Health Insurance - What Do You Actually Need

Compared to many other Developed Countries we have a pretty good public health system, yet it's still advisable to have some private health insurance - particularly if you need anything medical that is classified as "non-essential".

I've had private health insurance for about 20 years, and the amount of times I've used it is minimal. Thankfully I haven't needed any of the Hospital Cover until I had my daughter, and even then, I would have been fine as a public patient.

There are two aspects to private health insurance - Hospital coverage, and Extras.

If you earn more than $90,000 as an individual or $180,000 as a couple, you will be charged the Medicare Levy Surcharge unless you have private hospital cover. The Surcharge is 1.5%, so in most cases it's cheaper to take out private hospital insurance, rather than pay the surcharge.

Where you need coverage for obstetrics or IVF, or any kind of elective surgery, then having the higher hospital cover is worthwhile. It depends on your circumstances.

As far as Extras cover goes, do a quick calculation on what you spend in a year, how much you get back, and what the Extras cover is costing you. You may find that you’re actually spending more all up. Here is an example:

•    You spend $1,600 per year on glasses, contact lenses, dental check-up, and massages, Chiropractor or Physio treatments;
•    Plus, you spend $1,200 per year on Extras insurance;
•    Minus, the $500 you receive back from your health insurer for optical, general dental, and alternative therapies;
•    You have actually spent a net amount of $2,300;
•    In this case it would have been $700 cheaper to just pay $1,600 per year for your items, without Extras cover.

However, if something major happens in terms of dental, then having the cover is helpful. Again, it depends on your level of health, and your circumstances.

The point is to look at what you have, think about what you need, and whether you're paying for something that you don't in fact need.