Is health insurance for taxes a scam?

Must know

  • Basic health insurance policies are touted as the best for taxes, but they are so limited that you will hardly ever be able to use them.
  • Bronze health insurance is more advantageous because it covers certain serious illnesses
  • Bronze health insurance costs just a few dollars more than basic health insurance

In early 2019, Australia introduced a tiered system of hospital coverage with health insurance policies falling into one of four main categories: Basic, Bronze, Silver or Gold.

If you want to purchase health insurance for financial reasons (because you earn more than $ 90,000 per year or to avoid getting caught up in loading up on lifetime health coverage, for example), a basic policy is presented. as the way forward. It will save you from having to pay additional taxes and it will not cost you a fortune.

Sounds simple, right? Well, not quite.

These basic policies cover you in the event of an accident, but in the event of a serious accident, you will likely be taken by ambulance to the nearest public hospital and be fully covered by Medicare for free.

And they’re just a few dollars less than Bronze policies, which cover you for serious illnesses like some cancer and stroke surgeries, and can come in handy if you get sick.

Since you will very rarely be able to use basic policies (and they are too expensive for what you get for health coverage), this is called junk insurance.

CHOICE tip: All you need is hospital insurance to avoid taxes and charges. Extras insurance, which helps cover the cost of a dentist, for example, is not necessary.

What is junk insurance?

Junk insurance is insurance that may seem attractive at a glance, but ultimately pays little value.

Examples include funeral insurance which charges more premiums than your funeral will ever cost, or disability insurance which has such a harsh definition of “disability” that many truly disabled people are not covered by it.

While unwanted health insurance serves only one purpose – to save on taxes – it does not do what health insurance is really designed to do, which is to cover your treatment when you are sick and relieve the pressure. on public hospitals.

Why are basic policies junk insurance?

The basic policies are accident policies: they cover you in the event of an accident. If you are young and in good health, accident cover makes sense since it gives you the option of using emergency services in private hospitals.

But, if you check the fine print, you might get less coverage than you think because these policies have time limits and conditions.

For example, after a sports accident, you might freeze the injury first and then go to bed hoping things get better. Then, when you go to the hospital the next day, you may have exceeded the 24-hour time limit imposed by some policies and therefore you are no longer covered.

Emergency treatment in a public hospital is not covered by health insurance, it is covered by Medicare

If you break your leg and pins and screws are inserted to allow it to heal, you might not be covered if they are removed six months later, as only the initial treatment is covered by some policies.

And if you’re taken to a public hospital and treated in the emergency room without ever having been hospitalized, you won’t be covered by health insurance, you will be covered by Medicare.

It is useful to remember that many accidents are already covered by other insurance, such as work cover in the event of an accident at work or CTP insurance in the event of a car accident.

What else do basic health insurance policies cover?

Basic policies generally provide emergency ambulance coverage. While it can be helpful, there are much cheaper ways to get ambulance coverage. Read our advice on ambulance coverage.

The government also requires that all hospital insurance policies cover rehabilitation, palliative care and psychiatric care in a public hospital. But you can already go to a public hospital with Medicare that covers you for free.

As a private patient in a public hospital, you can get a private room if it is available, as it is allocated based on medical reasons. And you can choose your own doctor in theory, but often you’ll just have to use the one that’s available, especially in an emergency.

Adverse health insurance from Medibank, Bupa and HCF

The most restrictive basic accident policy offered by the deep sea is:

HCF Accident only Basic

It covers you if you are hospitalized through the accident and emergency service within 24 hours of the accident. Coverage is limited to immediate treatment, so follow-up treatment after discharge is not covered.

Medibank and Bupa accident policies also have conditions and deadlines:

Medibank Basic Accident and Ambulance

This policy covers you for treatment after an accident for 12 months, but you must see a doctor within seven days of the accident.

Bupa Accident Only Base Hospital

You are covered for treatment after an accident for 180 days, but you must see a doctor within three days of the accident.

NIB and HBF do not offer basic accident policies.

What health insurance should you buy?

Bronze health insurance is good for tax purposes and gives you good value for money.

Bronze policies cover 18 categories of services in private hospitals, giving you additional coverage for:

  • fractures and joint reconstructions
  • endoscopy, colonoscopy and gallstone removal
  • breast, skin and prostate cancer surgery
  • head trauma, stroke, epilepsy and Parkinson’s disease.

Learn more about Bronze and Bronze Plus policy coverage.

How much does Bronze health insurance cost?

Bronze fonts aren’t much more expensive than Basic fonts, but they offer a lot better value for money. Here’s a breakdown of the cost per month by state:

Australian Capital Territory and New South Wales

Base policies range from: $ 100 to 108 per month

Bronze policies start at: $ 109

Victoria

Base policies range from: $ 100 to $ 114 per month

Bronze policies start at: $ 118

Queensland

Base policies range from: $ 98 to $ 113 per month

Bronze policies start at: $ 118

Western Australia

Base policies range from: $ 76 to $ 86 per month

Bronze policies start at: $ 87

South australia

Base policies range from: $ 93 to $ 110

Bronze policies start at: $ 113

Tasmania

Base policies range from: $ 99 to $ 114

Bronze policies start at: $ 109

North territory

Base policies range from: $ 38 to $ 67

Bronze policies start at: $ 54

Note: All premiums are monthly for singles without health insurance reimbursement.

Source: data.gov.au, June 2021

Do I have to pay more for a Basic policy with a reduced deductible?

The more expensive basic policies have a deductible of $ 500 per person per year, the cheapest have a deductible of $ 750 per person per year. The deductible is what you pay if you are admitted to the hospital.

You are unlikely to use the policy, so it is unlikely that you will pay for it. Also, if you are admitted by the emergency department to a public hospital and use your private health insurance, they often do not charge you the deductible. So paying more for a lower deductible is a bad idea.

If you decide to purchase basic insurance, go for a deductible of $ 750 per person, which is the highest deductible allowed for policies that exempt you from paying additional taxes (Medicare surcharge).


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About Linda Stewart

Linda Stewart

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