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Private Health Insurance Explained

04 Mar 2022

If you’ve long been tossing up whether investing in private health insurance is really worth it or not, then it’s important to understand how each policy works.

Health-Insurance-Explained

By definition, the concept of insurance is an arrangement by which a company undertakes to provide a guarantee of compensation for specified loss, damage, illness, or death in return for payment of a specified premium. Sounds serious, right? Well, insurance is serious business, and can be all that stands between you and potential disaster. 

Insurance comes in all shapes and sizes to cover a wide range of life events and major purchases, a growing number of Australians are investing in private health insurance for the first time. While more than half of the population now have private health insurance in 2022, many of those same people have admitted to not fully understanding what they are getting for their money, and what they are and are not covered for.

Understand Your Options For Private Health Insurance 

Despite the private health insurance industry being a lucrative one, Australia’s universal health care system is still ranked  #9 in the world. Publicly funded and operated by Services Australia, the system known as Medicare is the primary way that Australian citizens and permanent residents access health care in Australia, covering the cost of treatment in public hospitals along with subsidising a wide range of services and medications.

In part, Medicare is paid for via a 2% tax on Australian wages, otherwise known as the Medicare Levy. However, the Australian Government actively encourages all Australians to take out a private health insurance policy, and imposes a penalty for not taking it out via paying more income tax through the Medicare Levy – it even offers incentives for those who do, through rebates on the premiums. 

Considering our rapidly aging population plus incentives available to young people, navigating the world of private health insurance isn’t for the faint of heart. It can be tricky to understand what types of policies are on offer, and which of those policies would be the ideal fit for you considering your personal circumstances, medical history, and even budget. For many people, private health insurance has long been considered as a luxury, with the premiums ranging anywhere between just $6.27 a month, and up to a whopping $1,152.75 a month, and dictated by the following factors. 

In Hospital Services – As a public care patient, you may be treated in either a public or private hospital. The public system will cover the cost of your treatment, but you don’t get to choose your doctor or hospital. In comparison, a privately insured patient can. Your insurer also covers some or all of the hospital costs, and doctor fees that Medicare doesn’t already cover. 

Doctor And Specialist Services – By law, health insurers can’t offer cover for most of the services of a doctor or specialist outside of a hospital environment. In comparison, Medicare covers some or all of the costs or services, such as visits to a general practitioner, visits to specialists, diagnostic imaging, and diagnostic tests.

Out Of Hospital Services – Private health insurance offers a wide range of policy inclusions that cover some or all of the costs for medical services outside of a hospital. Medicare isn’t quite as expansive, but covers some services such as dental care for children, eye checks by optometrists, and allied health services such as mental health care. 

Prescription Medications – For those relying on the public health care system, prescription medicines are covered by the Pharmaceutical Benefits Scheme (PBS) at a Government subsidised rate. For those privately insured, some policies provide access to certain prescription medications that are not covered by the PBS. 

Prostheses – In the world of medicine, a prosthesis or prosthetic implant is an artificial device that replaces a missing body part, which may be lost through trauma, disease, or a condition present at birth. The cost of this is not covered by Medicare, but certain private policies do cover the cost of some or all of the procedure and prosthetic limb itself. 

Ambulance – Medicare does not cover the cost of emergency transport or other ambulance services. Instead, some state and territory governments cover the cost of ambulance transport, but this all depends on where you live. If your state doesn’t offer this service, there are private health insurance policies that specifically offer this as an inclusion to customers. 

Many people make the mistake of purchasing a private health insurance policy for one specific inclusion like access to dental services or weight loss surgery, but don’t realise that wait times often apply before you’re able to make a claim. For big ticket one off events like these, many consumers may even be better off to save up the funds themselves without insurance. 

As a consumer, it’s important to be wary of comparison websites that filter health insurance products. Keep in mind that particular products may be promoted or recommended more heavily than others because of commercial arrangements, and do your own thorough research when it comes to general inclusions, exclusions, and the fine print. 

How To Save Money On Your Monthly Bills

Kyco is a member based buying group that ultimately aims to save Australians money on their energy, health and insurance bills. The more members we have, the more negotiating power we have to arrange low, long-term deals with service providers.

Kyco doesn’t play one provider off against another taking commissions of up to 30% like most comparison sites. Instead, we’re leveling the playing field with a low 3% capped commission. It’s free to become a member, and with no lock in contracts or unexpected price hikes, spending less on your annual bills has never been easier. Join Kyco today and help make the cost of living more sustainable for everyday Australians.