Affordable private health insurance can seem like an oxymoron, a mythical creature lurking in the shadows of high premiums and confusing jargon. But the truth is, navigating the world of private health cover doesn’t have to break the bank. With a little research and strategic planning, you can find a policy that fits your needs and your budget, offering peace of mind without emptying your savings. Let’s dive into the strategies that will help you secure affordable private health insurance.
Understanding Your Healthcare Needs
Assessing Your Current Health Status
Before you even begin looking at policies, take a good look at your current health situation. Are you generally healthy? Do you have any pre-existing conditions? Do you anticipate needing specific treatments or procedures in the near future?
- Consider your family history: Are there any hereditary conditions that you might be at risk of developing?
- Think about your lifestyle: Do you engage in activities that increase your risk of injury?
- Reflect on past healthcare usage: How often do you visit the doctor, specialists, or hospital?
This self-assessment will help you identify the types of coverage you truly need, allowing you to avoid paying for unnecessary extras. For example, a young, healthy individual might only need basic hospital cover, whereas someone with a chronic condition might prioritize comprehensive extras cover.
Identifying Essential vs. Optional Coverage
Private health insurance typically comes in two main forms: hospital cover and extras cover. Understanding the difference is crucial for finding affordable options.
- Hospital Cover: This covers your costs as a private patient in a hospital, including accommodation, theatre fees, and doctor’s fees (subject to any excess and policy limitations). This can be essential for avoiding long waiting lists for elective surgeries and receiving treatment in a private room (subject to availability).
- Extras Cover (also known as ancillary cover): This covers out-of-hospital services, such as dental, optical, physiotherapy, and chiropractic. If you frequently use these services, extras cover can be beneficial. If not, it might be an area where you can save money.
Decide which of these types of cover is most important to you. Can you afford to pay for some extras services out-of-pocket if needed? Perhaps you can prioritize hospital cover and consider a more basic extras package.
Strategies for Finding Affordable Premiums
Comparing Policies and Providers
Don’t settle for the first policy you find. Comparing policies from different providers is essential for finding the best deal.
- Use online comparison websites: These sites allow you to compare policies side-by-side based on your specific needs and budget. Examples include iSelect, Compare the Market, and Finder.
- Get quotes directly from insurers: Some insurers may not be listed on comparison websites, so it’s worth contacting them directly for a quote.
- Pay attention to the details: Don’t just focus on the premium. Look at the inclusions, exclusions, waiting periods, and excess options.
- Example: Two policies might seem similar at first glance, but one might have a much higher excess, meaning you’ll pay more out-of-pocket if you need to make a claim. The other might have longer waiting periods for certain services, meaning you won’t be able to claim for them right away.
Increasing Your Excess
An excess is the amount you pay towards your hospital claim before your insurance kicks in. Choosing a higher excess can significantly reduce your premiums.
- Consider your risk tolerance: Are you comfortable paying a larger amount if you need to go to hospital?
- Calculate the potential savings: See how much you can save by increasing your excess. Is the saving worth the potential out-of-pocket cost?
- Example: Increasing your excess from $250 to $750 could save you hundreds of dollars per year on your premiums. However, if you’re likely to need hospital treatment, you’ll need to be prepared to pay the higher excess.
Reviewing Your Policy Regularly
Your health insurance needs may change over time. It’s a good idea to review your policy regularly (at least once a year) to ensure it still meets your needs and is still the most cost-effective option.
- Check for changes in your health status: Have you developed any new health conditions? Are you planning any major medical procedures?
- Compare your current policy to other options: Are there any new policies on the market that offer better value?
- Negotiate with your insurer: Ask if they can offer you a better deal. They may be willing to match a competitor’s price or offer you a discount.
Understanding Government Incentives and Rebates
Australian Government Rebate on Private Health Insurance
The Australian Government offers a rebate on private health insurance premiums to help make it more affordable. The amount of the rebate you’re eligible for depends on your income.
- Check your eligibility: Use the Australian Taxation Office (ATO) website to determine your rebate tier based on your income.
- Claim the rebate: You can claim the rebate either as a reduction in your premiums (by having your insurer apply it) or as a refundable tax offset when you lodge your tax return.
- Example: A single person earning less than $93,000 per year is eligible for the full rebate. A single person earning between $108,001 and $144,000 per year is eligible for a reduced rebate.
Lifetime Health Cover (LHC) Loading
The Lifetime Health Cover (LHC) loading is a government initiative designed to encourage people to take out private health insurance earlier in life. If you don’t have private hospital cover by 1 July following your 31st birthday, you’ll pay a loading of 2% on your premiums for every year you’re over 30 when you take out cover.
- Avoid the loading: Take out private hospital cover before your 31st birthday to avoid paying the LHC loading.
- Understand the impact: If you delay taking out cover, factor the LHC loading into your cost calculations.
- Example: If you take out private hospital cover at age 40, you’ll pay a 20% loading on your premiums for the first 10 years.
Leveraging Workplace Health Insurance
Employer-Sponsored Health Plans
Some employers offer health insurance as part of their employee benefits packages. These plans can often be more affordable than individual policies because the cost is shared between the employer and the employee.
- Check with your HR department: Ask if your employer offers a health insurance plan.
- Compare the benefits: Carefully compare the benefits of the employer-sponsored plan to other individual policies to see if it’s the best option for you.
Salary Sacrificing for Health Insurance
In some cases, you may be able to salary sacrifice for health insurance, which means you pay for your premiums out of your pre-tax income. This can reduce your taxable income and lower your overall cost of insurance.
- Consult with a financial advisor: Get professional advice to determine if salary sacrificing is right for you.
- Understand the tax implications: Make sure you understand the tax implications of salary sacrificing before making a decision.
Conclusion
Finding affordable private health insurance requires careful planning and research. By understanding your healthcare needs, comparing policies, increasing your excess, leveraging government incentives, and exploring workplace options, you can find a policy that fits your budget and provides you with the peace of mind you need. Remember to review your policy regularly to ensure it continues to meet your needs. Don’t be afraid to shop around and negotiate with insurers to get the best possible deal. The key takeaway is that affordable private health insurance is attainable with the right strategy and a proactive approach.
