Health Insurance question

Hi Accountants and knowledgeable non-accountants

We've never had health insurance before but after being whacked with a large 'surprise' due to not having it, it seems to be time.

So I can avoid bothering my accountant, can someone tell me is it as simple as, for eg -

Your financials state that you will owe the ATO $5000k in medicare surcharge if you don't have insurance.

You get insurance that costs $5000.

No surcharge payable, assuming it's held the full FY.

Correct? Or too simple?

I just think the health insurance is for the most part a complete waste of money, so don't want to spend a cent more than necessary.

Thank you!

 

It works more like this:

Your financials state that you will owe the ATO $5,000 in medicare surcharge if you don't have insurance.

You get insurance that costs $2,000.

No surcharge payable, assuming it's held the full FY.

You save $2,000.

Basic Hospital starts at $928.80 pa from Medibank ($1939.20 for a family). That is without shopping around.

Product Details - Medibank

You can roughly work out the difference with the ATO tax calculator (estimate only)

Calculators and tools_Host

 

Assuming it is held for the full year yes. Otherwise it is pro rata

Look into an excess to reduce costs. Also hospital cover is relevant - not ancillaries.

 

Really? So if I'm up for $5000k in surcharge with no insurance, I can get the cheapest insurance ever and avoid the whole $5k? Win!!

 

Yes its one or the other and the test applies for each day of the tax year for the taxpayer and their spouse (one covered means both are liable !!)

There are three sorts of policies

1. Non-compliant policies. Waste of $. Very large excess etc.
2. "Bullsh7t" policies. They do waive the surcharge but are a waste of $ and have been criticised as a scam. Cover is very poor and high excess for each claim etc.Your premium pays for nothing much.
3. Any other policy. SHOP AROUND

The premium may be subsidised by the Govt - Check tiers here Australian Government Private Health Insurance Rebate
This link explains most issues around private health.

Shop around using some services like finder, meerkat, iselect etc BUT...None cover whole market....There is a comparison website somewhere....Its on the above link. Look on the menubar on that website and compare policies !!!

 

Right, so dental, for eg, doesn't help reduce the surcharge?

When I was speaking to the lady on the phone, I was astounded at how little you get back for physio etc. I'd rather just pay for what I need!

@Paul@PFI No rebate for us Thanks for the info!

 

Health insurance wont "reduce" the MLS (Medicare levy surcharge). You either have the right hospital cover or you pay it.

Welcome to private health. Mine now pays $10 for physio / Chiro until it jumps back to the grand $28 rate in Jan for so many visits (not many). Bloody useless. Two pairs of specsavers per member a year is about all you get without having to pay even more. Oh and they are fairly generous with basic dental checks and cleans. Often free in their own clinic.

I dont get it. I paid for 4 weeks of travel insurance for USA and cost me $400 for family. Visited a doctor in USA for 2.5hrs and it cost $4850 !! And they paid 100%. Perhaps we should all go to NZ and take out travel insurance ?

My wife goes into hospital for surgery. Specialist fee is $17500. Medicare (85%) was $170. Health fund paid $30 plus hospital bed....Fees for anethetist and surgeon assistant were on top. Mind you the op cant be done in a public hospital anyway.

One tip that wont cost a cent - You can choose to go private in public system and will get top priority (they will bump public patients !!) and its free...They ask for the excess gap but you arent forced to pay !!! Just ask for an account and dont pay. Downside is its like being in a 1950's Russian hospital. Good for basic procedures and those where they have all the gear and specialists like open heart, orthoppeadic etc.

 

Dont forget each year you go without insurance your payments will increase - I only took out cover 5 years ago and am paying double the usual amount and my payments will not decrease for another 5 years.

 

This doesn't happen in my part of the world.
I do know a local surgeon who will inflate his public wait list and insist a patient pays to go intermediate - but I think thats different.

 

So - you had private cover and still had to pay a fortune? Did you have to pay that $17500 specialist fee or was that covered?

 

I suspect Paul's wife was having a procedure that was not fully covered by the level of insurance.

The specs are set out pretty clearly in the product disclosure statements.

I am with Australian Unity Smart Start. Costs about $900 a year and includes a wide range of day surgery in a private hospital, also treatment as a private patient in a public hospital.

I found that it was as cheap to get a basic extras package as to just get hospital cover

Has extras ($25 per visit for a range of services, $150 a year for spectacles, some minor dental.

However it won't cover me for some operations, crowns, psychiatric etc

Also, I had to pay a bit extra for the gap last year for day surgery as the surgeon was not part of the gap free scheme - cost an extra $250 for the Surgeon and $100 for the anesthesitist.

Then again, it removes my Medicare levy.

 

Medicare levy surcharge? I don't think Medicare levy can be removed by having private health insurance.

