Why I signed up for private health insurance

healthSince I found out I was pregnant, it gave me the push I needed to look into private health insurance. Even though I knew that the waiting periods would be too long if I joined now for any pregnancy cover, I still wanted to check it out.

I got some quotes over a month ago from two different companies and they were both between the $200-$250 range for basic hospital cover in a family package with $500 excess. If I included pregnancy cover the quote ranged between $250-$350. I felt that this was quite expensive and left it at that and didn’t pursue the quotes any further.

As the days went by and as tax time was approaching I started reading up a little more about the tax implications around private health insurance. I knew my partner and I were paying the Medicare levy surcharge but I didn’t know exactly how much we were paying as I never bothered to check. Big mistake! I also never researched if we could avoid paying the surcharge if we got the insurance.

So anyway, one day I received an email at work stating that the company has an agreement with a private health insurance company where they offer a corporate plan for employees with some good discounts. I was naturally curious so I booked myself an appointment with the consultant who was coming in to work the following week.

The consultation went well and I learnt the following things:

  • The corporate policy offered to employees is different to the retail policy and with the discounts offered it works out to be cheaper than if I had not gone through my employer. The corporate policy also comes with an extras package whereas the previous quotes I received were for hospital cover only. I was quoted $216.40 for the corporate basic hospital cover (with $500 excess) plus the flex 60 extras package which includes $500 cover for basic dental, physiotherapy, chiropractic, osteopathy, natural therapies and $200 for optical items. I didn’t include any pregnancy cover.
  • We will not have to pay the Medicare levy surcharge if we get the insurance. This made me curious at how much we paid last year so I went and looked back at last years tax return. To my horror we both paid around $6500!! If we had the insurance we would have paid just $2596.80 ($216.40 x 12). That’s around $3900 saved! Sigh!!
  • I said I was quoted $216.40 for the insurance, however that also includes the lifetime health cover loading. I had heard about this in the past but never really understood what it all meant. Basically because my husband and I are both over 31 we get penalised 2% for every year we didn’t have private insurance after the age of 30. Without the loading our quote would have been $206.60 per month. Double sigh!!

So I have basically been kicking myself the last few days!

The second point listed above basically sealed the deal for me to get the insurance. I definitely didn’t want to continue paying more than I have to. We could have saved thousands had we signed up for private health insurance a few years ago.

Oh well better that I know now than later. You live and learn!

UPDATE: I didn’t end up saving money like I originally thought. I explain why in my follow up article.

Images: Mets360.comWebfornews

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4 thoughts on “Why I signed up for private health insurance

  1. Great article explaining your choice, I’ve written a few PHI articles myself.

    Although I’m wondering about the section you wrote about the “medicare levy surcharge” – you guys must be on INSANE incomes (congrats if you are!) or you’ve calculated it as the “Medicare Levy” and the “Medicare Levy Surcharge” as the same thing.
    (Quoted from an article I wrote) “The Medicare levy surcharge is not to be confused with the Medicare Levy; The Medicare levy is 2% of all taxable income paid by ALL Australians (unless that individual has an exceptionally low income).” – You can check out the rest of the article if you like; Private Health Insurance: Rebate, Tax & Lifetime Health Cover Loading – got some calculations comparing having PHI vs not and what the costs (and savings) actually are.
    This is a fantastic table showing the Medicare Levy Surcharge thresholds/values – https://www.ato.gov.au/Individuals/Medicare-levy/Medicare-levy-surcharge/Income-for-Medicare-levy-surcharge,-thresholds-and-rates/
    Sorry for plugging my own article! but I feel the info there could maybe benefit you. Unfortunately I don’t think your savings will be quite as high as you hope :(, I’d double check to make sure you will indeed be saving money if you are getting PHI for money-saving reasons (we have PHI but know it actually costs us more financially, but feel it’s important for us for personal reasons). Of course I don’t know your income, if you are in the income bracket paying $6k in Surcharge I am very envious!

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    • Hi @dividendsdownunder
      Thanks for commenting, I really appreciate your feedback!
      I had a look at last years tax returns and I noticed that in mine it said “Medicare levy” but my husbands said “Medicare levy and surcharge”. So maybe I didn’t pay a surcharge? However, our joint income does not fall in the base tier so I was under the impression that we both have to pay a surcharge?
      I find this topic so confusing, no wonder I have been avoiding it lol.
      You are probably right, I don’t think the savings will be high as I expected, but there still should be some savings. I’m confused on how much it is now 😦

      Like

      • I’m really glad you didn’t take my “feedback” the wrong way! I’m glad you got some further answers and got everything straightened out (I saw the newer post you did about it). It is all so confusing, I don’t blame you at all for being confused (believe me, I get confused about the whole thing and crunching the numbers too, not looking forward to our yearly renewal time when I have to compare all the companies/policies and prices again)

        Jasmin

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      • Oh of course not, your feedback helped me out a lot, so thank you! I know it is so confusing, you would think they would make it a little easier for us to understand 🙂 There are so many factors to consider when crunching the numbers too, I honestly wouldn’t be surprise me if I missed something.

        Liked by 1 person

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