Shifting from my early twenties to my late twenties has made me a lot more interested in uncool things like mid-century homewares, getting eight hours sleep and private health insurance.
Like others older than 26, I’ve been kicked off the family coverage my parents took out.
But I have no idea whether it would be financially worth it to sign up for my own, considering the cost of seemingly everything on earth is going up and my budget needs to give somewhere.
I've avoided getting health insurance due to the cost, confusion and complexity around it, but have summed up everything you need to know. Source: SBS
But people keep telling me my age and income have reached a point where it could actually save me money.
This is despite the fact fees are going up - the government has approved an average industry premium rise of 3.03 per cent.
who have cover.
Several providers have faced criticism that they are lifting prices for some policies by more than the approved rate but the have argued the costs of medical treatment have gone up also.
Other people my age have been ditching private health insurance because they can’t afford the cost.
In a TikTok video viewed over 100,000 times, a doctor named Imogen asks Australians if they’ve recently cancelled plans and the comments are packed with people saying yes.
“I cancelled mine because paying $1.5k a year didn't even cover me for going to the doctor which is now $80 a visit due to no bulk bill,” one user wrote.
“If private health covered the cost of appointments with specialists then I would have kept it,” another said.
But other users commented that it had been a gamechanger for their complex medical treatments.
I’m sharing my personal investigation into the topic and seeing whether myths about it stack up.
Why get private health insurance?
Depending on your level of cover, private health insurance can cover things the free public system doesn’t, such as ambulance call-outs, dental, optometry, physiotherapy, chiropractic treatment, podiatry and some surgeries.
At the outbreak of the COVID-19 pandemic hospitals largely cancelled elective surgeries, which are any that are not considered an emergency, though many of them can be lifesaving.
This caused wait times for surgeries to blow out and they are still much longer than pre-COVID, but people face much shorter waits in the private system.
Kate Browne is head of research at comparison site Compare Club.
She said there’s been an increase in people taking out health insurance later in life, often because they need elective surgeries.
But you can't just join a private insurer and then claim for elective surgery. Insurers usually set wait times of up to a year before people can claim.
The federal government incentivises people to get health insurance, to take pressure off the public system, comparison site Canstar’s insurance expert Steve Mickenbecker told The Feed.
“Younger people do have much lower claims rates, but that doesn't mean younger people never get sick or never have injuries through some sort of misadventure.
“You can't predict that so it would be brave to say that there's never value in it.”
The Medicare Levy Surcharge is a tax applied to people earning over $90,000, where 1 to 1.5 per cent of their income goes to the public health system, but you don't have to pay it if you have private health insurance.
Additionally, insurers can offer a discount of 2 per cent for every year an 18 to 29 old joins before age 30.
How much does private health insurance cost?
Insurers offer basic, bronze, silver and gold plans, as well as plans such as basic plus.
In NSW, where I live, basic policies for hospital cover cost a minimum of $900 a year, typically paid as a weekly or monthly premium.
But if I want bronze coverage, I’d need to spend at least $1032 a year.
And then if I want to add extras like physio and dental, the cheapest bronze coverage I could get would be $1272.
Some policies provide little value, Brown said.
“Basic policies will help avoid the Medicare Levy Surcharge, but these policies are largely junk as they provide very little cover beyond ambulance and some hospital cover.”
“Bronze policies are often only a few dollars more but cover a lot more, including a lot of common procedures like gynaecology, dental surgery, and even chemotherapy.”
Additional costs with health insurance need to be factored in, like the excess you need to pay for a major expense, which is usually $750, and gap payments when the insurer doesn’t cover the full cost of your service.
Premium costs went up by an average of 2.9 per cent in 2023 – on par with recent years.
Is health insurance cheaper than the Medicare Levy Surcharge?
It depends what product you want. Some are more expensive but provide you with tangible benefits like rebates on glasses and medical appointments.
The threshold for the Medicare Levy Surcharge is $93,000, meaning people who earn less don't have to pay it.
But people earning over that amount are looking at paying a minimum of $930 as tax.
The threshold for the Medicare Levy Surcharge is $93,000, meaning people who earn less don't have to pay it. But people earning over that amount are looking at paying a minimum of $930 as tax. Credit: Unsplash/ Zhen H
Browne said there are a lot of health insurance plans out there that offer little value.
“It's a really complex product. It is really easy to buy something that isn't good,” she said.
The average annual cost of combined hospital and extras health insurance for singles is $3,017 for those under 36.
The average annual cost of hospital-only health insurance for singles is $2,257 in NSW while extras-only coverage is $1,027 on average, so either of these would be a cheaper option for me.
What is the private health insurance rebate?
To further incentivise you to buy private health insurance, the government offers you a rebate.
It means you get money back from your health insurance premiums in the form of a reduction of the premium or as a refundable tax offset.
People earning below $90,000 are eligible to get 24.608 per cent of their premium back, which would equal $246.1 back for a $1,000 plan.
Individuals earning between $90,001 – $105,000 get 16.405 per cent back.
Those on $105,001 – $140,000 get 8.202 per cent back and those earning above $140,001 aren't eligible.
What happens when you turn 31?
If you sign up for health insurance after the age of 31, it’s more expensive because companies add a 2 per cent premium for each year that you don’t have health insurance after 31.
So if you sign up when you’re 40 there will be a 20 per cent premium and if you’re 50, a 40 per cent premium is added on.
This loading, called Lifetime Health Cover loading, is removed after 10 years of continuous hospital cover.
The loading was introduced by previous federal governments to further incentivise people to take on health insurance when they’re young and less likely to make claims.
Is it cheaper to go on a couple’s plan?
In short, it’s often not, according to experts.
“People have different health needs … so in a lot of circumstances it can be cheaper to have a separate policy,” Browne said.
She said couples plans can mean people are paying more for services they don’t need, but their partner does.
Similarly, child-bearing women usually have more costs associated with their plans throughout their lives, which can disproportionately increase the cost of family or couples plans, she said.
Family plans often offer cheaper coverage per individual, Mickenbecker said, with a lot of a child’s costs being free until they are bumped off the plan aged 26.
What is the role of Medicare?
If you're treated as a public patient at a public hospital in Australia your costs are covered by Medicare.
The scheme, which turned 40 this week, was called Medibank when it was first set up by the Whitlam government, to pay for out of hospital health expenses.
It now covers some medications, under the Pharmaceutical Benefits Scheme, and pays costs for bulk billed appointments directly to doctors.
So should I get health insurance?
Consumer advocacy group CHOICE has built a ‘Do I need health insurance’ calculator.
It tells me I would not save money on taxes by getting private health insurance.
It’s hard to know at this point in my life what medical issues I’ll have.
Health insurance would offer me peace of mind that if I was in an ambulance I would be financially covered, but equally I may never set foot in a medical setting not covered by Medicare.
I spend loads of money on glasses and physio so I may come out better off by buying them with health insurance.
But I would need to make sure I’m not buying a plan that doesn’t help me.
“Don't take out private health insurance just based on price,” Mickenbecker said.
“You'll end up with a policy that doesn't cover much at all if you just buy the cheapest.
“You also have to make sure that you're getting the treatments you need.”
This advice is general and is not intended as financial advice.
