What are the disadvantages of private health insurance in Australia?

Private health insurance is designed to provide Australians with more choice in health care. You can select your doctor, skip the long public hospital waiting lists, and even receive extras such as dental and physio. But despite all the benefits of private health insurance, it has some serious disadvantages as well. As a matter of fact, many people are surprised to discover that it’s not always convenient or cheaper than you might have thought.

Let’s have a closer look at the most prevalent disadvantages of private health insurance in Australia.

1. It’s Typically Costly

One of the first things you’ll probably find about private health insurance is the price tag. Monthly payments can be costly, particularly for families or individuals seeking additional degrees of cover. Even entry-level hospital cover is not cheap, and the more you need to be covered, the higher your bill will be.

Elderly people are compelled to pay still higher premium because of age loading, where additional premiums are levied if they didn’t purchase insurance prior to the age of 31. And despite the fact that government rebates do some good, they might not be adequate to make insurance look cost-effective.

2. You Still Have to Pay Out of Pocket

Most people think that private insurance will cover it all. That is not the way it is, however. There is typically a gap between how much your insurance covers and how much a doctor or hospital charges you.

For example, if your surgeon charges $3,000 and your insurance only covers $2,000, you’ll have to pay the rest. These surprise fees can make people feel like they’re paying twice — once in premiums and again at the hospital.

3. Waiting Periods Can Be Long

Even once you purchase a policy, you can’t normally use it immediately. Health funds have waiting times for almost all treatments. Say you are expecting a baby – you will probably be required to wait 12 months before your policy will subsidize any treatment for maternity.

Pre-existing conditions also come with a 12-month waiting period. And optional extras such as dental or optical can range from two to twelve months depending on the treatment.

4. Not All Treatment Is Covered

Insurance doesn’t mean you’re covered for all kinds of treatment. Policies vary about what they will cover. Some only pay for routine hospital stays, some refuse to pay for surgery or specialist consultations you might require.

Extras cover is another aspect which can be disappointing to individuals. Although dental, physio, and optical are covered, your fund will rarely pay for such services. You may receive $400 annually only for dental work, and all the rest over that is up to you.

5. It Can Be Confusing

There are numerous health insurance plans in Australia, and they have various names, levels, and benefits. Even if you believe that you comprehend your policy, the fine print contains much more significant information.

It is simple to purchase a policy believing that it covers particular specialists or surgeons, only to later realize that it does not. The majority of individuals do not understand what they are paying for, and once they need to utilize their cover, they get frustrated. 

6. Limited Choice of Providers

There are also some medical funds with arrangements with specific doctors, dentists, or clinics. They are referred to as preferred providers. If you visit them, your benefits will normally be greater. If you go outside their network, however, you may get a smaller rebate or even nothing.

This can be a issue if your regular doctor or specialist is not covered by your health fund. You change doctors or you pay more, defeating the insurance purpose in the first place.

7. You Might Not Need It

For healthy and young individuals who do not visit a doctor or hospital very often, private health insurance is not going to be worth the expense. Public hospitals have very good emergency care for free. So, if you are healthy and young, you may find yourself paying for something you do not even use.

Even when you have extras cover, the benefit may be restricted. For instance, if you visit the dentist annually and have your eyes examined biennially, you may not make enough claims to justify your monthly premiums.

8. Rolling Over Funds Is a Hassle

You can switch health funds at any time, but it is frustrating to do so. If your new policy isn’t as good as the previous one, you will likely find that you end up waiting once more for everything that wasn’t covered previously.

You also have to ensure that you are comparing policies properly. The most affordable one is not necessarily the best choice for you. Making a mistake when you change can leave you without cover when you need it the most.

9. Policy Reforms and Changes Cause Confusion

Private healthcare insurance regulations tend to change across the board. There have been recent reforms that added categories such as Gold, Silver, Bronze, and Basic to simplify things. But these categories are still confusing in real-life terms. All Silver policies are not created equal, and Basic cover may exclude essential treatments altogether.

Medicare Levy Surcharge caps and private health rebates also vary annually. This can impact whether it is more cost-effective to purchase insurance or pay the additional tax. It can be a nuisance for busy individuals to keep track of all this.

10. You May Feel Manipulated into Purchasing It

Others don’t even need private health insurance but purchase it anyway so they won’t have to pay an extra tax. If you make above a certain amount and don’t have private hospital cover, the government makes you pay a surcharge on your tax. This causes some people to purchase the most basic policy so they won’t have to pay the fine, even if the policy isn’t what they need.

This is not a highly realistic solution and has the tendency to get people holding on to policies that do not give them real value, just to save them further cost.

In Summary

Private health insurance in Australia is not a universal solution. While it does offer more options and shorter wait times for some, it also comes with high costs, confusing policies, and limited coverage in some cases. Before signing up, it’s important to understand what you’re paying for and whether it really fits your health needs.
Always read the fine print and inquire if the benefits are appropriate for your lifestyle. Oftentimes the healthiest option is not making payments on things that you do not need, even when looking for a skin check near me.