5 tips for taking out a private health insurance policy
AS THE end of the financial year approaches research from health insurance experts iSelect reveals 72% of Queenslanders with private health insurance were motivated by potential tax savings or a desire to avoid paying higher premiums later in life.
A national Ipsos Research study commissioned by iSelect in June revealed 72% of privately insured Queensland residents first took out a policy before they turned 31, which is the age when Lifetime Health Cover (LHC) loading comes into effect.
iSelect spokeswoman Laura Crowden said while younger people were more likely to nominate "to save on tax" as a reason for having private health cover, 73% of insured Queenslanders said they hold a policy to "protect their health".
"While avoiding LHC or paying additional tax via the Medicare Levy Surcharge (MLS) is likely the reason younger customers initially choose to take out cover, most Australians say they keep it for peace of mind," she said.
A government incentive designed to reduce the burden on the public health system, MLS is an additional tax (on top of the standard 2% Medicare Levy) for those who earn over $90,000 (single) or $180,000 (couple/family) and don't have private hospital cover. MLS ranges between 1-1.5% depending on income level.
5 TIPS FOR TAKING OUT PRIVATE HEALTH INSURANCE
1. Think about your current and future health needs - consult a private health insurance expert to discuss your life stage. This ensures you take out the right policy that covers you for everything you need and so you are not paying for things you don't need.
2. Only hospital cover delivers tax benefits - taking out an extras only policy will not deliver any tax benefits, such as excluding you from the Medicare Levy Surcharge. If you earn over $90,000 (single) or $180,000 (couple) and are looking to save on tax, make sure your private health insurance includes hospital cover.
3. Review the extras - if you don't think you'll use them, why pay for them? Also consider flexible extras products that combine your separate extras limits into a single annual limit for you to use across different services.
4. Make sure ambulance is covered - not all private health insurance policies include ambulance cover and it can also vary by state. Make sure your policy includes ambulance cover or you could be left significantly out-of-pocket after an emergency.
5. Look for payment discounts - some providers offer a discount for paying by direct-debit. Similarly, paying 12 months of premiums upfront can see you avoid the annual premium increase.
LHC is a government incentive designed to encourage younger and healthier Australians to take out private insurance earlier in life.
Customers without hospital cover by 1 July following their 31st birthday who decide to take it out later in life will have to pay 2% LHC loading on top of their premium for every year they were without cover.