Thinking of purchasing private health insurance? Here’s what you need to know.
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Have you thought about subscribing to private health care but not sure if it is worth it?
Here, we take an in-depth look at private healthcare so you can make an informed decision about whether investing in a private healthcare policy is right for you.
Private health and hospital care coverage
The benefits of private health care will ultimately depend on your personal circumstances, but there are several great incentives that may be worth it.
While Medicare, Australia’s public health system, provides world-class health care, private health insurance policyholders can access benefits that could not otherwise be provided by Medicare.
Depending on the policy you choose, you may experience more choices, comfort, amenities, and general peace of mind for you and your family.
Within the framework of health insurance, health practitioners are assigned to you; the availability of individual health practitioners, as well as hospital accommodation and waiting times, are limited and depend on the availability of public resources at any given time.
In comparison, private patient care is not on the waiting list, and depending on your policy, you may have access to private hospital care as well as more comfortable accommodation facilities in public hospitals.
Australians who invest in private health insurance take the pressure off our public health system and are duly rewarded by the Australian Taxation Office with an impressive benefit called private health insurance reimbursement – an amount the Australian government contributes towards your insurance premium. private illness.
This can be refunded directly to your insurer to reduce the cost of your premiums throughout the year, or as a lump sum when you file your tax return with the Australian Taxation Office.
The eligibility and the total amount you can expect to be reimbursed are based on the total taxable income of your single person or family.
For those with higher incomes, if you don’t invest in private hospital coverage, you may find yourself spending a lot of money at tax time.
The Medicare Levy Supplement (MLS) is a tax penalty for high-income Australian wage earners without private hospital coverage who earn more than a certain taxable income. MLS kicks in when a single person earns more than $ 90,000 or a family’s combined taxable income exceeds $ 180,000. For families with two or more dependent children, the family income threshold is increased by $ 1,500 each after the first child.
To avoid paying MLS, high-income individuals can invest in qualifying private health insurance policies, which must have a registered Australian health insurer, cover the costs and charges of a hospital stay, and have a maximum deductible of $ 750 for singles and $ 1,500 for families. It should also be “hospital coverage” – not “extras-only coverage”, “general care coverage”, “foreign visitors coverage” or “coverage of the health of the foreigners”. foreign students “.
Supplementary health insurance
Extras coverage (also known as “ancillary” or “general”) can cover a wide range of out-of-hospital health services and products that Medicare does not cover.
These may vary, but some common treatments covered by Extras may include:
• Catch-up massage
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The cost of Extras varies considerably depending on the policy, fund, level of coverage, type of insurance – individual, couple, family, services covered, the state in which you reside and the level of coverage you choose – basic, medium or full.
Insurance comparison websites are handy tools for comparing relevant policies, costs, annual limits, wait times, and everyone’s inclusions and exclusions.
Although the coverage for extras does not cover full costs, you will receive a “benefit percentage” over the total cost of a specified service and / or health product. The remaining amount, which is not covered by Medicare or your Medicare Fund, is called a “gap fee” or out of pocket expenses that you have to pay.
How much does private health insurance cost?
The cost of private health insurance policies typically increases each year, so it is in your best interest to review your policy regularly to make sure you are getting your money’s worth and not paying for services you no longer have. need.
People with high incomes can lose their private health insurance reimbursement, because it is means tested, so the more you earn, the less you will receive. It is based on the total taxable income of your single or combined family. It also includes the net amount of Family Trust Distribution Tax paid, employee benefits to report, total net investment losses and super-contributions to report.
Private health insurance reimbursement rates vary each year and are spread over four income levels. This year (2021), if you are a single person under the age of 65 who earns less than $ 90,000 or a family with a combined taxable income of less than $ 180,000, you will receive a rebate of just under $ 25. %. For singles under 65 who earn more than $ 140,000 or a family with a combined taxable income of $ 280,000, you will not receive any refund.
Extras coverage also has its limits as it only offers savings to a family or individual who regularly uses these services.
If used only sporadically, it could prove to be more expensive than fully paying out-of-hospital health care providers. Coverage for extras often comes with “annual limits” on the amount you can claim and also with “waiting periods”, which is the time you must wait to purchase a policy before signing up. be able to make a complaint. These vary by policy and insurance fund, so always do your homework.
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