In Australia, we have the option to rely on either Medicare, the country’s public healthcare system, or opt for private health insurance. Both choices come with their own set of benefits and drawbacks, particularly from a financial standpoint.
Understanding each option can help you make informed decisions about your healthcare needs. Below, we look into the differences between Medicare and private health insurance, and how to fund medical expenses in a hurry.
What is Medicare?
Medicare is Australia’s public healthcare system, providing access to essential medical services and subsidising the cost of treatment for Australian citizens. One of the primary advantages of Medicare is its universality – it covers a wide range of medical services, including doctor visits, hospital treatments, and pharmaceuticals, ensuring equitable access to healthcare for all Australians.
Medicare provides essential healthcare services at little to no cost for most treatments. Cover is universal to Australian citizens and funded through taxes. Plus, Medicare covers the entire cost of services within the public hospital system or where providers bulk bill (usually this is for low income patients with a Health Care Card).
However, Medicare does have some limitations, and many people opt to take out private health insurance to access healthcare that goes beyond essential services. Medicare does not usually cover elective procedures or many non-essential allied health services. There may also be long waiting lists in the public health system, which may mean a delay in receiving diagnosis or treatment. There’s also limited choice of providers through the public health system.
Do you need private health insurance?
Private health insurance offers the option to access private healthcare services outside the public system. It covers a broader range of treatments and services, including elective surgeries, dental care, and other allied health services like physiotherapy and optical care.
Private health insurance can seem expensive, so it’s worth considering your options and comparing policies to get the cover you need. Some people may decide to ‘self-insure’ by saving up the money they would pay on a policy and using this to cover health costs.
With private health insurance you may benefit from choice of provider and usually this also means faster access to specialist care. With an approved provider, the total costs of your appointment, or a significant proportion of the cost. You can also have allied health costs covered, including things like physiotherapy, chiropractic, dental care, optical care or acupuncture.
One thing to consider when you take out private health insurance is any exclusions and waiting periods that apply to the cover. You can read through the policy and compare different levels of cover to identify what best suits your healthcare preferences or needs.
Choosing between Medicare v Private Health Insurance
The decision between relying on Medicare or taking out private health insurance is a personal choice. Young people, families and lower-income earners with relatively good health may find Medicare sufficient for their needs, choosing instead to save money and keep it aside to pay out of pocket if a medical treatment or procedure is required.
Those who enjoy sport and use physiotherapy regularly, manage back pain or simply want to preventatively manage their health might choose private health cover.
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Frequently asked questions
Is it worth getting private health insurance instead of paying the Medicare levy?
If you are single and earn over $93,000 (or a couple or family earning over $186,000), choosing private patient hospital cover may help you to minimise your tax due to not having to pay the Medicare Levy Surcharge.
What is the difference between Medicare and private healthcare?
Private health insurance can fill the gaps in Medicare’s coverage and give you more choice about your treatment. Medicare doesn’t cover the cost of ambulances, glasses/contact lenses or hearing aids. It also excludes optional therapies such as speech pathology, osteopathy and remedial massage.
What are 3 disadvantages of private health insurance?
The main drawback of private health insurance is that it can be very expensive and requires membership for a lengthy period before an expense can be covered.
It doesn’t always cover everything – often, private health insurance policies will only cover part of your treatment/procedure and depending on your type of coverage there can be excluded treatments.
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The information provided in this blog is of a general nature and is provided without considering your specific objectives, financial situation, or needs. It is intended for informational purposes only and should not be relied upon as financial, investment, or other professional advice.
Before making any financial decisions or taking action based on the information presented, you are strongly encouraged to assess its appropriateness in light of your individual circumstances. Red Tree Finance does not intend to provide personalised financial advice, and you should seek independent financial, legal, tax, and other relevant advice tailored to your unique situation.