Health Insurance for Young Adults - Do You Need It?

During your twenties you will probably experience your first taste of financial freedom. It could be a good time to take out health cover as you start your career and possibly move out of home. Here’s what you need to know.

Are you too old to keep being covered by your parents’ health insurance? Being in your twenties usually means becoming more independent and kick-starting your career. Health insurance may not be front of mind – but it could be worth taking the time to consider your options during this important time in your life.

Why do young adults need health insurance?

Generally, you’ll no longer be covered by your parents’ family policy when you turn 25 years old, or earlier (18 to 21 years old) if you stop full-time study or graduate, get a full-time job, or get married. Check with your parents’ health insurer for details, as all policies differ slightly.

Due to several government incentives like the Lifetime Health Cover loading and the Private Health Rebate, your twenties can be a prime time to take out a basic level of private health cover if it suits your needs to do so.

You will probably have to choose a private health insurance policy of your own, keeping in mind your circumstances change rapidly throughout your twenties as you transition from student or trainee to fully independent adult. So how do you go about choosing something as complex as health insurance?

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Am I still covered by my parents’ health insurance?

It depends how old you are and what the terms and conditions of your parents’ health insurance are. If you are a full-time student and aged 25 or younger, you may still be covered under your parents’ health insurance policy.

Generally, to be covered for health insurance under your parents’ policy, you need to be:

• Not married or in a de facto relationship
• Studying in a full-time approved tertiary course
• Aged 25 years old or younger (note that some funds impose a lower age limit)
• Be at least partially financially dependent on your parents

What if I’m not studying?

If you’re not currently studying, then most funds will remove you from your parents’ policy between the ages of 18 and 21 years old. As the rules can differ between funds, it’s always important to check with your insurer.

I’m almost 25 or finishing my studies – what should I do?

If you are approaching the point where you will no longer be covered under your parents’ health insurance policy, aand you would like to remain covered, you may want to shop around for replacement cover.

Some funds may waive waiting periods if you get a new policy in place within 30 days or so of exiting your parent’s policy. Since waiting periods can be up to 12 months for some conditions, it’ could be worth avoiding that if you can.

The cost of health insurance for young adults

If you’re still covered by your parent’s policy, then you may not be paying for anything for that coverage. If you decide to pay your own way and get your own health insurance policy, then the table below shows the average annual premiums for hospital and extras policies for young people.

Bear in mind that ‘young’ in our Star Ratings Methodology refers to anyone under the age of 35.

Based on packaged cover policies considered for 2017 Canstar Health Insurance Star Ratings. Premiums include Base Tier Australian Government Rebate of 25.934%. “Mature” profile only includes products that include cover for cardiac and hip/knee replacements. “Established” profile only includes products that include cover for cardiac.

Understanding the types of health insurance

It helps to start with a clear understanding of the two levels of coverage – hospital cover and extras cover (also known as Ancillary Cover).

Why young adults might want to consider hospital cover

Teenagers and young adults are statistically the most likely age group to end up in hospital. The AIHW reported that 27.5% of people who visited the emergency department in 2015-16 were aged 15-34 years old. With this in mind, cover for ambulance transport services and hospital cover could be considered pretty important.

With hospital cover, you may get to choose what doctor treats you at the particular hospital recommended by your health fund, and depending on the situation you may have added flexibility on the timing of your surgery or treatment.

For non-emergency conditions like tonsillitis that puts you out of action for a few weeks, having private cover can mean that tonsil removal happens months or even years earlier than it would in the public system.

Hospital cover is also helpful if you require specialist treatment after, say, a stint in the emergency department at a hospital. Medicare may cover you for your initial treatment while admitted, but if you have ongoing specialist treatment such as rehabilitation, you may be out of pocket without health insurance.

Generally, once admitted to a hospital for a procedure, the cost of your treatment would be partly covered by your health fund. This includes intensive care, theatre and accommodation costs, doctors’ fees and other medical costs, such as drugs and dressings, associated with your treatment.

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Should young adults consider extras cover?

Extras cover is the component of health insurance that covers you for out-of-hospital medical care. It cover some of the non-hospital treatment costs what Medicare doesn’t, such as dental treatment, glasses, physiotherapy, chiropractic, psychology and podiatry (feet).

For example, with major dental cover, you can get part of the cost of having your wisdom teeth removed paid by your insurance; with optical cover, you could get help to pay for reading glasses; and with psychology cover, you could get help to cover the cost of counselling sessions with a psychologist. If you were unlucky enough to be in an accident, physiotherapy or chiropractic cover could help you pay for your rehabilitation.

Exactly what you’re covered for and what your annual claim limit will be varies from policy to policy, so it’s worth taking a close look at the extras inclusions and exclusions.

Some health funds also offer sign-up incentives including gym memberships, health and wellness programs, recipes, health guides, discounts, and more.

Should I purchase policies separately or as a bundle?

Hospital cover and extras cover can be purchased separately, but some people opt for two-in-one hospital and extras packaged cover.

Of course, everyone’s personal situation is different and what works for one may not work for another. It is simply a case of honing in on what you believe is of value to you now and down the track.

How do I know what health insurance to get?

If you’re a young person or couple, there are a few factors that you will need to consider when looking at health insurance.

The cost

Probably the most important criterion for your insurance premium is also the most obvious: Can you afford it?

Depending on your situation, you may be able to afford a very different level of health insurance cover. If you’re fresh out of university and not far into your first graduate job, you’ll probably only go for the most basic hospital cover. On the other hand, if you have been working in your field for several years, your earnings may be enough for you to take out a more comprehensive hospital and extras packaged plan.

Keep in mind that down the track, government policies like the Lifetime Health Cover loading and the Private Health Rebate are designed to encourage you to have private health insurance if you can afford it. It can be more expensive later on in your 30s and 40s if you decide not to have private health insurance now.

How active your lifestyle is

How active a person you are is another big factor – after all, the more strain your body goes through, the more likely you are to get sick or injured.

If you work in a physically demanding job or you work outside, or you play a lot of sports and love to go adventuring, you may benefit from having physio and chiropractic cover.

If you work in a typical office environment and you’re a bit of a couch potato at home, you may simply need a bit of optical cover for glasses or a bit of physio cover for RSI after working at the computer all day.

Do keep in mind, though, that no matter what lifestyle you lead, you never know what might happen!

Relationship status

We may not like being defined by your relationship status, but it can affect your health insurance needs. If you and your significant other are thinking about starting a family, then it may be worth planning for that in your health cover – for example, by including obstetrics in your policy, bearing in mind that waiting periods typically apply for this.

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