Tuesday, March 29, 2011

I have Private Health Insurance .......... but for how long?

I haven’t always had private health insurance, not because I chose not to – but because I couldn’t afford to. Now that I can afford private health insurance, I’ve taken it up (as is ‘my duty’) but I am struggling to afford it.

Firstly I’m being penalised because I delayed signing up after I turned 30 (because of finances, due to injuries that prevented me from working.) I joined as soon as I could afford to.

It means that I have a 10-15% loading (penalty) because I delayed. So with every hike in insurance costs, I get a further 10-15% penalty.

Alright – so the government said everyone MUST be insured and if you’re not – we are going to penalize you.

What about a ‘reward’ if you stay signed up for 12+ months? Something like, alright we penalise you for the time it takes you to sign up for health insurance, BUT for every 12 months you stay joined, you get a 1-2% discount every year. Until you are back to the regular rates. You’d still be penalised but not at a rate that may eventually cause you to drop out of said health policy?

Let’s play pretends (with nice round figures)

M’ship length - - Pr Mnth $ - - - % Penalty - - - Total cost - - - Discount - - - Total
1yr - - - - - - - - - -$200 - - - - - - - 10% - - - - - - $220 - - - - - - - 1% - - - - - $218
2yrs - - - - - - - - - $210 - - - - - - - -10% - - - - - - $231 - - - - - - - - 2% - - - - -$226
3yrs - - - - - - - - - $220 - - - - - - - -10% - - - - - - $242 - - - - - - - - 3% - - - - - $235
4yrs - - - - - - - - - $230 - - - - - - - - 10% - - - - - -$253 - - - - - - - - 4% - - - - - $243
5yrs - - - - - - - - - $240 - - - - - - - - 10% - - - - - - $264 - - - - - - - - 5% - - - - - $251
6yrs - - - - - - - - - $250 - - - - - - - - 10% - - - - - - $275 - - - - - - - - 6% - - - - - $259
7yrs - - - - - - - - - $260 - - - - - - - - 10% - - - - - - $286 - - - - - - - - 7% - - - - - $266

So in 8-10 years, things would be back to normal and you might be enticed to stay in said health policy rather than dumping out because you can no longer afford to stay and pay both the yearly hikes and the penalty.

What say you? Are you being penalised the same as me – or don’t you have private insurance because you can’t afford to have it?

I’m beginning to wonder if $250 a month is really worth it – would I be better off putting that money in a high-interest earnings account, paying the 48% interest for having savings in the bank and use that if I need to?

Would love your thoughts.

Noting that I found this artical regarding lifetime health cover loading AKA LHC. There is no expections, no exclusions, and there is a further 2% levy if you fail to maintain your cover (even if due to financial hardship) NO EXEMPTIONS.


  1. If the money that goes into private health insurance was directed to the public health service, we would have a Rolls Royce health system. I pay insurance but it seems a waste as you are so much out of pocket when treated as a private patient in a hospital. The sums always work out that you are better investing the money than paying health insurance if you are relatively healthy, but you have to be disciplined to take on such a commitment.

  2. and Andrew that is the thing - discipline - few people are disciplined enough to do it.
    We would have a rolls royce system IF things were done the way they were meant to be, but it is never the case :(
    I do beleive in insurance, but in saying that should I really be penalised for not having it when I couldn't afford it and then taking it out when I could and trying to do the right thing?
    what about that that didn;t have insurance for house asnd contents during the recent natural disasters - should they be punished in the same fashion?
    Another question for insurance nazi's

  3. I have mid level health insurance, about $75 a month. I got it just before the cut off point of turning 30. I was pressured into getting it because I kept getting told "You have a chronic health condition you need it more than anyone" Pffft. I've had fantastic treatment in the public system. I've had countless procedures, two major surgeries and every 8 weeks I have a transfusion all with no out of pocket expense. If I use my health insurance, I'll be out of pocket for thousands of dollars every year, with no guarantee that I'd get seen any quicker or receive a better service. As it is, the ratio of nurses to patients is higher in public than in private.
    The only real benefit is the extra's cover. The dental and chiro savings alone have more than paid for it.

  4. I agree with the extras (to a certain degree) can't say I've had anywhere near my money back, or even 50%.
    The public health system from my personal experience is under-staffed, with little knowledge and certainly no follow up care. (look at my leg)
    So I'm in two minds about it all - but as I;m being penalised the longer I DON'T have it - I'm not left with much choice :(
    thanks for the comments - certainly makes for some interesting insights from a real users point of view.

