When should I get private health insurance?

Deciding when to get private health insurance is something many Aussies have to think about – but if you’re young and healthy, it’s easy to put into the too-hard basket. The risk with that sort of mentality is that unexpected illnesses and injuries happen all the time. If you’re not already covered, then you could be left in a world of hurt, both physically and financially.

There’s no perfect time to take out private health insurance, but there are reasons to take it out as soon as you can. Here, we look at some of the most important factors to consider around when to get health insurance, as well as tips to reduce your premiums and out-of-pocket costs.

While there’s no one-size-fits-all answer, getting private health insurance early in life can be a really smart idea. In Australia, everyone is encouraged to take out health insurance before turning 31 – mainly due to the Lifetime health cover (LHC) loading, which adds a 2% penalty on top of your premiums for every year you are over 30 when you first take out hospital cover.

Here’s the bad news. If you're 31 or older and don’t have private health insurance yet – this loading can increase your premiums by up to a whopping 70% if you delay getting insured until you’re approaching retirement age. If you want to avoid that, then it’s time to get cracking on securing health insurance ASAP.

The best time of year to get health insurance is right now. But if you want to get more specific, taking out private health cover before 1 April can be a smart idea. That’s because health insurers tend to jack up their premiums and tweak their policies from the start of April, so buying a policy before this date means you can take advantage of what’s on offer right now and potentially get a better (i.e. cheaper) deal.

There’s another date to also bear in mind: end of financial year. Getting health insurance before 30 June will mean you can take advantage of the private health insurance rebate for the entire financial year, if you are eligible. The rebate is income-tested and, if you’re able to receive it, can greatly reduce the cost of your premiums.

Before actually taking the leap and getting private health insurance, you’ll first want to figure out your current healthcare needs and then compare a few different policies. Think about stuff like your:

• Age
• Health status
• Lifestyle
• Family size
• Any pre-existing conditions
• Family medical history

If you’re young, healthy and single, then you might be happy with just a Basic tier policy. If you plan on having kids or are dealing with more chronic conditions that require lots of medical support, then a Silver or Gold plan might be more suitable.

Use online comparison websites to look at all your options, and then choose one based on the level of cover you need, the cost of premiums, as well as things like gap fees and out-of-pocket costs. The most important thing is to find cover that gives you the best value for money and covers the services you are most likely to use.

Major life events such as getting married, starting a family or changing jobs can have a bearing on your health insurance needs. That’s why we recommend reviewing your policy every year at least, and adjust it accordingly. Couples, for example, might benefit from combined cover rather than paying for two separate policies, and families might need cover for maternity services and paediatric care.

Be aware that private health insurance also comes with some minor tax implications, most notably the Medicare levy surcharge (MLS). If you earn above a certain income threshold and don’t have private hospital cover, you’ll need to fork out for the MLS come tax time.

Some employers in Australia will go above and beyond with their employment packages by offering supplemental private health insurance benefits. These can include everything from subsidised premiums or access to corporate health plans with better cover and lower premiums. While you don’t have to take them up on the offer and switch from your current provider, it’s worth considering exactly what the employer-sponsored plan includes.

Young adults can also get a better deal when they take out health insurance between the age of 18 to 29. Insurers can offer a discount on premiums of up to 10%, and that discount is retained until you turn 41 – when it’s gradually phased out. Not a bad little incentive to get covered while you are still young!

It’s a good idea to stay across the latest government initiatives and any major changes to health insurance legislation. Beyond the government’s private health insurance rebate, things like LHC loading can also influence your decision about when to get private health insurance.

Still unsure? Here are a few questions to ask yourself if you’re wondering whether now is the right time to take out private health insurance:

1. What’s my current health status and medical history?
2. Do I need cover for any specific treatments or services?
3. How often do I tend to visit the doctor or use medical services (e.g. physiotherapy, dental work, getting glasses)?
4. What’s my budget for monthly/annual premiums?
5. Am I eligible for any government rebates or subsidies?
6. Do I need hospital cover, extras cover or both?
7. Are there any waiting periods I need to keep an eye on?
8. How much can I afford to pay out-of-pocket if there are gap fees?
9. Does my work have any health insurance benefits I could take advantage of?
10. Are there any restrictions or exclusions in the policies I’m thinking about?

Deciding when to get private health insurance involves considering things like your age, healthcare needs, financial implications and timing. But once you’re covered, you can rest easy knowing all the hard stuff will be taken care of. Just remember to review your policy every so often and compare what’s on the market so you can make the most of your private health insurance.