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Frequently Asked Questions

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Why Private Health Insurance?

All permanent Australian residents have access to the public health system ‘for free’, yet almost 11 million people choose to supplement this by purchasing private health insurance.

The public health system generally takes longer to access (than private services) and provides less choice about who you’ll be treated by. All surgery that is not life threatening is referred to as Elective Surgery and people can wait several months or even years for operations on hips or knees, heart surgery or a even a colonoscopy. There can also be delays accessing rehabilitation services.

Private health insurance circumvents these delays and should you require it, allows you to have surgery performed within the period recommended by the doctor as well as access to rehabilitation facilities.

How does Private Insurance give me choice?

When you are a public patient in the public system you will usually be directed to a particular hospital (when the hospital’s workload permits) and allocated a doctor or doctors by a hospital administrator. The public system doesn’t necessarily give you choice about who treats you or about when and where you are treated.

Private Health Insurance allows you to choose the doctor and the hospital. Your GP will usually recommend a specialist or specialists who they believe is best qualified to help. If an admission to hospital is required, the specialist will generally recommend a couple of hospitals in which they work for you to choose from. If you’re not happy with the specialist or the hospital they recommend, you can choose a different Doctor.

Of course, in cases of emergency there may not be time to make these choices.

Hospital cover

Hospital cover pays benefit towards the cost of hospitalisation. This includes treatment by your doctor when in hospital and the costs of accommodation, theatre fees , intensive/coronary care etc. Even a ‘minor’ operation and short hospital admission will cost several thousand dollars. In fact, 1 out of every 3 hospitalisations will cost over $10,000. In rare cases the cost of hospitalisation can be $200,000+ (see privatehealthcareaustralia.org.au for details). So long as you are covered for the procedure, the insurer will pay benefits towards the hospital accommodation etc and contribute to the charges by your doctor/s.

Health funds offer various combinations of hospital cover. Full cover for accommodation and in-hospital medical charges obviously commands higher premiums, but you can reduce your premiums by agreeing not to be fully covered for some conditions or taking an excess, which is payable when you go to hospital.

Unless you are expecting to be in hospital (for example, you are planning to have children), Choosewell will recommend that you take cover with an excess because it will most likely save you money in the long term. It’s for the same reason you probably have an excess on your car or home insurance. What’s more, some of the covers we offer waive the excess when dependent children (under 21) are admitted to hospital.

The most basic covers often have lots of exclusions but meet the objective of avoiding or minimising the Medicare Levy Surcharge and locking in your Lifetime Health Cover age. A more comprehensive cover is available from mid covers while top covers provide complete peace of mind.

To gain access to Private Hospitals, avoid/minimise the Medicare Levy Surcharge and Lifetime Health Cover, you’ll need to take out mid-top hospital cover.

Extras cover

Extras cover provides protection for many non-hospital health care services that are generally not covered by Medicare. These include: Dental, Optical, Physiotherapy, Chiropractic, Psychology, Speech Therapy, Occupational Therapy and several other therapies. If you don’t use any of these services, nor expect to use them in the future, then you may want to only take hospital cover. We’ve found that unless a family member is a dentist and treats for free… and you have 20:20 vision & a perfectly straight back etc , then Extras cover can be a worthwhile investment. To maximize the benefits you receive from your extras cover you’ll need to take a close look at how the benefits offered by the health fund correspond to the services that you use. Some insurers will be very generous for their preferred providers but only offer small rebates at other providers. Others, will offer a consistent % back based on your level of cover – say 60% for a ‘silver’ level cover up to 80% for a platinum cover.

Combined cover – Hospital and Extras

More than 80% of people who take out hospital cover also take out extras cover. Some funds offer these as separate products while others bundle them into a package. If the products are separate you can easily mix and match to get a combination that suits your needs.

Waiting periods

A waiting period is the time between taking out or upgrading a health insurance policy, and when the benefits of that policy become available to you and others covered under the policy.