 

Unfortunately private health insurance basically pays for the hospital and medicare pay for the Dr/surgeon. Health Insurance will then cover some of the gap between the Drs charge and the medicare rebate but not all the time and sometimes the out of pocket can be huge. Some health insurances have special no gap agreements with some Drs and if you can find a Dr on that list who is fantastic you are onto a winner. DH required a neurosurgeon and his operations have been fully paid for and total around $120k but if it had been another Dr we would have been out of pocket around $40k.

 

We paid almost $17K of the specialist fee. Its the patient "gap". Health insurance / Medicare is only legally permitted to pay 100% of the scheduled fee ie around $500. The operation took 3hrs. Even I admit the scheduled fee pays for the skills of a butcher. Medicare is a joke.

Westminster. When it comes to advanced surgery and techniques NO health fund has a broad deal for true no gap. Its usually available for things like tonsils and small procedures. Rare its for larger matters but some do it and IF they have availability then its a winner. Note that it used to be called no-gap but is now called "known gap" for a reason.

Often the known gap or free procedure comes at a price. eg wooden leg v's titanium. I read a story this week where health funds are refusing to pay for a specific stent that works but costs $$$$ and saves a major operation (heart bypass with open chest). If patient offers to pay for the stent the funds wont fund to have procedure or hospital either. Its a disgrace what both public & private health has become. Same procedure in public hospital is free if you enter as private patient. While Centrelink paymnets baloon, NDIS is a spend-a-thon (the new fibreglass batt project) the poor medical system is now funded by private patients who pay three times and even then its broken.

 

@Paul@PFI If you'd gone through the public system for your wife's procedure, would it have been free?

Gap seems a bit of an understatement - more like a ravine.

 

I think it depends on the cover and who with and what you need.

A few years ago, partner needed a hip replacement. We went through private health, he had to pay a gap but it ended up probably about $2K. He was in in-hospital rehab for 2 weeks (We signed off on the paperwork that come to about $1K a day which we did not have to pay for) and it also covered the RDNS that came round everyday for a week for wound care and also a couple of at home rehab / physio sessions. That in itself i think had us 'ahead' for a few years (rather than us forking out for it without health cover - we wouldn't have been able to afford it)

On top of that, I claim a fair bit of 'extras' so it works out ok for us.

 

Interesting thread. I'm actually considering ditching mine, as I've inquired before on issues and as covered above by other, they can really be quite useless, and perhaps only pay for a hospital bed. Forking out $1k+ a year and for me no tax advantages I can't see the point. That and I've had a number of close friends with far more extensive cover claim and use it instead of public options and been $10's of thousands out of pocket, some seeing complications additional operations, again out of their pocket too. Ironically after bragging about avoiding public health to 'get it done right'.

I took mine out out years ago when they introduced that 'rising' premium scam.

The whole system seems aimed at pleasing corporate profits. People paying private companies for what can generally be poor services/cover, getting a rebate or surcharge reduction and inturn eroding the tax base, while at the same time these people are still using the public health system.

If Govco ditched these private system rebates and levy surcharge reductions etc and said that the medicare rebate was to go up 0.5 or % or whatever tomorrow and public health care improved with waiting lists reducing, I'd be like, take my money. I wonder how many others would agree? I guess it may depend on what income level you're on as to ones view here.

 

Tip for all thinking of delaying or ditching.

Lifetime loading applies !! This applies an increase automatic loading to all policy premiums if the persons are aged 30+ and havent always held a past policy or some such rule. Its like 2% extra a year based on age. Adds up so if you take out hospital cover at age 40 you will pay 20% more than someone who first took out hospital cover at age 30. The maximum loading is 70%.

Read about it at Lifetime Health Cover

Also watch out for catches...
* CGT profits can push incomes beyond thresholds. Its often overlooked until assessed !! Medicare Levy Surcharge can also occur
* Rental losses can be ignored so dont assume that neg gearing fixes things.
* Changing jobs, bonuses, foreign income windfalls etc and even inheriting $ in five years time can change financial and tax outcomes so that private cover may need to be taken out.
* All taxpayers in same family are assessed on family threshold and policy must cover all family. eg Cant just insure wife for materity and not hubby. Prior to bith must be both covered and post birth the kid also must be covered under family policy. I kid you not. ATO do catch out this issue.

 

What if both hubby and wife has separate individual policy with the same company and same cover?

.... I thought "maternity" is quite obviously for female but apparently not

 

Thats fine. When bub is born they must have a family policy. I have heard stories that some funds have single policies that dont include birth services so a individuals policy must not upgrade to birth services without a wait period !! Otherwise the time to upgrade is within 60days of birth I belive. Family premiums are generally 2 x individual so no extra cost.

I will throw it out there and guess that health funds wont pay claims for male birth costs