Many millennials are ditching private hospital health plans due to steadily rising premiums. It is not hard to understand why they are running away from paying for decent medium hospital insurance plan… [read]
Young people who have just started their professional careers want to take on private insurance because it may cost them less. Others might feel that they need to be treated like ‘privileged’ customers when they visit a hospital or call for an ambulance.
Just like airlines are fully booked during Christmas break, Medicare facilities are usually booked in advance as there are more people who have access to public healthcare than a private one.
Difference between Private and Public Healthcare
When you enrol in private medical insurance, you gain access to three essential healthcare products and services:
- Ambulatory Care
- General coverage
When you go to a hospital and the doctor wants you to stay overnight to perform a surgical procedure the next day, your hospitalisation policy will cover all those expenses. If you are at home and feel that you need immediate medical attention you may call an ambulance free of charge through your ambulance coverage. All these services will give you peace of mind at all times.
There are people who usually do not subscribe to general or extras private health cover as they feel they do not need that much care. Your extra healthcare insurance policy can provide you with vision, dental, psychological services and even massage coverage. This policy is for those who believe in investing a lot of time and money on maintaining their medical health.
Is Public Healthcare Enough for Everyone?
Although every Australian citizen and permanent resident has access to Medicare free of cost, there are certain challenges associated with public healthcare policy. Since the ratio between Medicare patients and healthcare facilities available for their treatment is quite high, these patients have to go through a long waiting list to reach their turn.
Besides that, they cannot choose a medical practitioner from their own free will in the public system. They have to consult with government agencies to check which doctors are available. However, there are a couple of reasons why people may still prefer Medicare over private insurance which include:
- They do not have to pay any monthly premium to maintain good standing with their provider.
- It does not require them to do a lot of homework when choosing a policy and avoid junk’ policies.
When people subscribe to private healthcare policy, they can enjoy Medicare benefits as well. This suggests that they can avoid long queues when going to a hospital and can take prescribed drugs from pharmacies free of cost based on their Medicare policy.
Research shows that nearly half of the Australian population between 16 and 85 years of age experiences some form of mental illness in their lifetime. This may imply that having a private system insurance policy can help individuals who do not have a life partner to comfort them in their hour of need.
Can I Go to a Public Hospital with Private Health Insurance?
Since every Australian has the right to access Medicare and any government health facilities, you can visit any public hospital even if you pay for private insurance. However, there is a minor difference in the way public and private patients are treated at a public hospital system.
When you are hospitalised as a Medicare patient, you do not have to pay a single penny for your treatment. For private patients, 75% of all expenses are covered under the Medicare policy and the remaining 25% can be paid out of pocket or through their insurance provider.
Rebates Unmarried Individuals Get through Private Medical Insurance
The government of Australia has taken notice of the fact that people who take on private health insurance help the society as well. While they pay higher premiums to cover their medical expenses, the general population gets easier access to public health facilities.
When the government has more taxable income at its disposal, it can put that amount to good use like creating more hospitals and public welfare projects. In order to help private health insurers to reduce their annual medical expenditure, the government provides them with a tax rebate, which can go up to nearly 35%.
A tax rebate that you can get on your private health insurance premiums depends on a couple factors including:
- Your age – As you grow older, your medical expenses are expected to increase over time.
- Income bracket – Government uses this information to determine how much tax rebate you need in order to meet your monthly financial obligations. High-income earners will get lower tax rebate then lower income earners.
- Type of cover you applied for, like hospitalisation or extra cover
There are multiple comparison sites which can give you some of the best quotes on the market based on insurance providers near you. You can then contact any one of them to get more details about your insurance plan and how you can save on your monthly premium.
Taking on private healthcare will not only save you on your insurance premium in a financial year, but it may also help you avoid Medicare Levy Surcharge. Here is how this works:
- Based on your income and age group, taxmen will put you in one of the three income tiers starting from 0 to 2.
- Tier 0 comprises individuals who earn less than $90,000 per year and are not married. For these individuals, Medicare Levy Surcharge is exempt. However, if you are earning more than $90,000 on an annual basis, you may be charged at least 1% of your income on a daily basis. Hence, rather than paying $75 a month, you can add a private hospital cover to your insurance policy and save yourself from this fee.
- When calculating your taxable income, collectors will consider the following amounts:
- Your monthly salary
- Fringe benefits
- Contributions from the employer
- Losses on investment or rented property
- It is important to note that your private health insurance provider should be registered with the Australian Health Fund to avoid MLS.
- When enrolling with a private health insurer, you should nominate yourself in the income tier that you expect yourself to fall in at the end of the year.
Changing Trends in Private vs. Public Hospital Admissions
While the general population seeks treatment from public health system every now and then, there has been a rise in the number of private patients as well. This can be attributed to long waiting periods that patients have to face when applying to a public healthcare facility.
However, another important element is the government’s initiative to encourage the affluent class to take up private health care. By putting in place a Medicare Levy Surcharge, regulators are trying to create a balance between private and public healthcare patients.
As the number of private patients increases in Australia, so will the number of private practitioners, and people of all income and age brackets will benefit from this change in the healthcare system.
While you are young, it might not matter much if you need health insurance from the private sector or not. However, after your 31st birthday, you can lose out on a couple of important benefits and tax rebates if you do not apply for a private insurance policy.
The answer to whether an un-married individual should take up private insurance products depends on their medical health and how much they are willing to spend on it.