Private Health Insurance: To Keep Or To Quit in 2020?Let's look at the pros and cons

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  • Private Health Insurance: To Keep Or To Quit in 2020?

You’re probably sick of hearing about private health insurance.

These days it’s constantly splashed across the newspapers and whether or not you need it is a hot topic at BBQs and water coolers all over Australia.

All this talk about a decline in private health insurance membership might have you wondering if it’s time to reconsider your family’s health insurance policy.

Health insurance premiums are set to rise yet again on April 1 by an average of 2.92% which works out to an extra $127 per year on the average family policy[2]. That may not sound like much at first, but when you consider the fact that health premiums have increased by 61% in the past decade, you might start to feel your blood pressure rising.

So the big question: Should you keep or quit health insurance in 2020?

We’ve rounded up our top pros and cons of private health insurance to help you make an informed decision about your cover.

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The positives:

  • Peace of mind: As soon as you start a family, you really start to value anything that can give you ‘peace of mind’ when it comes to protecting them. A lot of Aussies opt for private health insurance simply because they know that if the unexpected happens and their family requires medical care or treatment that they will be covered.
  • Extras cover: If you have school aged children, you’re probably very familiar with regular trips to the dentist and maybe even the optometrist. Or if you have kids that enjoy their sport, they may need to visit the physio now and then to get them back on track after an injury. The cost of all of these appointments can certainly add up (especially if you have a few kids!) This is where Extras cover can help by paying you benefits for some treatments not covered by Medicare such as dental, physio and optical.
  • Choice of doctor and hospital: As a private patient, you can select your own specialist should you require a medical procedure or treatment. For example, if you’re planning a family and have Gold hospital cover, you’ll be able to select an obstetrician that perhaps a friend or family member has recommended to you. The same goes for choosing your own hospital and the ability to be admitted as a private patient. You may like to be treated in a hospital close to home or one that you know has a great reputation.
  • Avoid paying the Medicare Levy Surcharge: The Medicare Levy Surcharge (MLS) is designed to encourage more Aussies to take out private health insurance to reduce the strain on the public health system. If you earn over $180,000 as a couple or family (or $90,000 as a single) and don’t have private hospital cover, you’ll have to pay the MLS which is a minimum $900 a year in additional tax. Ouch! Would you prefer to fork out extra money to the tax man or put your hard earned cash towards your family’s health?
  • Shorter waiting times for elective surgery: It can be hard to imagine why you or your family might need elective surgery. But when you think about, elective surgery can be things like the removal of wisdom teeth or tonsils for the kids, the removal of varicose veins for yourself or a knee replacement for the hubby who’s injured himself at footy. If your family doesn’t have private hospital cover, you could face much longer waiting periods for treatment in the public system. As a private patient, your doctor should be able to treat your family quicker getting you back to work or the kids back at school sooner.

The drawbacks:

  • The cost of premiums: The average family policy according to iSelect sales data is $4,359 a year[4]. There’s no denying that the cost of private health insurance can absolutely be a strain on the household budget. Rather than simply throwing your hands up in the air and cancelling your cover, it might pay (literally!) to review your cover to make sure you’re still getting value for you money. You’d be surprised how many people are paying for things that they don’t need or ever use! If you’re thinking of reviewing your cover to find better value, iSelect can do the hard work for you by helping you compare your options from our range of policies and providers to help you find something more suited to your budget and  lifestyle*.
  • Out of pocket costs: While having private cover can protect you from a lot of costs, sometimes depending on your level of cover, you can sometimes be left with out of pocket costs for treatments and procedures. This is what we call ‘the gap’ payment which happens when the cost of medical treatment is more than what you get back from Medicare or your health fund.
  • It can be confusing: Above everything, private health insurance can be just plain confusing. Between trying to navigate whether you’re covered for what you need, how much your policy is increasing by this year and whether you’ll be out of pocket for a procedure, you might be left thinking it’s all just too hard. If you are feeling overwhelmed, the trained consultants at iSelect can help you better understand your cover and navigate your options.

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When it comes to the health of your family, you just want what’s best for them (ideally, without breaking the bank!) Before you make the decision to jump out of private health insurance, first consider whether it’s worth just jumping ship to another policy or provider.

You may be surprised at the savings you can make or better value you can find by simply comparing and switching.

Disclaimer:

*iSelect does not compare all health insurance providers or policies in the market. The availability of policies will change from time to time. Not all policies available from its providers are compared by iSelect and due to commercial arrangements, your stated needs and circumstances, not all policies compared by iSelect are available to all customers. Some policies and special offers are available only from iSelect’s contact centre or website. Click here to view iSelect’s range of providers.
[1] Source: https://www1.health.gov.au/internet/main/publishing.nsf/Content/health-phicircular2019-80
[2] Based on iSelect sales data (1 April – 31 December 2019) with the average 2.92% increase from April 1 applied.  Average premiums in 2019 were $4,359 for a family policy, $4,780 for a couples policy and $2,014 for a singles policy, which will increase on average by $127, $140 and $59 respectively on 1 April 2020.
[3] Source:  health.gov.au – industry weighted average premium increases by insurer by year (1 April 2011 to 1 April 2020 inclusive).
[4] Based on iSelect sales data (1 April – 31 December 2019).  Average premiums in 2019 were $4,359 for a family policy.

Private Health Insurance: To Keep Or To Quit in 2020?

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