Should I cancel my private hospital cover?

Women with CentsBlog, Budgeting, Insurance

Every year, around this time, there is one topic of conversation that seems to flood the airwaves: health insurance. Health funds start increasing their fees so all the associated marketing campaigns come out, the comparison sites start reminding us of the need to compare and switch, and numerous news articles pop up highlighting some of the ‘junk’ health policies available out there. So I wanted to get in on the action with a question from the community and give you a somewhat personal take on the answer.
“Hi Tash, I am looking at reducing some of my family’s outgoing expenses. Im thinking of reducing our private health to extras only since I have Medicare which covers emergency ambulance and hospital. Why do I need both?

 

Let me start with a story. Two years ago, my husband’s work colleague was single, in his early 40s, and apart from an ongoing heart condition he was in pretty good health. He went in for scheduled heart surgery as a public patient, and everything went well so he was released from hospital. A few days later though, he had to be re-admitted due to complications and needed a second surgery. Now, you would think that it doesn’t get more urgent than heart surgery, right? He was awaiting urgent heart surgery in a public hospital, but unfortunately due to the triage system and the demand placed on the hospital with emergency cases coming in, his surgery kept getting postponed to the next day, and then the next day. This went on for a week and sadly, he passed away in hospital waiting to have his urgent surgery.

While it is true that our public hospital system is excellent in many ways, it is also known that there can be long waiting lists depending on the circumstances, and sadly this is one case where the system couldn’t handle the load.  Could the same thing have happened with a private doctor? Possibly. But I would argue the chances of that would be lower. When you add to that the risk of future governments following in the footsteps of the USA and privatising a lot of our medical care… I think there are good reasons to hold on to private hospital cover if you can afford it.

Here are some other things you should consider before you make a decision.

If you don’t have private hospital cover you can be penalised financially.

The Medicare Levy Surcharge is applied to your income as a tax if you earn over $90k as a single, or $180k as a family, unless you have private hospital cover. The levy goes upwards from 1% depending on your income, and is only waived if you have private hospital cover (the waiver does not apply to extras).

Medicare does not cover emergency ambulance cost

You mentioned Medicare covering ambulance – it is a common misconception, however in Australia Medicare does not cover emergency ambulance unless you are eligible for a concession. For most people this means that unless they obtain cover through a private health fund or a subscription to a state ambulance service, each trip could easily cost you upwards of $1,000 (depending on where you live and treatment received).

You might be able to get a better deal on your hospital cover than what you’re paying now.

Use www.privatehealth.gov.au to compare policies and providers annually as providers will change their offers each year. It is also worthwhile checking what you are covered for and make sure you’re only paying for what you need.

Assess whether you are getting value for money from your extras.

When it comes to extras, most people pay more in premiums than they receive back in claims so it’s possible that you could be better off setting the money aside and saving it up instead. Request the last couple of years of claim statements from your provider and compare the fees you paid to the claims you made before deciding whether to keep it.

If you’re determined to cancel your private hospital cover, consider having some other insurances.

Some quality trauma cover (also known as critical illness) can help you cover out of pocket medical costs if you’re diagnosed with certain illnesses or injuries. It still may not give you access to private specialists (some only work with people with private hospital insurance) but it is better than no cover at all. You can read more about the difference between life insurance and health insurance here.

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