Private health funds play a key role in the Australian health care system. They help take the pressure off the public (Medicare) health system through Government incentives and rebates to encourage more people to take out private health insurance.
Why are people being encouraged to participate in private health insurance? Simply, you get better cover from a private health fund than the public health system. There are many benefits offered through private health insurance that are not available through Medicare.
The key to understanding health insurance is to take a look at the benefits on offer, while keeping in mind your own health needs to determine whether private health insurance is the best option for you.
Understanding How Health Funds Work
Private health insurance is provided through registered organisations and can be a ‘not for profit’ organization where premiums paid into the fund are used to operate the business and cover benefits for members. While other health funds are a ‘for profit’ organization where they aim to return a profit to their owners as well as maintain company operations and payment of benefits to their members.
Health fund memberships fall in either two categories: ‘Open’ or ‘Restricted.’ Health funds with an ‘Open membership’ make policies available to the general public, while a ‘Restricted membership’ provides policies to specific employment groups, associations or unions. You may want to check with your employer whether they provide health insurance via an association, group or union.
Private health funds offer all Australians the opportunity to access private health services via insurance. The health insurance premium covers a range of medical services offered by the health fund that is not available through Medicare and the public health system.
The Benefits of Private Health Insurance
- Treatment in a private or public hospital as a private patient;
- You can choose the hospital and/or doctor for treatment;
- Private health insurance covers doctors’ fees; hospital fees (accommodation & theatre);
- As a private health member you have shorter waiting times and greater flexibility in the scheduling of elective surgery.
- Private health insurance offers Extras or Ancillary cover for services outside of standard hospital care such as:
Dental including endodontic and orthodontics;
Optical;
Physiotherapy;
Chiropractic;
Acupuncture, Naturopathy, Remedial Massage;
Medical devices such as hearing aids and other artificial aids.
As mentioned earlier, the Australian Government provides private health insurance incentives and rebates on premiums for hospital and extras cover. Rebates are available to anyone who is entitled to full Medicare benefits and holds private health insurance, regardless of the level of cover or income.
There are three levels of rebates available based on age, private health insurance members age 64 years or younger will receive a rebate of 30%, followed by 35% rebate for policy holders age 65 to 69 years and 40% rebate for private health members 70 years or older.
You can claim the Government rebates three ways: as a reduction on your paid premium, as a Medicare refund or through your annual tax return.
Now that you have a better understanding of health insurance, how it works and the benefits, you can start to compare the various health funds to find health cover that fits your lifestyle.
