Thursday, 29 May 2008

Is Private Health Insurance Still Worth It?

As part of the the recent Federal budget here in Australia, the income level that tax penalties kick in if you don't have private health insurance increased from $50,000 to $100,000 for singles; and from $100,000 to $150,000 for couples.

So if your income and situation fall below these levels, the decision to get health insurance is now up to you. There’s no tax incentive (more a stick than a carrot as far as incentives go in my mind) to sign up.

You still get the existing 30 per cent tax rebate. And every year over the age of 30 that you delay taking up private health insurance, your premiums will still go up by 2 per cent.

I’m one of those singles who is no longer impacted by the tax penalty.

An exodus of younger, largely healthy fund members (like me, well at least healthy if not younger these days!) between 485,000 and 750,000 are expected to leave the private health care system. This could of course increase costs to those members who are left behind.

Times are tough, interest rates are going up, petrol costs a fortune, it’s tempting to ditch that monthly charge to save some money.

For me though, the bottom line is not that I can't afford private cover but that I can't afford not to have it. I’m keeping my health insurance. It’s an investment in myself - just in case.

Why? If I happen to be diagnosed with something serious, the blowout in public hospital waiting lists means I might not get the treatment in time and I couldn't afford private treatment out of my own savings.

It’s not a fear thing, it’s just that I insure my car and my home contents against disaster, and don’t expect anything catastrophic to happen, why would I not apply the same reasoning to my own health and wellbeing. It’s got to be worth as much to me as my ‘stuff’.

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  1. I'm with you, while it's tempting to save the money, I've seen too many people left waiting on the public list for years.

  2. Rick Vaughn29/5/08 13:44

    Nice piece, nobody likes to think about it but medical debt can be a huge pain in the ass when it happens. Its not a matter of if its more of a matter of when.

  3. I also have to keep my private health insurance for the main reason - the 30% rebate when it comes to tax time.

    Living in Australia we are very lucky and fortunate in that we can be treated in our public hospitals for free if we ever need healthcare, especially emergency treatment.

    However, with the rising cost in daily living and health insurance premiums going up each year (higher than the inflation rate) it really stretches the budget that's for sure!

  4. That is such an interesting perspective. In the UK it is very uncommon for people to have insurance and perhaps it is because the free treatment available is better. However, there are long waiting lists for certain treatments, I guess many of us are just hoping that we will not need any of these treatments.

  5. You've hit the nail on the head. My wife and I didn't get private insurance because it was suddenly cheaper, we got it because it was a smart choice to protect ourselves against whatever may come.

    I certainly think that the effect of the changes might be somewhat overstated, but I suppose only time will tell.

  6. Here in the US I am fortunate enough to have health insurance through my place of employment, however, if I didn't I would certainly do what you are doing. The costs of health care are just too high. I had a minor accident that resulted in a trip to the emergency room and 6 stitches. It cost me $800. Had I not had insurance it would have run over $3K. That is the kind of thing you can't plan on.

  7. Anonymous30/5/08 12:12

    Good post. I like to think that the money i spend on my privtae health insurance is an investment in my future. If i get sick and have to wait a prolonged period of time for treatment then my earnings during that time will be reduced and ultimately i will be worse off.

  8. my wife and I hated paying the insurance costs, but recently we had a huge medical problem. If we hadn't had insurance we would have gone bankrupt. Read our story HERE

  9. debtfretter4/6/08 10:14

    I agree with you - I'm sticking with the private system.

  10. I have private Health insurance, but at times I think why do I bother.

    When I was diagnosed with Cancer in 2006, my Chemotherapy and related drug were covered by HBA. BUT, my radiotherapy wasn't covered, as they said it wasn't a necessary treatment so with what i got back from Medicare, I was left paying off a $8000 bill, and all this on a very low income too.

    So it really makes me wonder if I'd gone public would I be in worst debt?