Two friends had breast cancer: One had private health cover, one didn’t.

Nicole discovered she had breast cancer – and was grateful she hadn't dropped her private health cover. (Source: Getty/Supplied)

• Read Nicole's breast cancer diagnosis here: 'I have breast cancer: If I trusted a mammogram, I'd be slowly dying'

For many, the private health insurance premium hike – though we know it hits us every April – is straight-up painful this year.

At 2.74 per cent on average, it’s the lowest for 20 years but it’s also the second hike in six months. The upwards adjustment, of 2.92 per cent, was delayed in 2020 as millions of Aussies struggled under the impact of the coronavirus crisis.

Indeed, tens of thousands dumped their cover last year.

Well, I for one, am damn grateful I didn’t. Already this year, it has probably saved my life.

Here’s what happened, as well as the four other reasons I believe you should keep, or get cover.

1. It can be a life saver

Firstly, if things go wrong, private health is not about the bottom-line cost. It’s about the opportunity cost. Which means what it may cost you if you don’t have it. And this could extend all the way to your life.

On January 21, I was diagnosed with breast cancer. Six weeks later, after a double mastectomy and simultaneous reconstruction, thanks to my private cover, I was cancer-clear.

Thankfully, my type of tumour didn’t require chemotherapy. My surgery choice meant I also avoided radiation and possibly 10 years of hormone blockers. And most importantly to me, all risk of recurrence.

Contrast that with my dear, uninsured friend who found a malignant lump at age 32.

…who, though her every instinct screamed mastectomy, in the public hospital system was only allowed a lumpectomy (she needed radiation too).

…who five years later contracted a different cancer in that same breast she’d wanted removed (this time, she had to have not just radiation but also chemo). And who desperately wanted a double mastectomy this time. She was offered only a single, with NO reconstruction.

…who at the time of my surgery, was desperately awaiting pathology on a lump she’d found in her remaining breast. Mercifully, this one is not malignant.

… who, eight years after her first diagnosis, is still awaiting her spot for reconstruction from her first mastectomy, as well as her second mastectomy and reconstruction.

…who heroically wanted me to share her very different and harrowing public hospital experience to my private cover one.

But the situation doesn’t even need to be life-threatening. Say you need a knee operation and work in a physical job. The public hospital wait might be six months you can ill-afford.

With private health, you’ll get in far quicker, with the doctor of your choice and, crucially, be back earning fast.

Sure, private cover is expensive, but can you afford to dump it? I’ve long written that you can’t. And that’s now been starkly played out, personally, for me.

Here are the other four, financial reasons to keep cover.

2. Government ‘carrots’

The government has built several ‘carrots’ and ‘sticks’ into the system, to ‘encourage’ more people into private hospitals and take the strain off the public system.

The first ‘stick’ stick is the Medicare Levy Surcharge: a tax penalty on people who don’t have private hospital cover but are higher earners. The crucial income thresholds are $90,000 if you are a single and $180,000 if you are a couple.

And the surcharge is up to 1.5 percent of your taxable income.

This would pay for decent cover. So it’s a no-brainer to buy it instead.

Which brings me to the financial ‘carrot’.

3. Tax reasons

Private health insurance is also tax deductible.

You actually get government help to pay the premiums, on incomes all the way up to $140,000 for singles and $280,000 for couples.

This help is up to an approximately 25 per cent rebate on premiums, which you usually pay net of this. So you don’t even have to find the money up front.

And there’s a further ‘stick’ but also a recent concession for young people.

4. Young person incentive

January 1 changes mean that adult children who live at home can now stay on their parents’ policy until age 31. This is in recognition of the fact many of the jobs that evaporated during our various lockdowns, and subsequently, are traditionally held by young people. So they may no longer be able to afford to move out.

This is a big free kick. It also takes adult children right to the age where the government applies that ‘stick’ to get them covered privately: for every year you delay taking out insurance beyond 31, premiums increase by 2 per cent (for the next 10 years).

The idea, of course, is to get more younger, healthier and cheaper people into the system to help subsidise the older, sicker and costlier ones.

To avoid paying extra, you must take out cover by 1 July following your 31st birthday.

5. The beauty of extras

There is also one further highly unknown and underappreciated financial incentive. If you take up extras cover as well, you might be able to claim enough to completely cover your premiums for the year. I do.

My tricks include:

• Take up the free usually 6-monthly dental checks and cleans, and annual x-rays to save perhaps $1600 a year.

• See if your policy covers kids’ swimming lessons, often another $400.

• Sometimes in the same benefit bucket as swimming lessons is gym membership. So, once your little ones are big, you could get a $400 workout subsidy.

• Though the government has removed some alternative therapies from policies, it is still possible to claim group physiotherapy. So subsidised rehabilitation costs, effectively targeted exercise, if you’re injured.

• Then there is treatment itself, everything from remedial massage to osteopathy.

• And if you are a family of glasses wearers, you should be able to claim a free pair for each member every two years.

If your fund is not so generous, a switch could really save you. And know that if you’ve already served waiting periods, rules designed to encourage competition mean you do not have to wait again for hospital cover and, depending on the insurer, for extras too (pre-existing conditions will be a different story).

By clever claiming on every possible extra, my private health has effectively been entirely free.

And regardless, for me, it’s just proved priceless.

Can you afford to drop cover?

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