Family private health insurance policies

Family health insurance policies are designed to provide cover for families of all types and sizes. One of the more significant factors you may want to take into account, is the age and lifestyle of your family members, as well as their medical history. Does anyone in your family have a chronic condition which may make them prone to certain illnesses or injuries?

Another factor to keep in mind is you and your partner’s plans for the future. If you are a growing family and are either thinking of, or have decided to have another child, then purchasing or upgrading to a hospital policy that includes pregnancy cover, or an extras policy that covers ante and/or postnatal treatment may be worth considering. It’s worth noting that there’s usually a waiting period of 12 months for pregnancy-related care, so if you’re planning on having a child you may want to take this into account. Gold-tier hospital policies are the only health insurance policies legally required to offer pregnancy cover by default, however some Silver or Silver Plus policies may also offer it.

You may also want to consider what kind of extras cover, if any, would be appropriate for your family. Looking at cover suited to a more established family, auxiliary health services such as general dental, speech therapy or podiatry may be covered depending on the policy.

If your kids are older (that is, teenagers or young adults) but still covered by your policy, you may want to weigh up whether a different level of extras cover could be suited to your situation, as their medical needs may change over time. For example, at some point they may require prescription glasses, physiotherapy or orthodontic work such as braces.

Private health insurance may be a worthwhile investment for those looking for greater peace of mind, choice and flexibility when it comes to their family’s health and wellbeing.

Some of the benefits of taking out a family health insurance policy may include:

Claiming money back on health services not covered by Medicare

A key benefit of private health insurance is that you will generally be able to get money back on health services that are not covered or only partially covered by Medicare. Without private health insurance, accessing health services such as dental, optical, and physiotherapy can be more expensive, potentially putting it out of reach for some families. However, it is important to compare the total ongoing costs of having health insurance (e.g. paying premiums) with the potential benefits your family may receive from it.

Not having to pay the Medicare Levy Surcharge

According to the ATO, Australian families who earn more than $180,000 a year and don’t have private hospital cover may have to pay the Medicare Levy Surcharge (MLS).

The MLS ranges from 1-1.5% of your family’s taxable income depending on family income. The MLS is charged on top of the 2% Medicare Levy but it doesn’t entitle you to any additional services.

Skipping public waiting lists

Having private health insurance may reduce the amount of time you and your family spend waiting to have elective surgeries.

Choice of doctor or surgeon

Depending on your choice of cover, private hospital insurance may give you the option of selecting your preferred doctor or surgeon to perform surgery or provide treatment when needed, even in a public hospital.

Private hospital rooms

Again depending on the specifics of your policy, you and your family members may be able to request a private room when admitted to hospital, subject to availability. However, it may be prudent to check what your policy covers before choosing a private room over a shared one, as not all hospital policies will cover the full cost of a private room.

As with any form of insurance, health insurance can offer a number of benefits to families but it’s not without its drawbacks. Here are some of the potentially negative aspects of health insurance that you may want to consider.

The cost

Private health insurance can be expensive, especially if it’s for a family rather than a single person. Canstar research shows that a family could pay over $4,000 a year in health insurance premiums, and potentially not need to claim any benefits, meaning you could be paying more for peace of mind than you are for actual medical services.

You may want to consider whether this peace of mind is worth the cost of family health insurance, especially considering that premiums usually increase each April.

Exclusions

Like other forms of insurance, health insurance policies have exclusions, and generally the less you pay for cover, the more exclusions there will be. So, if you do decide to take out health insurance, you may find that you can’t afford a policy that offers the cover you want. Alternatively, in the event of injury or illness, you may find that your health insurance doesn’t cover you for the treatment or medical assistance you require. This highlights the value of understanding what you – and are not – covered for through your health cover.

Waiting periods

There will usually be a waiting period – ranging from several months to more than a year depending on the treatment – that you will need to serve after you first take out health insurance. While there are some circumstances that allow you to waive or skip these waiting periods, you may find that you are unable to avoid them.

Out-of-pocket costs

Even with a comprehensive health insurance policy in place, a hospital stay could leave you with significant out-of-pocket costs in the form of your policy excess, and potentially a gap payment as well. While you may have paid more for the same treatment without health insurance, it may be worth considering if the ongoing cost of your health insurance premiums outweighs the amount you may save in out-of-pocket costs if injury or illness strikes.

While taking out health insurance may benefit your family in a number of ways, it is worth bearing in mind that health insurance is ultimately optional. Whether you decide health insurance is worth having will ultimately depend on factors including your family’s medical needs and financial circumstances.

It is also important to remember that all Australians have access to the public health system, which can provide subsidised medical treatment to you and your family, as well as possibly allowing you to access some services (such as GP visits) for free, depending on your circumstances.

The premium you pay for family health insurance will vary based on a number of factors, including:

• The level of cover you decide to take out
• The health fund you choose and the specific policy you acquire
• Whether you or your partner have ever held health insurance – if not, you may have to pay Lifetime Health Cover Loading (LHC) on top of your premiums, depending on your age

Your weekly premium may be reduced if your family qualifies for the Federal Government’s means-tested Private Health Insurance Rebate, which is a percentage reduction for eligible policyholders.

In 2021 new rules were introduced that allow health funds to increase the maximum age of dependents for private health insurance policies from 24 to 31 years, and remove the age limit for dependents with a disability. However, health funds can choose whether or not they choose to implement this change. Some providers have adopted the change while others haven’t, so it may be worth factoring this into your decision when comparing policies.

It could, for example, be the case that an insurance provider might cover damage caused by the flames of a fire, but not damage caused by smoke or by any water that was used to fight the fire.