Private health coverage isn’t cheap, and it can be especially tempting to skip out on it when you’re young. After all, if you don’t have any chronic conditions and aren’t prone to getting sick, why bother? This is the general attitude of many young Australians who consider themselves in excellent health. In fact, Australians aged 20-29 are less like to get private health insurance than any other age group.
In addition to being less prone to serious illnesses, young Australians also know they’re covered by Medicare in cases requiring critical treatment. If they do suffer a catastrophic event, they’ll be taken to a public hospital by an ambulance and treated as a public hospital patient, whether they have coverage or not. Catastrophic illnesses and injuries for hospital visits, however, and there are several reasons Australians under 30 might consider private health coverage.
Lifetime Health Cover
The Lifetime Health Cover (LHC) initiative was set up in July 2000 as a way to encourage those under 31 to take out and maintain hospital coverage earlier in life. Hospital coverage basically takes care of any hospital stays that aren’t covered by Medicare as part of public patient treatment. This could include things like elective surgery that would normally require you to serve long waiting periods.
If you take out hospital cover early in life, you can avoid LHC loading fees. This is a 2% fee that is added to your insurance premium for every year over 30. If you didn’t take out hospital cover until you were 38, for example, you would pay a 16% higher premium than you would if you had taken out a policy in your 20’s. Maximum LHC loading fees go up to 70%, so getting coverage early can save you a great deal of money across your lifetime. There are certain conditions that may make you exempt from LHC fees, and circumstances like traveling overseas may allow you to have gaps in your coverage without additional fees.
Speaking of waiting periods for elective surgeries, non-critical patients also don’t have any choice over their doctor without hospital coverage. They also aren’t necessarily able to stay in a private room for recovery. For anyone anticipating non-critical needs, this can be a big deal, so it’s a great idea to go ahead and get coverage so you can feel secure.
Value for Individual Needs
Hospital visits aren’t the only reason you should consider private health coverage. Your individual needs will greatly impact your decision. You can take out coverage for extras like dental, vision, or chiro, which can lead to huge savings each year. With certain providers, you can receive annual limits that will pay for 100% of your costs for things like prescription glasses or dental checkups. It’s also a good idea to look for private care if you participate in risky activities, like sports, so you know you’re covered if you need it. Compare health insurance options with iSelect to see if your premiums will be cheaper than the value you receive.
Medicare Levy Surcharge
You also might want to get health coverage early for tax purposes. This can help you avoid the Medicare Levy Surcharge (MLS), which is basically an additional tax levied on those who make above a certain income but don’t have hospital coverage. The income threshold for individuals is $90,000 per year, so if you make above that you can be charged an additional 1-1.5% in income taxes. The threshold is $180,000 for families, although you won’t have to pay the MLS if your own income was below $22,938. The purpose behind this is to make things easier on the public system.
Ultimately, getting private coverage early is likely to be a greater value for you overall, and you may be surprised at the benefits you can already receive.