Everything you should know about cheap health insurance

  • November 18, 2020 07:39 PM AEDT
  • Edita Ivancevic
    Edita Ivancevic
    Journalist Edita Ivancevic
    212 Posts

    Edita is a young journalist who graduated in 2019 from the Faculty of Political Science in Zagreb, Croatia, specialising in Television and Public Relations. Since the teenage years, Edita gained knowledge of news reporting and analysing complex curre...

Everything you should know about cheap health insurance

Summary

  • Many people opt for health insurance just to avoid unnecessary costs created by the Australian government. For that reason, cheap health insurance policies might be a good idea to consider.
  • Basic health insurance generally does not cover for a lot of medical procedures, but rather prevents Australians from being affected by MLS or LHC, depending on their income.
  • In case you genuinely want to consider getting a good private policy, you might need to consider bronze, silver, or gold policies.

Private insurance in Australia is a common thing to have, mainly because the government has privatised the whole system. Yet, the most common reason why Australians get private insurance policies is the Medicare Levy Surcharge (MLS).

RELATED: What is Medicare Levy Surcharge?

Because of MLS, Australian residents need to pay higher taxes if they do not get at least the basic private insurance. When similar circumstances occur, and when people do not seek a proper health insurance cover, they tend to settle for the cheapest policy available.

Standard health insurance

The cheapest health package is often referred to as standard or basic policy. They offer low tiers for the lowest price, which is often not too much coverage.

Apart from being the cheapest, basic policies need to satisfy the following conditions – they need to cover for palliative, rehabilitation, and psychiatric care in public hospitals.

However, experts do not recommend basic policies in case individuals genuinely want to be covered for more procedures in and outside the hospital. Basic policies usually do not cover many things but are rather an MLS getaway. For more comprehensive insurance, it is advised to look into bronze, silver, and gold packages.

 Image Source: © Kalkine Group 2020

DID YOU READ: What are the different types of health insurance available in Australia?

What are some of the tips for finding the cheapest policy?

Not everyone has the same definition of cheap and affordable health insurance. No matter what your budget might be, there are some crucial things that everyone should look into before settling with their final choice:

  • Research, always research – Australia has 38 private insurance providers, and it is safe to say that each one of them will offer different fees for their services. As some insurers might be significantly more affordable than the first link on Google, it is always advised to do thorough online research before committing.
  • Consider annual payments – Every private insurance company offers some discount if future clients pay for the whole year in advance. If you want to save some bucks, consider saving up for the annual contract and enjoy the reassurance for months.
  • When already having private insurance – Sometimes it is easier to downgrade the current policy than opt for a new insurer. That usually costs more money and time, as well as added waiting periods.
  • Make payments before 1 April – Private insurance companies usually increase their insurance premiums every first day of April. For that reason, try to avoid that month and get your insurance beforehand.
  • Direct debit is a way to go – When private insurance customers set up direct debit payments, the insurers know they are certainly getting paid for that month. As a reward for that comfort, the insurers usually offer discounts for everyone who wants to set up this payment style.
  • Ask your company if they have health insurance arrangements – In some cases, corporations are offered private health discounts, which employees can also use.
  • Find a policy with higher excess – Higher the excess, lesser the insurance premium. However, be aware as that usually means significant out-of-pocket costs once admitted to the hospital, which the insurer will not cover.
  • Check if you are in a restricted fund category – Restricted funds mean they are reserved for specific professions only, e.g. teachers, corporate workers, and similar. Those funds are not-for-profit, so they are mostly cheaper than regular insurers. However, not everyone meets the criteria to join them, so it is advised to check all options.

ALSO READ: How much does private health insurance cost?

When is basic insurance the best choice?

Basic health insurance is not the best choice if you are looking for good medical coverage. Unfortunately, these policies do not offer a lot of choices and usually involve high excess payments when being admitted to the hospital.

RELATED: What does ‘excess’ mean in health insurance?

You may want to consider basic policies when you are younger and have no major health problems. And also, to avoid some taxation costs imposed by the Australian government so that more people could get into health insurance:

  • Lifetime Health Cover (LHC) – All Australian residents aged 31 and over must pay an additional tax rate of two per cent in case they do not get hospital cover. For that reason, insurance premiums can be as higher as 70 per cent than the regular price. However, the additional charge can be applied for ten years after the individual finally gets insurance.
  • Medicare Levy Surcharge (MLS) – Singles that earn more than A$90,000 and families/couples with more than A$180,000 annual income need to pay 1, 1.25, or 1.5 per cent of surcharge if they do not get private insurance. Even though these percentages do not seem to be a big deal, getting a basic insurance policy will still be more cost-effective.
  • Private insurance rebate – All singles and families within the same income range as MLS on the above can be eligible for the private insurance rebate, getting 25.1 per cent back from the government. In all other year groups, the rebate gets lower and lower, until it comes to A$140,000 for singles and A$280,000 for families/couples. Australians that are so well-off cannot apply for the rebate sponsorship.

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