In a country of more than 23 million, around half of the Australian population have private health insurance. But why, you may ask.
All Australian residents have access to free public health services through Medicare, after all, so what causes such a large portion of Australians to turn to the private system, which is accessible through a health fund?
Here, we take a look at some of the reasons:
For added choice and control
People like to have options, and having private health insurance offers them the ability to gain extra control over their healthcare – such as their choice of doctor and the location of their treatment.
As explained by one health insurance customer in a recent article by The Conversation:
"As a private patient I can … choose my treating specialist and I can say I'm available on these days, how does that work for you, rather than sitting on the wait list. I mean, it costs out of pocket, but I am lucky enough to be in a position that cost isn't a huge barrier for me."
At certain stages in life, people find this added control a great asset. For example, those looking at having children will enjoy the benefits that come with a family health insurance plan.
To avoid the Medicare surcharge
Australia's tax system is designed to encourage those with financial stability to take out private health insurance, and in turn lessen the burden on the public system.
One of the ways they do this is through the Medicare levy surcharge, which comes in the form of a tax penalty up to 1.5 per cent of their annual earnings.
The first tier of eligibility comes for individuals earning between $88,001 and $102,000, or families bringing in between $176,001 to $204,000 per annum. Medicare users in this bracket will pay a 1 per cent penalty on their wages, with many wishing to avoid such an expense and instead use this money to go private.
For later in life
People between the ages of 60 and 79 are the most common users of private health insurance hospital benefits, The Conversation explained.
However, if someone decides to take out health insurance for the first time later on in life, they will need to pay a loading fee on top of their insurance premium. Lifetime health cover (LHC) determines what this equates to, and it could be as high as 70 per cent for people aged 65 and above.
This is because the LHC loading is a 2 per cent addition on top of health insurance premiums for anyone who is over the age of 30 when they first take out private health cover. Through LHC, the government aims to encourage people to consider their health needs early on in life to gain the benefits as they get older.
If you are considering private health insurance and would like to find a competitive deal, contact HICA on 1300 44 22 01 for the advice and support of an expert health insurance broker.