The government has set portability rules to ensure that members can transfer their hospital cover from one fund to another without penalty.

You will not have to serve additional waiting periods if you transfer from one health fund to another with the same or a lower level of benefits, as any waiting periods you have already served are credited to you. Your new health fund may require waiting periods to be served before you are eligible for any new or higher benefits on your new health insurance policy.

For people new to hospital cover, or upgrading from a lower level of cover, waiting periods will typically be as follows:

  • 12 months for pre-existing conditions
  • 12 months for obstetrics
  • 2 months for psychiatric care, rehabilitation or palliative care (whether or not these are pre-existing conditions)
  • 2 months in all other circumstances

While there are no Government regulations covering waiting periods for benefits under extras cover, the funds will generally have waiting periods of between 2 & 12 months. Again these may not apply to members who switch to a policy with equivalent or lower benefits with another fund. In addition, funds are often willing to waive some waiting periods on extras to attract new members. Ask us if we can arrange for your Extras cover waiting periods to be waived.

Lifetime Health Cover

Lifetime Health Cover is a Government initiative to encourage people to take out hospital cover at a younger age, and to maintain that cover over their lifetime. It penalises people for taking out cover at any time over the age of 31 (or 12 months after migrating to Australia) with a 2% loading for each year that you are over 31 when you take out hospital cover.

For example, someone who takes out hospital cover at age 44 will pay a 28% loading for their insurance. The Lifetime Health Cover loading applies only to hospital cover – it does not apply to the cost of extras. Having Extras cover will not help you avoid the loading when you eventually join hospital cover.

Joining a health fund and getting Hospital Cover before 1 July following your 31st birthday ensures that you receive the lowest rate for as long as you continue to hold Hospital Cover.

Switching health funds will not affect your Lifetime Health Cover entitlements so long as the health insurance transfer includes Hospital Cover.

The Medicare Levy Surcharge

To encourage people on higher incomes to take out health insurance, the government introduced a tax surcharge.

If your income is over $180,000 as a family or $90,000 as a single in the 2016/17 financial year and you do not have Hospital Cover, you will be required to pay an additional Medicare Levy Surcharge (MLS), on top of the 1.5% Medicare Levy that most people pay as part of their taxes. The MLS is means tested so those on the highest incomes will pay more.

Income threshholds
Tier 0 Tier 1 Tier 2 Tier 3
Singles $90,000 or less $90,001 – $105,000 $105,001 – $140,000 $140,001 or more
Families $180,000 or less $180,001 – $210,000 $210,001 – $280,000 $280,001 or more
Medicare levy surcharge rate 0% 1% 1.25% 1.5%

The Medicare Levy Surcharge works out to be a minimum of $1800 for families and $900 for singles. This can be avoided by taking out Hospital Cover, which in some cases can be cheaper than the additional tax.

Australian Government Rebate

If you are eligible for Medicare you may also be eligible to receive a rebate on your health insurance premium from the Government.

The level of rebate is determined by the age of the oldest person covered by the health insurance policy and the household income. Please refer to the above table.

The vast majority of people access their rebate by registering at the time they take out their health cover and requesting that it is deducted from their premiums upfront. We quote prices assuming that this is your choice.

Alternatively you can choose to claim the rebate, if you are eligible, when you complete your tax return each year.

What to do when you change jobs

You should review your cover when you change employers as you may no longer be eligible for the corporate arrangement you’ve enjoyed in the past. Your Corporate Health Plan’s advisers, Choosewell can assist you with this transition from “corporate” to “retail” health insurance.

If you haven’t looked at your cover for a while, Choosewell can also assist with a no-cost review of your needs and if appropriate, recommend a more appropriate option.

You can contact Choosewell on 03 9976 0894 or 1800 808 096.

Need help?

Your corporate health plan provides you with free access to independent, specialist advice and guidance to ensure your health cover purchase is appropriate for your specific health care requirements and budget. To get started, simply complete and submit this form with your contact details and and we’ll be in touch to discuss your needs.

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