How Do Health Funds Work?

Health insurance is a crucial safety net to have. Any injury or ailment can spring up at a moment’s notice, and you want to have some level of protection for yourself and your loved ones. In Australia, we are able to take advantage of the public health care system, but we may reach a point where we’re able to afford and explore private health services. Let’s take a closer look at this private option and what it can then deliver for you and your family.

Private Health vs. Medicare

Private health insurance provides financial cover for all or part of the cost of various health-related treatments and services. Depending on the insurance policy, health funds provide cover for treatment as a private patient in a public or private hospital, allowing you to choose both your doctor and hospital-based on a given scenario. One of the greatest benefits of private health insurance is the ability to have certain treatments covered that aren’t protected by Medicare, such as physiotherapy, optical, and dental care.

There are two main types of private insurance policies: hospital cover and extras cover. These health services can be purchased separately, or combined into a single policy with your provider. One of the biggest benefits of private insurance is choice and flexibility. As a private patient, you’re given the choice of doctor, choice of clinic, and even the flexibility over the time of your appointments. In comparison, a public system patient has little to no flexibility over appointment times, doctors, and hospitals regardless of health concerns.

Breaking Down Covers

As mentioned, private health insurance breaks down into hospital and extras covers. In some Australian states, there is a third category known as ambulance cover, although this is sometimes included in the hospital cover or extras depending on your policy. Extras cover may also be known as general treatment cover in some states. Private insurance is not risk-rated, so everyone who signs on for these policies must pay the same base premium for the same level of cover.

Private health insurance allows patients to include services and treatments not previously covered. The government sets maximum waiting periods that health funds can impose for hospital treatment, including 12 months for pre-existing conditions and obstetrics, or two months for psychiatric care and rehabilitation.

For extras insurance, waiting periods are determined by your individual health fund provider, and the length can vary depending on treatment and the level of coverage you purchase. To receive benefits, you must have a policy that covers the treatment you’re receiving upon serving the waiting period. Some hospitals will be able to automatically apply for your benefit by scanning your health fund membership card during payment transactions. You may need to make the benefit claim after paying upfront, but how much you pay in total, ultimately depends upon your policy and level of health insurance coverage.

Curbing Premiums and Other Costs

Having access to private health resources does come at a cost depending on the insurance policies you opt for. However, there are ways in which private health funds can save patients money. The private health insurance rebate through the Australian government to help cover the cost of premiums for hospitals, extras, and ambulance cover policies. It’s offered to encourage Australians to sign on for private insurance to put less pressure on the public healthcare system.

The rebate that you receive as an investor connects to your income level. There’s also the Medicare Levy Surcharge tax. This is placed on people at a certain income level, but the tax is waived upon signing up for a private insurance policy. Again, this is about alleviating some of the pressure that is put on the public healthcare system.

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