.

Your co–payment is a smaller amount that you pay for each day you’re in hospital. If you’re hospitalised for four days and your co–pay is $60, you’ll pay $240. Co–payments vary with each policy, with some being fairly small and some being $200 a day or more. As with excesses, your co – pay is often limited to a maximum annual amount, and lots of hospital cover policies don’t charge co–payments for day surgeries.

Have funds ready to part pay your bills

If you agree a higher excess than the minimum required, or a higher co–pay rate, then you could reduce the size of your premiums, just as you can with home and car insurance.

If you’re single and you have a taxable income of more than $90,000 (or $180,000), you might prefer a policy that has an excess requirement of $500 (or $1,000). By agreeing to this level of excess payment, you could reduce your monthly premiums and you might also avoid the MLS charge of at least one per cent of your taxable income. The MLS is applied if you don’t have qualifying medical cover.

It’s also important to remember that the threshold of $180,000 for couples, families and single parents rises according to the number of dependents you have on your hospital cover policy. You should always contact the Australian Tax Office (ATO) for more information and advice about your taxed and the MLS so you understand what your tax liabilities might be.

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