Should we get Private Health Insurance?

By | March 29, 2016

Author: Mrs DDU.

In Australia, choosing whether to have Private Health Insurance (PHI) can be a real internal struggle decision to make. We have a fantastic public health system through Medicare and even with PHI there always will be out of pocket expenses, so we can expect to hand over that hard earned cash for cover, and then also for treatment – double whammy.

But on the other hand is PHI worth it for the fact that we can by-pass all the public system queues? For elective surgery (non-urgent) on the public lists can be months of waiting, but through PHI we could get that surgery within a week. But how often would we realistically need surgery? Will we even use the PHI? Is the “peace of mind” worth the cost? Nobody can answer this for us; it is very much a case-by-case basis for every person. The forced 12 month waiting period for pre-existing conditions can also make it feel like you’re chained to PHI, because who wants to pay for a service they can’t use for a whole year? Once you’ve served your waiting period I doubt you’d want to serve it again.

If you are reading this quite a bit later than when it was posted, information in this article might not be current.

Our Private Health Insurance choice

I was never raised with PHI, using Medicare and paying out-of-pocket where needed, although I was pretty lucky medically; with only a few broken bones in my childhood. Mr DDU was covered under his parents’ PHI but he doesn’t remember having to ever use it for himself. Originally we decided against getting PHI as a couple, we were very young, had no pressing medical conditions and we could make our money work harder for us if we used it in other areas. Although we hadn’t completely ruled it out and thought we may get it later in life. Being in Australia we felt confident in the Medicare system and made sure to always have Ambulance Cover which is a service supplied by our state government and is a yearly fee covering all emergency ambulance services, the current annual fee is $87.60 for a family. If you call an ambulance for someone who doesn’t have ambulance cover it can cost thousands of dollars.

In 2015 our journey with infertility and IVF began and we were suddenly in a very medical world with lots of costs and what felt like a never-ending money pit. Initially we kept going without PHI, feeling quite confused about what PHI would even cover and the fact that it would be a huge expense to add to our already expensive medical life, plus we would have to serve that pesky 12 month waiting period before we could even use it.

We did eventually decide to get PHI a few months later. It was a way for us to take “control” of any unknown variables that might come up with our infertility, we knew it would cover the hospital costs for IVF (but not the IVF itself) and if any surgeries needed to be performed we could choose to do them quickly, rather than waiting on the public waiting lists. We also felt that after all the negativity and problems with our fertility that we might want to have our future baby through the private system, being able to have more control and specialized care for our specific circumstances. The main goal of this choice was not made to save money, it was a choice we made to have better control for reasonable costs.

Although we do have PHI now, we are still serving the 12 month waiting period. We have decided to go ahead with IVF without having access to our PHI, but it is a little comforting that the PHI will be there in several months to soften the blow of costs if we need it then.

 

How we chose our PHI

As a team with Mr DDU I usually take on the role of researching products like this and come to him with my research so that we can make a final decision together.

We needed “top” hospital cover to cover reproductive Services/IVF and pregnancy/birth – these were the reasons we were getting PHI. We also did not want any “extras cover” – we felt that we would be paying outright for a service we would never get the full value of and choose to pay for any “extras” ourselves when we need them.

  1. The first thing I would tell anyone looking at getting PHI or comparing policies is to use this website about all things PHI by the Australian Governmentbeing someone who knew hardly anything about PHI it was the best, and pretty much the only resource I relied on. One of the best parts of the website is the compare policies section, it might look simple, but it is an extremely powerful tool and will be my ‘go to’ when researching PHI in the future.

I also felt it was important for us to go for a not-for-profit PHI provider; they generally have lower costs than for-profit organisations. Although I did look at quotes from for-profit providers to cover all options in the chance that it would have been a better deal.

  1. Once I had narrowed down the choices from the compare policies sectionI clicked on each company’s link within the policy comparison and it takes you to a fantastic page with more details on the individual company, you can even see performance statistics, % of coverage and complaints. I also Googled for any reviews on the providers I was considering, but always took these with a grain of salt – most people write reviews when they’re upset with a product or service.
  2. At this stage I went to the few companies websites I was considering, to make sure the price and policy was suitable (and matched with the research I’d already done), I could also look more closely at their fee structure and whether there would be any discounts paying yearly.

We ended up going with a 400/800 excess and no extras cover at a cost of $2,303.30 which includes the full government rebate and a 4% discount for paying yearly, the 4% yearly payment saves us $92.12 which for us is a no-brainer to be able to save that much just by paying up front. By paying yearly we also lock-in our cheaper price, as we purchased late in 2015 we will avoid the April 1st price rises for 6 months.

