Private health insurance
Medical care in Australia is provided by medical practitioners who either charge for services on an individual fee-for-service basis, or are salaried. Public hospitals generally employ salaried staff whereas out-of-hospital medical care and private hospitals utilise the services of private, fee-for-service practitioners.
Medicare was set up in 1984 to ensure all Australians were able to access the medical treatment they required through the public health system. However, with many medical services not covered by Medicare, fee-for-service care could turn out to be very expensive with costs running into many thousands of dollars.
The role of private health insurance is to cover these additional costs associated with fee-for-service care.
The “Gap”
When fee-for-service care is provided in a hospital, the difference between the doctor’s fee, and the combined benefits supplied by Medicare and the patient’s health insurance, is called the gap. This amount must be paid by the patient.
Since 1995, the Federal Government has been trying to minimise medical expenses paid out of a patient’s own pocket. Under the present provisions, private health insurance funds are allowed to offer:
- up to 100% of charges incurred by patients in public or private hospitals for services such as theatre fees and accommodation;
- up to 25% of the Medical Benefits Schedule (MBS) fee to cover the gap for medical services provided for in-hospital services;
- medical cover beyond that 25% if an existing contract is in place between the private health insurance fund and medical practitioner concerned; and
- cover for ancillary services such as dentistry, optical and physiotherapy.
To reduce the likelihood of having to pay a gap for medical treatment, ask your private health insurance fund what types of gap cover it offers. You can still choose the doctor you wish to treat you, however out-of-pocket expenses could still be incurred if your health insurance fund does not have an agreement with the doctor concerned.
Most private health insurance funds will include gap cover on their hospital cover for no extra cost.
Lifetime Health Cover
Lifetime Health Cover started in July 2000 with the intention of encouraging people to take out private health cover earlier in life. When customers arrange hospital cover at a younger age, and maintain that cover, private health insurance funds are able to charge lower premiums than those charged to people taking out hospital cover later in life.
For every year a person delays taking out hospital cover, over the age of 30, a loading of 2% is added to their premium, to a maximum of 70%.
The ultimate goal of the Lifetime Health Cover government initiative is to improve the health profile of all private health insurance members and make premiums affordable for a wider variety of Australians. while offering more choices and a more sustainable balance between public and private health care.