Why hospital cover is a no-brainer if you're turning 30


I feel you don't officially recognise your adulthood until you start paying insurance.

That's what real adults do - they pay hundreds, often thousands, of dollars a year to protect their stuff, including their health.

When you cease full-time study (or turn 25), mum and dad will let you know gently that they can no longer include you in their private health care. It gets worse - as you reach 30 you discover you can't keep putting off private health cover because the government will tax you extra if you don't take it out.

If you're about to turn 30, it's time to get serious about health insurance. If you wait until after you turn 31 to take out private hospital cover, you'll attract a 2% lifetime health cover (LHC) loading on your premium for every year you're aged over 30.

So if you wait until you turn 40, you'll pay 20% more than someone who took out cover at 30.

Plus, if you're earning more than $90,000pa and don't have private hospital cover, you'll have to pay a 1%-1.5% Medicare levy surcharge at tax time - that's on top of the 2% Medicare levy that you're probably already paying each year.

Basic private hospital cover in your 30s is a no-brainer. You'll immediately save on tax and avoid an extra-hefty premium when you do decide to take out private hospital cover. Premiums for basic cover will vary depending on your age, sex and where you live.

If you earn under $140,000pa you'll attract a yearly government rebate on your private health insurance, which can be used by insurers to reduce your premium. For me, the cheapest basic cover I could find was accident-only with a premium of $63 a month and an excess of $500 for hospital admission. Have a think about what value you want for money, and sift through the wording carefully to avoid buying a "junk" policy.

If you're teetering somewhere between 22 and 30, you should consider extras-only insurance.

Don't immediately write this off - there are a bunch of very valid reasons why paying a few hundred dollars a year could end up being highly cost effective.

First, unless you live in Queensland, Tasmania or regional Western Australia, paying for an ambulance can be excruciatingly painful for your wallet. If you live in NSW, an ambulance in an emergency has a relatively modest $364 call-out fee with a charge of $3.29 for each kilometre.

But if you live in Victoria an ambulance can cost you more than $1100. It's even worse for South Australians - if you need a retrieval team there, it costs over $3000. Accident-only ambulance cover is included in most extras-only policies so it's a neat perk that could one day end up saving you thousands.

Did you know that dental services aren't covered by Medicare? This means that if you see a dentist once a year (yes, people, you should still get an annual check-up as an adult) you'll have to pay for the full clean and fluoride treatment out of your own pocket.

The Australian Dental Association lists the average cost of a consultation, scale, clean and fluoride treatment as about $200 (2014-15).

After searching online for the cheapest extras-only policy with general dental I worked out I would get a total rebate of $115 for the three services.

The same policy would also give me a rebate of $100pa off the purchase of prescription glasses.

You can get an on-point pair of glasses at Oscar Wylee or Bailey Nelson for $99, including lenses - so that's a free pair of glasses each year. If you don't need glasses, there are also rebates available for physiotherapy, chiropractic, remedial massage and acupuncture.

Some policies also allow you to customise your extras cover, which can include yoga, pilates, kinesiology, dietetics and alternative massage therapies.

By jumping on a comparison website, I've managed to find an extras-only policy that saves me $100 on glasses, $115 on dental and, as I live in NSW, $364 on an ambulance if I ever need one. That's $579 worth of rebates for a policy that costs only $180pa.

So if you're neglecting your teeth because you think health insurance isn't worth it, check a comparison site to see just how much it could work for you.Sift through the wording carefully to avoid buying a 'junk' policy


Steph Nash was a staff writer at Money until 2017.
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