Policy holders are questioning the value of their private health insurance more and more and we think that is a great thing!

In the last 12 months, more than 500,000 policy holders have either ditched or downgraded their top-cover health insurance policies – and that’s got the government worried. Many are unhappy with their private health insurance and if people needed proof just look at the statistics. In response to increasing dissatisfaction with the price of health insurance, the government launched an online consumer survey on November 8.

So as it stands, is private health insurance actually worth the ever-rising costs? Since 2009, there’s been cumulative price rises of about 35 per cent. It’s getting very expensive to have private health insurance. Now is the time to ask yourself: “Why do I have it, and how’s it protecting me if something goes wrong?”

Taking out extras cover can be poor value if you’re not using it. Policyholders often end up paying more in premiums than they get back in claims throughout the course of the year. If you choose not to take out private health insurance, you’ll be covered by the public health system in an emergency – and in many cases you would end up there anyway even if you do have private health insurance. The real risk of not taking it out apply particularly for non-life threatening surgery. Many people as they get older need a knee or hip replacement or have heart problems. They would wait a long time on a public hospital waiting list.

We believe that the average Queensland family may be facing premiums of more than $4,100 a year or more. This is a massive amount of money! If you need care, quite often you will end up finding out your policy doesn’t cover the particular element of private hospital care.

Many people are choosing to squeeze down their cover, rather than dropping it altogether to save costs. If you choose not to take out private health insurance, you will need to factor in the tax implications. Private health insurance isn’t compulsory, but the Medicare levy surcharge might mean you pay more if you don’t have the cover. If you’re single and earn more than $90,000, or if you’re a family earning more than $180,000 – and neither you nor your dependents have cover – you’ll face a Medical levy surcharge of between 1 and 1.5 per cent of your income. For example, a single 26-year-old female earning $95,000 per annum can obtain basic cover for around $846 a year after applying all the rebates. It will be very basic cover, but without the cover the extra Medicare levy surcharge she’d pay is $950 a year. There’s also the private health insurance rebate to consider. If you’re under 65 and earning less than $90,000, for example, you’ll get a 27.82 per cent rebate for having private health insurance.

If you’re considering changing or dropping your cover, take the opportunity to get some advice from us as to how you can best manage your situation.