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Home » Understanding Health Insurance » Why private health insurance?

Why private health insurance?

Public versus private health care

Australia boasts a good public health system, which is run by the government through Medicare. However, it is beneficial to take control of your own health care so you can determine when you want treatment and by whom. The Federal Government provides incentives to those who take out private hospital cover.

Public Hospital

  • If you choose to be treated as a public patient in a public hospital, you will receive, free of charge, all your medical, allied health and pharmaceutical care. But you cannot choose when you are treated, the facility you are treated in, your own doctor or ask for a private room.
  • The length of time you wait will depend on the urgency of your condition. The waiting list could take quite some time before you are booked in for elective surgery in a public hospital. The most recent research* indicates that public patients wait an average of 97 days before being admitted to a public hospital, while private patients are usually admitted within the month.  This research also indicates that the highest cause of concern and complaint are waiting lists and poor service.
  • Emergency procedures and operations take precedence. If you are scheduled for a non-emergency procedure or operation you will be at risk of this being delayed or cancelled.
  • Public hospital accommodation is primarily shared. If you are admitted to a public hospital you could share a room with up to 3 other patients with a lower nurse to patient ratio.
  • Public hospitals are usually short on beds and may send you home before you are physically or emotionally ready. No one wants to stay in hospital any longer than necessary but we also don’t want to be sent home before we are ready.

Private Hospital

  • The private hospital system offers shorter waiting times and allows you to select from a range of doctors and private hospitals according to your preference. There is also a greater flexibility in scheduling non-emergency operations.
  • Many women opt to give birth in a private hospital and take advantage of having consistent care by a private obstetrician and staying in a private room (when available) after the baby is born.
  • Private health insurance also gives you access to Extras services like physiotherapy, optical and dental which may not covered by Medicare.
  • Generally the food served at meal times in a public hospital is not the tastiest. In a private hospital meals are of a higher quality – not restaurant quality but better than a public hospital. In many situations, a private hospital will serve your carer or partner a meal also along with beverages. You may also have access to your own bathroom within your room and a refrigerator.

Private hospital care can be very expensive, so it does help to have private health insurance and you will benefit for doing so.

If you are single, and earn over $80,000 or a couple/family whose combined income is over $160,000 then you will have to pay more tax with the Medicare Levy Surcharge if you don’t have private health insurance.

Also, you don’t need to be old to get unexpectedly sick or have an injury that requires hospital treatment. The government will add a Lifetime Health Cover loading to your private Hospital cover contributions for each year you delay taking out Hospital cover after your 31st birthday.

*Health Care & Insurance, 2011, Ipsos Australia.

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Your Rebate

All Australian residents, who are entitled to Medicare, are able to claim an income tested rebate on their private health insurance; would you like to apply your rebate?

For individuals earning between $88,001 - $102,000 (or $176,001 - $204,000 for families*).
*For families with children, the thresholds are increased by $1,500 for each child after the first.

How rebate tiers workX

Most Australians with private health insurance currently receive a rebate from the Australian Government to help cover the cost of their premiums. The private health insurance rebate is income tested. The table below details the different rebate amounts and Medicare Levy Surcharge levels.

The rebate applies to hospital, general treatment and ambulance policies. It does not apply to overseas visitors cover. The rebate levels applicable for 1 July 2013 to 30 June 2014 are:

Singles
Families
≤$88,000
≤$176,000
≤$88,001-102,000
≤$176,001-204,000
≤$102,001-136,000
≤$204,001-272,000
≤$136,001
≤$272,001
Rebate
< Age 6530%20%10%0%
Age 65-6935%25%15%0%
Age 70+40%30%20%0%

Single parents and couples (including de facto couples) are subject to family tiers. For families with children, the thresholds are increased by $1,500 for each child after the first. http://www.privatehealth.gov.au/healthinsurance/incentivessurcharges/insurancerebate.htm