Should I Take Out Private Health Insurance?

If you don't have private health insurance, you may have felt at least a bit of pressure to get it. But is it really a good idea? With the economy and the price of petrol these days, is it affordable? Fortunately, the sAustralian government has made getting private health insurance a very attractive idea. By offering rebates, incentives and tax discounts, it's a wonder why only 43% of Australians have taken out private health insurance (2005 figure).

Why You May Need Private Health Insurance

Private health insurance will offer you savings and peace of mind in the long run. With the rise in medical costs, a simple out-patient surgery can end up costing many thousands of dollars that you'll pay out of pocket. If you're not disciplined to keep a savings account for medical emergencies, paying for a premium instead may be the right thing to do.

There are many benefits besides not having to pay large fees out of pocket. Many insurers allow you to claim services that help to keep you healthy and risk free, such as health club memberships, under an extras cover. Imagine having a policy that pays for you to work out and stay fit. Private health insurance also allows you the comfort of choosing your doctors and seeing them within a reasonable amount of time. Why wait in pain in the public system?

Government Incentives Galore

There are three ways the government makes taking out private health insurance affordable.

  • A 30% rebate on health fund premiums is available for citizens under age 64, no matter what your income bracket. For citizens 65-69, the government offers a 35% rebate, and a 40% rebate for those 70 and older. This rebate can offer a considerable savings, greatly offsetting the amount you budget to pay your premiums.
  • A tax break of 1% if you carry private health insurance is yours through the Medical Levy Surcharge.  A single income of up to $50,000 and a family combined income of over $100,000 will have this 1% tax waved for carrying private health insurance. This savings of up to $1,000 a year is added to the 30% rebate offered above.
  • The government wants to get younger people involved in health insurance by offering an age incentive. Those that take out a policy before the age of 30 and keep hospital cover will realize an instant lifetime savings for insurance premiums. If you decide to add hospital cover over the age of 30, you will be penalized 2% per year over the age of 30. For example, someone that's 40 and signing up for private health insurance with hospital cover will pay 20% more for their premiums than someone 30 or younger.

Tips on Saving

Of course, there are ways to save money beyond the government rebates and tax benefits. You'll want to assess the needs of your family and yourself in order to select the right coverage. For example, if you're older and your family is set in size, you'll want a policy that omits childbirth costs. Every five years you should be reviewing your insurance needs and taking life changes into account.

Don't be afraid to swap insurance coverage. You can change to an equal policy that's less expensive and not be penalized with a renewed waiting time. The government protects your rights in this instance, so you can find new coverage without worrying .

Quotes

Where can I get a free quote? You can access free health insurance quotes here.

Additional Reading:

Should I Take Out Private Health Insurance?
5 Ways To Save Money When Getting Health Insurance
Why Insurance Is Important



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