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As we age we are more likely to experience illness and injury. This can make us an unattractive risk for insurers. If we have not had private health cover over the longer term it may prove too expensive for us to take up cover later in life. So what are the options for pensioners and the ageing?
Medicare – A great Australian success story
Despite the efforts of recent Australian Governments to undermine the universal healthcare system, Medicare, it remains the saving grace of the poor, elderly and infirm, as well as many average Australians. Unlike the appalling situation in America where people are discriminated against based on their insurance status, and even refused emergency care, access to Australian Medicare does not require private insurance. In addition, standards of care for Medicare patients are comparable with private practice, although waiting times may be longer. In fact, in Australia, many private doctors also work within the public system. (This is why the Government has had to legislate to force Australians to take up insurance. Why be a private patient and pay through the nose when the doctors are the same in the public system, and the equipment is generally better?).
Private health insurance
Private health insurance may still be attractive to some, however, and can provide older people with peace of mind as they age.
Companies to approach regarding health insurance policies for pensioners include:
- HCF
- HBA
NIB - Allianz
Rich versus poor pensioners – poor to pay more
However, with recent changes to the superannuation laws a few discrepancies have come to light. It seems people who must continue to work until they are 67 years old before qualifying for a Government pension will have to continue paying the Medicare levy after age 60. This contrasts with wealthier, self-funded pensioners who take a pension at age 60, and are no longer obligated to pay the surcharge. Both groups are likely to end up in the public health sector for treatment of more complex ailments as they age, even if the wealthier pensioners have private insurance.
Private health cover
Private health insurance cover is generally divided into hospital cover, general treatment cover (also known as ancillary or extras cover) and ambulance cover. If you plan to take out both hospital and general treatment cover, many insurers provide combined policies. Ambulance cover may be available separately, combined with other policies, or even covered by your State government.
Private health hospital treatment cover insures you against some or all of these additional costs of being a private patient in either a public or private hospital. It also allows you to choose your own doctor or specialist, and the timing for any treatments required.
As with any other insurance policy, you can choose comprehensive cover with higher premiums, or pay lower premiums for reduced cover. You can also reduce your premiums by opting to pay some of the costs through an excess or co-payment.
Some insurers also offer “gap cover” to cover some or all of the difference between the doctor's fee for services provided in hospital and the combined Medicare benefit and health insurance benefit. This may be more attractive to pensioner’s with limited financial resources to draw and who prefer to “play it safe” and pay along the way rather than if the need arises.
What’s not covered?
The health insurance policy you buy will have some limitations on the services it will pay for.
Limitations on hospital treatment might include:
- specific services that are not covered at all (known as “exclusions” – more exclusions may apply to older people),
- services that are covered to a limited extent, which means you will have greater out-of-pocket expenses (known as 'restrictions'),
- benefit limitation periods, which pay reduced benefits on one or more services for a set period of time after the waiting period, then pay full benefits after this period,
- cosmetic surgery and other hospital treatment for which Medicare will not pay a benefit (Medicare pays a benefit on all medical services necessary to maintain your health, but does not cover optional treatments such as elective cosmetic surgery. This type of surgery is not necessarily all about face lifts and so forth – and can catch some people out. Check the fine print).
Nearly all services covered under general treatment are only covered to a limited extent. There are various limits that may apply, for example, a limit per service, per year, or lifetime limits. Some services may not be covered at all.
Industry watcher Michael Wynne has provided his listed his insights on a university website that offers a great deal of information to pensioners and their families about the Australian health provisions and is worth a look.
In addition, the Department of Health and Ageing has a number of fact sheets and press releases that may be relevant to your decision to purchase private health insurance, as well as the tax and superannuation implications.