Top Tips on Choosing Health Insurance
This guide will help you understand the basics of family health insurance.
1) Don’t pay tax man more than you should
Watch out: The Medicare Levy surcharge (MLS) could result in you losing a certain percentage of your taxable income if you move up the income ladder.
For the 2014-2015 tax period, if your annual income is over $90,000. (for couples, families, or single parents, $180,000), you might be subject to an EXTRA 1% MLS. You also have to pay the 2% Medicare levy. If you don’t have any private hospital coverage, this MLS charge will apply to most people.
The MLS will go up to 1.25% if the income exceeds $105,000 ($210,000 each for couples, families, and single parents), and to 1.5% if it is more than $140,000 ($280,000 per couple, families, and single parents).
For more information regarding the MLS, please contact the Australian Taxation Office or consult a professional tax advisor.
2) Give your current hospital coverage for a health exam
There are many excellent health plans available so don’t be afraid to change funds. The law protects you from having to re-serve waiting period if you have a hospital policy that covers a particular service. People don’t often switch funds because they think they need to re-serve waiting period.
But, the law ensures that you don’t have to wait for waiting periods for services you were already covered for by your old fund. This is called continuity. You should also review your policy and ensure the premium is affordable. iSelect recommends you verify that there is no need to re-serve waiting periods before you switch funds.
3) Review your extras
Many people choose to have hospital coverage as well as general treatment (extras). These extras include cover for services like dentistry, physiotherapy or optical. There can be a difference between the services offered by health funds and what you get back in rebates. So make sure you have the right coverage and that the price is reasonable. It is important to weigh the cost of the policy against the benefits you receive in terms both of services and benefits. Some policies limit the benefits of each service on a per-person basis while others have family benefit limits.
You can bundle some general treatment services together. A benefit limit will be applied to the bundle. These wide variations make it difficult for consumers to compare extras. Talk to an iSelect advisor today at 13 19 20, and they’ll help you make the right choice.
4) Match your policy to your specific needs
The same insurer may not have all your hospital and extras insurance. It is possible to save money on hospital and other extras insurance by switching between different health insurers. What is the answer, you might ask? What are your options?
It is important that you review your current policies and confirm that your premiums are fair and that you have enough coverage to cover all of the services that are required. This could significantly reduce your out of pocket expenses.
5) Use the iSelect
iSelect takes the hassle out of shopping private health insurance. iSelect offers the benefit of being able compare policy combinations across its participating funds. This will allow you to buy your desired policy quickly and easily. iSelect also allows you to compare your policy with iSelect’s health funds.
6) Excessive or co-payments. Avoid paying them both when you purchase a hospital policy
The options for co-payment or excesses vary from one health fund or another; generally, you either pay one or both.
It is best to avoid purchasing hospital policies that require you to pay both an excess and co-payment when you are admitted to the hospital. This could be very expensive.
Excessive and co-payments explained
An excess is an upfront payment, which you agree to pay before any health benefits are payable. An excess is a payment that you agree to make on every admission into hospital in the year. However, it can be limited to a sum that you would have had to pay over the course of the year.
A copayment may be a lower amount that is paid daily for the services you receive in hospital. For example, $150 per day for 3 days would be the cost of a hospital stay. This is $50 x 3 days. The co-payments can be as high at $250 per day. A co-payment is a form of excess. The amount you pay per year for your co-payments is typically limited to a certain amount. Some hospital policies don’t require that a copayment be paid for day surgeries.
7) You can pay a part of your hospital bill
Your premium could be reduced if you agree to split the hospital bill and pay an excess or copayment. The average premium is lower the more you pay in excess or co-payment. Hospital policies can be purchased from health funds with either an extra or co-payment, or both. Even some funds don’t charge a copayment for day-surgery.
If you are single and have taxable income of more than $90,000 (or $180,000 for couples and families), you might consider a hospital plan with an excess of 500 for singles, or $1,000 for couples and families. This will allow you to avoid paying the Medicare Levie Surcharge (1% tax) if you don’t have qualified hospital coverage.
The MLS will go up to 1.25% if the income exceeds $105,000 ($210,000 each for couples, families, and single parents), and 1.5% if it is more than $140,000 ($280,000 per couple, families, and single parents).
The amount of dependents on your hospital coverage increases the threshold amount to $180,000 for couples and families as well as single parents. The Australian Taxation Office can provide more information on the surcharge or consult a tax professional.
