To private health insurance, or not? That is the question.

Health insurance premiums have increased by an average of 54% since 2009, so it’s easy to see why so many Australian’s choose to re-evaluate whether it is worth it.

Currently 47% of Australians have hospital cover, compare that to a decade ago where most Australians had full insurance cover. As insurance premiums continue to rise, the number of Australian’s dropping their level of cover or their insurance altogether is increasing.

With an ageing population health insurers are targeting young Australians in order to cover the cost of the older generation. We are constantly being bombarded with commercials trying to convince those without private health insurance or under the age of 31 that they need cover.

Statistics show that people don’t really start using the hospital system until they’re in their 50’s. So why do so many Australians feel as though they need it? Well with so many products on the market consumers can easily be bamboozled, and we unfortunately rely on our health insures to provide us with the right advice. However, that’s like asking a salesperson if you really need that new pair of shoes.

In fact the government kind of prods people into getting private health insurance by using financial incentives(this is where it gets a little technical, but bear with me) like the Medicare Levy Surcharge(MLS), which is an additional tax paid by high income earners (those who earn $90k+ for singles & $180k+ for couples). The other being the Lifetime Health Cover(LHC) loading, which affects you if you take out hospital cover after you turn 31.

So, is it worth it? Well if you are a high income earner, planning for pregnancy, or your health condition requires hospital cover and/or utilise the extras, then you should sit down (or stand up, far be it from me to tell you how to live your life) and do the sums.

For those that are deemed high income earners (remember that $90k & $180k thing I mentioned above), and do not have private health insurance, then they will be liable for the Medicare Levy Surcharge, if they have private health insurance they are exempt.

Confused? Yeah I get that, so here are my handy five tips to help you avoid the traps of health insurance:

  1.  Do yourself a favour and take the Do I need health insurance? quiz. It will tell you whether you are financially better off with or without private health insurance.
  2. For those with private healthy insurance policies, don’t be afraid to shop around and move health insurer provider, sometimes an increased hospital excess can be better value than reducing your cover.
  3. Pay your annual premium as a lump sum (ouch! I know) but it will help you avoid the 1 April price rise.
  4. Check if you can join a restricted membership health fund for your industry. These are usually available to teachers, those in the military, police and individuals in the medical industry.
  5. Finally, review your extras cover, if you’re getting less in benefits than you’re paying in premiums than its probably not worth it.

Wishing you Health, Happiness and low premiums,

YG.

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