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Health insurance is without a doubt a confusing subject. Wrapping out brains around the language, the rates, and premiums as well as what we should do when we’re hurt or ill is a bit challenging. Though it can be a daunting task, it’s important to educate yourself about this complicated industry and make the most out of what it offers. Let’s dispel some common myths around Australia’s private health insurance jungle.

1. We Don’t Need Private Health Insurance — We Have Medicare

The government might cover most medical services through the Medicare system, but it only covers a certain amount of the cost. Private health insurance gives you a greater choice over your hospital experience — including access to a private room in a private hospital as well as greater control over your choice of doctor and hospital. Without private insurance, you’ll also have to wait to get treatment in a public hospital — an average of 73 days for a hip replacement or 38 days for general surgery.

2. I’m Fit And Healthy

Being fit and healthy doesn’t make you invincible. There’s still the possibility that you’ll get injured, suffer an accident or have a medical emergency. It doesn’t hurt to be prepared for whatever situations may arise. Private health insurance can ease the financial burden you’ll be in where you need to have your tonsils removed, break an arm or leg, or getting ill. You can also access a range of non-hospital treatments like dental, optical, physiotherapy, chiropractic and remedial massage.

3. Private Health Insurance Is Too Expensive

Accidents can happen at any time which could leave you with considerable out-of-pocket expenses. And without an appropriate level of private health insurance, you’re required to pay a Medicare Levy Surcharge. Consider the impact of a health issue that can cause serious and ongoing financial harm versus the range of policies available at different price points. You just have to pick out a policy that matches your income and health needs accordingly.

4. The Costs Outweigh The Benefits

Some private health insurance providers offer more than just plain insurance. Take Medibank’s GymBetter as an example, it provides members with access to a nationwide network of gyms at discounted rates as well as 24/7 access to health advice. So, it pays to shop around to find the best value for your money.

5. There’s No Need To Update My Policy

As our lives change, our health needs also change. So, having the same policy might not be beneficial in the future. It’s worth reviewing your cover regularly to ensure you’re always covered. It’s also a worth checking out new products from time to time. After all, policies don’t adapt to our personal health needs, we’re the ones that need to make the decisions to switch.

As health insurance premiums are expected to hike up as a result of rising medical costs, you should brace yourself for a blow to the family budget. Policyholders may choose to switch providers for a better deal or abandon their cover altogether if their health funds continue to climb. But before you ditch your health cover, here are some tips to help reduce the impact on the price hike.

1. Pre-Pay And Save

Paying the annual premium upfront before the price hike which is on April 1, helps you beat the increase. Some health funds provide extra incentives for members who pay their premium a year in advance. These incentives could be a discount on the premium or a suspension of the increase. Opting for a direct debit premium may also help you negotiate a discount, which can help you pay on time and avoid late penalties.

2. Choose A Higher Excess

Most health funds allow you to increase your excess for a reduced premium, which means that you’ll need to pay more if you need to go to the hospital. While you may think you can save by dropping extras and increasing your restrictions, opting for a higher excess makes more sense in reducing your premium.

3. Change Your Co-Insurance Ratio

This is how much you’ll pay after you’ve met your deductible. A common ratio is 80/20, which means that after you pay your deductible toward health care expenses, your insurer pays 80% of the bill while you shoulder the 20%. Changing this ratio in order to pay more will mean a lower premium. Like choosing a higher excess, you have to weigh the costs versus the risks.

4. Explore Direct Primary Care

A growing number of primary care physicians are partnering with employers to deliver affordable preventive and primary care on a fixed-monthly membership model. Direct primary care, coupled with a high-deductible health insurance plan, can be an outstanding and relatively affordable solution for entrepreneurs and small businesses. A major drawback though is that it generally isn’t, on it’s own, a solution for the kind of catastrophic illness, like cancer, which leaves people bankrupt.

5. Trade Up Group Health Insurance Plans

If both you and your spouse have group health insurance plans available through work, figure out which one will cover both your needs at the lowest possible cost. This is a case to case basis though, for an individual family plan may offer a cheaper option for some people as opposed to group rates.

6. Find Out If You’re Entitled To A Corporate Or Restricted Fund

Talk to your employer and find out your options. Often, corporate or restricted fund members enjoy exclusive discounts and perks, including lower premiums for higher levels of cover or free gym membership. There’s also the possibility that you can join a fund that someone in your immediate family has access to.

Health insurance isn’t cheap so it’s a sensible idea to review your health insurance policy at least once a year. It’s crucial to know how to get the most value from your cover. Take a look at your private health cover to ensure you’re not spending more money than you need to especially as the end of the financial year approaches. Here are some tips to help you navigate the puzzling world of private health insurance at tax time.

1. Sticks And Carrots

To reduce the demand on the public system, the federal government encourages Australians to take up private health insurance through a “sticks and carrots” approach. The “carrot” is the Private Health Insurance Rebate, which makes private cover more affordable, while the “sticks” are the Medical Levy Surcharge (MLS) and Lifetime Health Cover (LHC) loading. MLS is an additional tax levied on those who don’t have private health insurance and earn more than $90,000 for singles or $180,000 for families and couples. LHC is a 2% loading payable on top of your premium for every year you’re aged over 31 and didn’t have private health insurance. LHC compounds, so better take out private health insurance before you reach 31 or you’ll pay at least 2% more if you’re 31 or older and wait until after tax time.

2. Only Hospital Cover Counts

The government only gives incentives to policy holders who have hospital cover. Which means that you will still be hit by the Medicare Levy Surcharge if you have an extras-only policy and earn more than $90,000 (singles) or $180,000 (families and couples).

3. Life Stage

Consult a private health insurance expert and discuss where you are in life and what your future plans are. Estimating your current and near-future requirements as well as your financial situation and budget will ensure you take out the right policy to cover your health needs at a price you can afford.

4. Cut The Fat

Think about the types of extras you’re likely to use. You don’t want to pay for something that you think you don’t require. If you’re not sure which extras to prioritise, it’s worth considering a flexible extras product that merge your separate extras limits into a single annual limit for you use across various services.