 

Going forward with our PHI

We have been happy with the choice we made to get PHI, even though we haven’t used it at all (yet), it has provided us with a peace of mind and sense of control. Although I feel happy/more secure that we got it at the time, I cannot confidently say whether I think it is a better financial choice to have it. We maintain the stance that we might not use or need it, and in that case we could easily cancel it – serving the waiting period again could be more cost effective than holding onto the PHI for several years of not utilizing it.

PHI is not a set in stone decision for us; Mr DDU and I even just recently discussed that we may not renew our PHI towards the end of the year if our IVF is successful before then (touch wood and cross fingers), or we keep the PHI until after we have our first child and then cancel it until we are going to have a second child (spoiler alert – we  do want 2 children) to save on costs in the middle, we will just have to pre-plan a year in advance for the 12 month waiting period.

Because Private Health Insurance is such an extensive topic, keep your eyes peeled for a part 2 article covering the lifetime health cover loading and how PHI can affect personal income tax.

How do you navigate the choices when it comes to private health insurance? Do you have PHI? Why/why not?

 

Thanks for reading this article about our investing journey Down Under.

Onwards and upwards!

11 thoughts on “Should we get Private Health Insurance?

  1. ambertreeleaves

    Reading things like this makes paying high taxes in Belgium quite digestable… Our basic health plan offered via the state (via a middle man) is quite good. And most companies offer to their employees an additional hospital plan. Both combined means that in most cases our expenses are capped to a 75 or 250 EUR.
    In 1998, I took a work break and decided to take on an additional health insurance coverage. Ever since, we have been lucky to be covered via the employer

    1. Dividends Down Under Post author

      It sounds like you’ve got the best combination of government health cover (like Australia, UK) and privatized health insurance through employers/self funded (like America). I feel it’s extremely important to have great, free medical access for everyone, regardless of their wealth and employment status.

      I also feel like it’s important to give people the choice of “private” care, but I feel Australia’s PHI system is extremely flawed, it’s very confusing and expensive. I think some of the private health insurance providers prefer it all confusing and hard for the customer – customers are less likely to shop around and don’t know how much value they should be getting. The whole set up is a big mess.

      I’d be very interested to see how PHI would change if it became part of employment packages, I think it might work better in a lot of ways.. but as long as our fantastic public government system stays intact I don’t really mind how PHI is set up.

      Mrs DDU

  2. Vivianne

    One thing that countries with universal insurance are very lean. However, if you look at a European and an American, you can easily tell, because American have very straight teeth.

    The draw back with universal insurance, they don’t cover dental, or preventative health. They would cover when you need to pull your teeth out. It’s just an extreme example.

    With that say, I support your decision to go private if you can afford it. Kuddo to you!

    1. Dividends Down Under Post author

      I don’t even think our government health care covers having teeth pulled out. We don’t have “extras” cover though, which dental falls into. We pay for dental with our own money whenever we need a checkup/work done.
      PHI is very complicated with how much they cover here, and you would still most likely have to pay an extra fee to the dentist even with PHI. So even though PHI extras cover “covers” dental, you still have to cover some of it yourself.

      Mrs DDU

      1. Vivianne

        Teeth pulling or infected gum disease should be “ear-nose-throat” Doctor, I think. We were discussing about it awhile back.

        I have health insurance and dental insurance through work, I do pay a premium for both. They pay for 2 preventative teeth clean. The rest they pay 50-80% depend on where and what. Cosmetic like braces, they cover $1500, the rest I’ll have to pick up.

        All and all, from I don’t need any work done other than a teeth clean, $40-80/visit in cash should cover it.

        I’ve heard people go to Mexico, Thailand or Vietnam to get dental work done for a small fraction of the cost.

    1. Dividends Down Under Post author

      Thanks Tom 🙂

      Will definitely be covering the lifetime cover loading and tax implications in part 2 of this article – was just already getting a bit long! Health insurance has so much to it, thought it best to break it up a bit 🙂

      Mrs DDU

  3. The Personal Economist

    We had PHI for our pregnancies, I found it comforting as I had to have emergency surgery twice (fertility/child birth related). It is also nice to have a private room with a nursery and I didn’t feel like I was being ‘pushed’ out before I was ready to go home. It was not cheap, and in fact the OB costs were significant and not covered by PHI. We’ve now dropped the pregnancy cover which has reduced the premium. Having said that, you can’t really go wrong in our public hospital system, so it is a personal choice.

    1. Dividends Down Under Post author

      I do really like the idea of a private room after birth (where Mr DDU can stay too), but we still are tossing up if we can make that work financially – guess we will wait and see after the first hurdle of making the baby! I’ve had fertility surgery through the public system and the care was fantastic, although the 4 month wait to have it was a pain. We are yet to use a private hospital, so it’ll be interesting to compare.

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