The National Health Service in Australia is called Medicare. It is funded partly by way of the 1.5% Medicare Levy payable by the majority of income earning individuals, but mostly out of general taxation. Medicare provides free treatment for many ailments in public hospitals, and free/subsidised treatment by doctors and certain dental services. However, many types of treatment are not covered by Medicare - as detailed here.
As with many other free public health services around the globe, demand for "free" Medicare outstrips supply, the result being waiting lists for non-essential services (and often for the necessary ones too). This reality compels many to take out private health insurance so that they have the comfort of knowing that in general they can be treated in a private hospital, maybe in a hotel style room, and when it is convenient in the case of non essential treatments.
Private health care also provides some certainty when considering cost. For example, if you choose to be treated as a private patient in a public or private hospital Medicare will only pay 75% of what is called the "Schedule Fee" for the consultant doctor's attendance. You will be billed for accommodation, nursing care, medicines and certain other medical services such as physiotherapy. Private health cover helps to meet most if not all of these costs.
Similarly, private health cover can help on those occasions when you consult a doctor or have certain other out-of-hospital services. For out of hospital treatments and consultations Medibank will meet up to 85% of the Schedule Fee, or the Schedule Fee less a fixed amount (currently $52.50). Note also that some doctors and consultants will charge more than the Schedule Fee, in which case you have to meet that excess in its entirety.
The difference between the Schedule Fee and the amount Medibank will pay is referred to as the "gap", and some private health insurance policies will provide gap cover to help you meet the difference, which could clearly be significant in the event of a lengthy stay in hospital as a private patient. Click here for a list of private health insurers.
A few words about who is eligible for Medicare, as not everyone is, particularly if you are in Australia on a temporary basis. In brief, Medicare covers you if you are a citizen or permanent resident of Australia. Similarly, if you are in Australia as a visitor you may be covered if Australia has signed a Reciprocal Health Care Agreement with your country of residence. The UK, for example, is a party to this Agreement. Contact Medicare when you are in Australia on 132011, or click here to find out whether you are covered.
As a general rule, if you are moving to Australia permanently we strongly recommended that you apply for a Medicare card straightaway after you arrive, as this will help you in the event that you need treatment soon after your arrival in Australia. More details are at the Medicare website, and your nearest Medicare office can be found by clicking here.
Turning to private health cover. There are a number of providers of health cover within Australia, and a list including links can be found by clicking here. A few points you should be aware of:
- In an effort to encourage private health care by making it more affordable the Federal Government provides everyone taking out cover with a rebate equal to 30% of the premium. More often than not this rebate is claimed by reducing the premium paid to the health fund. Alternatively, the rebate can be claimed when submitting the annual tax return, or by way of a payment from a Medicare office.
- In an effort to encourage younger members of society to take out medical insurance the Federal Government has introduced what is called Lifetime Health Cover. In essence, if you are aged over 30 and take out health insurance after July 2000 you will be required to pay a loading on top of the basic premium equal to 2% for each year of your age over 30.
- When comparing policies watch out for:
- Waiting periods - the period of time you must wait from taking health cover before you are eligible to claim.
- Coverage when travelling outside Australia.
- Whether cover includes the "gap" (see above), and other ancillary services.
- The level of excess, whether "co-payments" (contributions to the cost of treatment) are required, and the financial limit on claims in any one year.
Don't forget to compare the cost of your policy on renewal each year.
And don't forget that if you hold a temporary visa you may not be eligible for Medicare and you are therefore potentially facing an "open cheque book" scenario, even if you are being sponsored by an Australian employer (for example under a 457 employer-sponsored visa). Private health insurance caps that risk and in our view is a must if you want financial certainty.
Go Matilda will be pleased to help you review your private health insurance options to help you obtain a competitive premium with a level of cover that fits your needs, and can review the position on the renewal date each year. Contact us and let us know you would like us to help.
Finally, if you want regular updates on information relating to health insurance register with us and tick the Personal Finance box.
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