Australian residents and some visitors on student or work visas have Medicare coverage to provide payment for their hospital treatment expenses. If you already have Medicare coverage, you may be uncertain of why you would also need to purchase private health insurance cover. The reality, however, is that there are many important benefits of obtaining private health insurance for yourself and for any dependants that you are responsible for.

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What are the Benefits of Private Health Insurance?

A few of the many benefits of private health insurance include the following:

• You can avoid being hit with Lifetime Health Cover loading.
• You can avoid a Medicare Levy Surcharge if you are a higher earner with Hospital cover.
• You can get medical care quicker and not have to endure a long wait for treatments that you need.
• You have a broader choice of providers.
• You can have coverage for other types of treatment besides hospital care.

Once you understand the benefits associated with buying private health insurance, it becomes clear that this is a purchase that makes a lot of sense.

Avoiding Lifetime Health Cover Loading

In order to encourage the purchase of health insurance at a young age, you pay more if you wait too long. If you do not purchase private hospital insurance by the 1st of July following your 31st birthday, Lifetime Health Cover loading will apply when you do buy a policy.

Lifetime Health Cover loading means you pay two percent more in premiums for each year over the age of 30.  If you are 40 when you finally buy coverage, you will have 10 years of a two percent penalty so will pay 20 percent more for insurance coverage than you would have had you been covered the entire time.   This guide to lifetime health cover loading explains more about what LHC is and why you want to avoid it by buying private insurance early.

Avoiding the Medicare Levy Surcharge

If your individual or family income exceeds a certain level and you do not buy hospital coverage, the Medicare Levy Surcharge applies. This calculator provides information on how much you will need to pay.

Medicare Levy Surcharge Calculator

The Medicare Levy surcharge is an additional fee paid on top of the 2% Medicare Levy Surcharge that most Australian taxpayers pay. You can avoid the surcharge if you have Private Health Insurance (Hospital Cover).

The exact surcharge level you'll need to pay depends on your income level and relationship/family status. Use the slider and dropdown menu below to determine what surcharge you're liable for if you don't have private hospital cover.

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Step 1: Select Your Annual Income $

Step 2: Select Your Life Stage Status Single Family Single Parent Family Couple

Calculate

Your Medicare Levy Surcharge is 0.00% of your income, or $0.00

Singles	≤ $90,000	$90,001 - 105,000	$105,001 - 140,000	≥ $140,001
Families	≤ $180,000	$180,001 - 210,000	$210,001 - 280,000	≥ $280,001
Medicare Levy Surcharge
	Standard	Tier 1	Tier 2	Tier 3
All Ages	0.0%	1.0%	1.25%	1.5%

For individuals with incomes between $90,001 and $105,000, there is a one percent Medicare Levy Surcharge, which means that you end up paying an additional one percent of your income in taxes because you opted not to buy private health cover for hospital treatment.  Families with income between $180,001 and $210,000 are also hit with this one percent surcharge. The surcharge only goes up from there, with those in the highest income brackets assessed a tax of 1.5 percent of income.  Because of the costs associated with not having coverage, it makes a lot of financial sense to buy a policy.

You Can Avoid A Long Wait for Care

If you do not have private insurance coverage, you may need to wait a long time for elective treatments. For things like knee replacements, cataract treatment, hip replacements, tonsillectomies and varicose vein treatments, you could potentially wait hundreds of days. You may be in pain and your activities will be restricted as you wait to get treatment. If you want to ensure this doesn’t happen to you, you should have a private policy that will provide you with coverage for prompt treatment. Many private health insurers impose a waiting period of up to 12 months before certain services are covered, so you should get private health insurance before you need treatment so you can get help immediately when a medical problem develops.

You Can See More Providers

Medicare doesn’t cover everything and if you are not able to get treatment through Medicare  or if you want to go to a private hospital, you need a private health insurance policy. You don’t want to be restricted in the types or quality of treatments you get, especially if you have a serious medical issue. Having a private policy gives you much more choice about where you get treatment and who provides it.

You Can Get More Coverage

There are two types of private insurance: private hospital coverage and Extras coverage. Extras are things like chiropractic care, occupational and physiotherapy, and dental coverage. You may need some of these “extra” treatments in order to stay healthy and live a comfortable life.

You Can Control Medical Costs

Private health insurance coverage can limit the “gap.” This guide explains health insurance and the gap. The gap is the difference between the costs covered by your insurance and what actual medical expenses are. It refers to the amount paid out of pocket for services. Co-pays, excluded benefits or services, and payments to providers that are larger than the Medicare Benefits Schedule allows all fall within the gap.

If you buy private insurance, you can get more coverage, lower co-pays, and higher payouts for care providers who offer treatment. You pay for insurance premiums, which you can budget for, but don’t need to pay nearly as much out-of-pocket when you actually require medical services. This allows you to plan ahead and avoid uncertainty.

Get Private Coverage Today

The many benefits of private health insurance coverage should convince everyone to buy. Shop today for the right policy for your needs.

Disclaimer: The above information is correct and current at the time of publication.