  5. Health Insurance - Yes if you can afford it then it you assist others by taking pressure off the public system so it has its place. What gets me fired up is that they seek raises every year and use the same line - cost of health care is rising and the ageing population. Our insurance Co spends cash on emailing newsletters, competitions, giveaways and fancy glossy publications - waste of fund members money. What is needed is a no claim discount similar to car insurance, if you don't claim in a 12 month period then offer members a discount. If you want to encourage more people to jump on board, give them an incentive to. Even the simple basic package is out of reach of most families today. The health insurance industry like all insurance industries need a good look at. The 30% rebate helps, but it still puts health insurance out of reach to struggling families. I'll be shopping around before next renewal comes - loyalty means nothing when you can save dollars on the family budget !

  6. I don't believe in it anymore. I used to have it but I will never get it again. I can't afford it anyway and I have so many pre-exising conditions they'd charge me a fortune.

    My last (major) surgery was at a public hospital and it was exceptional. Good service, good outcomes and I didn't pay a cent. If I had insurance I would have been out of pocket a couple of thousand. Which is ridiculous. So I choose to wait and go public and I am happy with my choice.

  7. John - unlike normal insurance policies where competition is rampant and rife (thank-you) Health insurance seems the absolute opposite - between the insurance companies and the government penalties – it seems as though you aren’t meant to have health insurance.
    It’s all wrong –
    Don’t punish latecomers – be thankful they joined
    Do keep hiking the rates up – some people can’t afford it
    Look at the cost of hospital admissions, public system NO out of pocket expenses, private admissions and you get hit to the back 9 for fees.

    AND…….. why must WE be involved in the 30% rebate – why must it be given/levied up EACH policy holder – why not just give that money to the funds for them to reduce overall premiums?

    I think this will really bite EVERY government in the butt and I see America on the horizon.

  8. Fen – see that is where the formula is wrong – IF you have private health insurance WHY are you paying for further out of pocket expenses?
    If you go public NOT ONE BRASS RAZOO from your pocket. Sure waiting period – but if you struggle to afford private health insurance, what really in the inconvenience?
    I’m beginning to think I’m stupid for having health insurance. If I’m going to be punished by the health funds AND the government, why not just avoid the punishment and drop the private health insurance?
    Seems like I might be onto something here

  9. I used to have this argument with myself all the time, until I had severe stomach pains (amongst other symptoms), and left work to go straight to the doctors. The doctor couldn't tell me what it was, but the pain was subsiding. He said it could be appendix, and he recommended that I went down to the hospital.

    When I mentioned I had private health, he said I could go down to the public hospital, but would be very low priority (pain was subsiding remember), but I could go to private outpatients... for a fee.

    I went to the private hospital, was very embarrassed as they're giving me an X-Ray and Ultrasound as I've got no pain at all by this stage, and they found a gall stone. 4 weeks later not only had a seen a specialist, but my gall bladder had been removed and I was being discharged from hospital after an overnight stay! And all because I had private health insurance.

    Some people at work got quite jealous, one said her daughter has had nasty gall stones for about 2 years (I think!) and is on a waiting list, but her GP has said the only way she'll get them out is if she goes to emergency when she's having an attack and they'll take them out then and there... if she's lucky. And this was my first attack!

    Yes, this still put me out of pocket about $1200, but my private health fund paid over $18,000! The main reason why I had it removed so quickly though, and after only my first attack was partly because gall stones runs in my family, and 6 weeks after surgery when I was climbing the Inca Trail I had peace of mind that I would get another attack where the only way out is to walk or be carried!

    Maybe my story is unusual, or maybe not. But after this I'll happily pay knowing that if something serious happens I'll be covered by the public system, and for everything else my private insurance covers me.

  10. We've had PHI for about 10 years now, and to be honest it's mainly because of the kids. 2 private hospital caesarian births would have taken a big chunk out of that. But in the scheme of things, we were only out of pocket about $1000 each time. Worth every cent in our opinion for our own surgeon and peace of mind.

    A few years ago I did the sums to see whether your theory of a high interest account would work. If you could guarantee you were never going to need to use the money, then it's worth it. But with 3 small children, it would only take one or two of them to need glasses or braces and your bank account wouldn't be looking so healthy.

    I'm not totally thrilled about it, but we'll be keeping it for now.