Thursday, May 23, 2013

The ABCs of Health Insurance

As uncomfortable as it is, the health insurance is one of the issues that we all must ponder on sooner or later. With the uncertainties of life, considering the prospects of health insurance, its pros and cons and finally, opting up for one is sometimes a difficult choice.

In Australia, health care is universal, meaning that the government takes care of a large percentage of the medical bills in public hospitals through Medicare - Australia's public health care system. The mode of coverage is expressly provided under Medicare benefits schedule, and in most cases, the residue of the medical bills is settled by the patient. In most instances, 100% of inpatient costs are covered by the government, and 75% are covered for general practitioner, whereas 85% of specialist services are covered.

There is the government-owned insurer called MediBank private. As a matter of fact, there are about 3,000,000 million Australians that are insured with Medibank. At Medibank, you can access three main types of medical covers. They include: hospital cover (where the services could range from basic to comprehensive hospital cover), extra cover, and Ultra health cover.

Nonetheless, life insurance is a broad field which cannot be left in the hand of the government alone, because it goes beyond just settling medical bills. As such, Medicare does not cover everything, and that is why people are strongly encouraged to look for private health insurance cover as well. That is why there are private health insurance companies, which are mostly run by private investors. There are about 36 registered private health funds in Australia registered under Private Health Insurance Act 2007.

The Australian government strongly encourages people to take private health insurance cover by offering the following incentives:

1. If you take a life-time health cover after 1st July following your 31st birthday, you are subject to a penalty of 2% premium loading per Annum. The loading premium runs for ten years, and only applies to hospital covers.

2. There is an arrangement where those who earn above certain taxable income bracket (above $80,000 as was the case in 2012) are forced to pay 1% surcharge aside from the 1.5% medical levy they have to pay if they don't hold a Medicare card. also, those who are entitled to reciprocal Medicare card, but don't have Australian domestic health insurance are also subject to the above levies. This is a federal government's initiative to encourage people to take health cover if you want to avoid paying the above levies.

3. The federal government offers what is known as private health insurance rebate. Those who have taken an Australian domestic health insurance and are eligible for Medicare can claim the rebate. The rebate is designed reduce health insurance premiums which cover hospital cost and other miscellaneous costs.

The question many people tend to ask is: why take a private health insurance cover, whereas Medicare cover exists?

To answer this question, you need to understand that Medicare only takes care of public hospital bills and not private hospitals. Moreover, Medicare does not cover auxiliary costs like ambulance transport, dental care, optician fees, physiotherapy costs, and so on. It is only private health insurance that can offer you the options which suit you and your needs.
What about temporary health cover?

Temporary health cover exists for visitors who hold temporary visas such as students, business people, and contract employees from overseas. Such visitors are normally asked to consider taking Overseas Visitors Health Cover (OVHC). Some visas such as Visa Subclass 457 require you to take an insurance cover before you can obtain it. On the other hand, overseas students in Australia are required to take Overseas Student Health Cover (OSHC) during their visa application.

In addition, visitors from some the following specific countries are under reciprocal health care with the Australian government. They include:
  1. United Kingdom
  2. Sweden
  3. Belgium
  4. Finland
  5. Italy
  6. Malta
  7. The Netherlands
  8. Slovenia
  9. The Republic of Ireland
  10. New Zealand
Under the reciprocal health care arrangement, the visitor is entitled to receive free emergency medical attention in public hospitals. Otherwise, for any other benefit, the visitor should seek Visitors Health Cover (OVHC).

However, reciprocal health care arrangement for visitors from the above mentioned countries does not include students from those countries, because students are covered under Overseas Student Health Cover (OSHC).

In the end, whichever health cover you want to take, take some time to understand whether it will be able to cover your needs. Study the options carefully, bearing the future in mind. After all, choosing the right health insurance will provide the coverage in case of predicament.

Tim Phillips enjoys spending his time reading about ways of making our life simpler. As a blogger, he likes sharing his knowledge about health insurance and other financial issues.


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