Private health insurance in Australia: Is it worth it in 2021?

“Price is what you pay. Value is what you get.”
~ The Oracle of Omaha

Image source: afndaily.com.au

Private health insurance in Australia
Australians are pressured to take out private health insurance by the time they turn 30 years old. If you do not have private health insurance by 1 July after your 31st birthday, you will have higher premiums later on when you do eventually take it out. I took mine out at 29 years of age, which entitled me to a 2% ‘youth’ discount. If you take out private health insurance between the ages of 18–25 you get a 10% youth discount (Cause that’s on the minds of 18–25 year olds!). A letter is sent to you around the time you turn 30 years old that tells you: Get it, or else…!

Once your taxable income is A$90,000+ per year, if you do not have private health insurance, you are made to pay an extra levy towards Medicare (the public health system). The youth discount is gone by the time you turn 41 years old. To the “40 is the new 30” crowd... Apparently not.

Relevant factors
I have had a health insurance policy with Medibank Private for about 1 year, 9 months. My policy covers hospital & extras cover. About me: 30 years old, male, single, no dependents, generally fit and healthy.

The product
I only took the bronze level because I’m a fool, but not a gold medal kind-of-fool. I pay A$116.50/month for the ‘Bronze Plus Progress Hospital and Essential Extras 60’ policy. Fancy name.

I took out this policy in April 2019 at the cost of $115.10/month. In 2020 it went up to $116.50/month. Private health insurance premiums — just like council rates, tax on tobacco products, and government spending — increase every year. In Australia, this occurs 1 April each year, ad infinitum.

I have bronze hospital cover and bronze extras. The hospital cover I cannot yet evaluate as I don’t ever get sick, and I’m never in hospital, ever! Not even during Covid! So, it’s only the extras that I can really comment on at this point in time. Therefore, this is not a comprehensive review, but just commentary on my experience with the ‘extras’.

Here’s what Bronze level gets you — ‘extras wise’:

Item : Limit covered per calendar year (1 Jan — 31 Dec)

General dental: $400
Optical items: $150
Alternative And Natural Therapies: $100
Physiotherapy And Chiropractic And Osteopathy (Combined Limit): $300

Max extras benefit (if used) =$950. My bronze limit policy only pays 100% back for optical expenses. As for the rest, it is just a percentage of the expense. With that in mind, to use all of the $950 extras benefit, it would involve constant visits to certain health service providers. I’ll expand more on this point below.

General dental
I had not gone to the dentist for over a decade. I did go in December 2020 and found out I got through that period kind of scot-free. I had two cavities that required two fillings.

With Medibank, my December 2020 comprehensive check-up (including X-rays, deep clean, etc) cost me —

Total cost $350
Medibank covered $121.10 (34.6%)
I paid $228.90 (65.4%)

Team effort.

I had a dental appointment just recently to get those two fillings. The total cost was —

Total cost $575
Medibank covered $159.20 (27.68%)
I paid $415.80 (72.32%)

Team effort.

If only I could have applied that $400 general dental limit towards this total cost. I wish I could choose: to pick a percentage, or use it all up with a costlier expense such as the $575. That way I would be $175 out of pocket and I would be able to use up ALL of my $400 general dental limit.

The dentist I went to was fantastic. Though, they were not one of these selected “Members’ Choice Advantage dentist” and so when I did go for the check-up in December 2020, I was still $228.90 out of pocket. A dentist is a dentist. Why favour some over others?

Optical items
I wear contact lenses. I pay about $67.50 every 3 months. That’s $270 in total for a year. After the $150 covered by the Bronze Plus Progress Hospital and Essential Extras 60, I only have to pay $120 of my post-taxed, post-private health premium money in order to have 20/20 vision. I like my 20/20 vision. This is of benefit to me.

Alternative And Natural Therapies
This includes remedial massage. Which, to me, is the most important. Though, with a limit of $100 per year, that’s hardly a happy ending! I went to my regular Thai massage place and had a remedial massage. Here’s what happened: I had a transcendental experience which leaves me in a nirvana-like haze. I pay $89 upfront. I lodge a manual claim over the app (with photo of receipt, etc). The claim gets approved and I am informed that Medibank will cover $37.80 (42.47%)

Total cost $89
Medibank covered $37.80 (42.47%)
I paid $51.20 (57.53%)

Team effort.

Physiotherapy And Chiropractic And Osteopathy (Combined Limit)
I have not used these services. With a $300 limit, perhaps I should. Though, it’s a percentage of the overall cost, so… I may only use these services if required, or out of curiosity. I’d prefer a higher massage limit instead.

In Summary
Watching A$116.50 [EDIT: now $101.65] disappear from my bank account every month bothers me. That’s the price I pay. In terms of value — what do I get? I have not experienced the hospital side of private health insurance, but in terms of the extras I feel there is “some” kind of value. I wish the option of either getting 100% back/or opting use a percentage of each limit was possible. That way it would be easier to use up the $950 of extras available. That would be value right there.

Conclusion
Private health insurance in Australia is probably a rort. I’m mildly dissatisfied with how the extras limits are applied. I do need to say that after looking at the numbers and taking into account that —

  1. over time your health is going to cost you a lot; and
  2. the human body tends to eventually have problems, fall apart and wither away (sooner of later)…

It’s worth having private health insurance to have options available when that time comes.

EDIT: After reviewing my private health insurance with Medibank, and by changing my income tier level, as well as increasing my excess amount, I was able to decrease my premium to A$101.65/month.

Disclaimer: The intent of this post is to inform and provide an honest opinion only. I do not own any shares in Medibank Private Limited (ASX.MPL) and am in no way affiliated with this company, other than being one of its members.

Sources:

Australian Financial News (accessed 12 January 2021)
https://afndaily.com.au/2019/12/30/2-million-dump-private-health-cover-as-prices-soar/

Medibank Private Health Insurance (accessed 12 January 2021) https://www.medibank.com.au/

Privatehealth.gov.au — Australian Health Insurance Information (accessed 12 January 2021)
https://www.privatehealth.gov.au/

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Reality is nonlinear.

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