Yahoo Finance How private health insurance ‘saved’ me and 3 secrets to help you save money
Health insurance premiums are on the rise, but there are ways to save.
This is part three of a three-part series on insider tips and tricks to combat the escalating cost of insurance. Read part one on how to cut the cost of your home and contents insurance, and part two on a strategy for cheaper car insurance.
You might think your biggest asset is your house, but it’s not, it’s actually your ongoing ability to earn an income.
What would you do if you weren’t able to work due to an accident or injury? And, if you needed it, how would you afford rapid medical treatment? The crucial word is ‘rapid’ because Australia’s strained public hospital system might mean you sit on a waiting list (possibly unable to work) for a long time. Or, far more grimly, it might not get to you in time.
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I want to share what happened to me when I was diagnosed with breast cancer two years ago and how – purely because of the health safety net I had put in place for my family – I was able to get treatment fast, and the income came in regardless.
My health shock – and safety net
On January 7, 2021 I found a lump, and immediately entered Australia’s phenomenal cancer-care system. But while it is phenomenal, it can be slow, especially if you don’t have private health cover.
Besides the issue of whether it ‘gets to you in time’, the public system also doesn’t give you a choice of treatment. For example, preventative treatment, such as the double mastectomy that I had eight weeks after my diagnosis, is unlikely to even be an option.
With healing time, and because I (mercifully) didn’t require chemotherapy and my surgery removed the need for radiation, I was able to beat cancer in five months. My situation was blessed compared with my distraught friend’s, who had no private health cover and was not permitted to remove her risk in the public system. She was diagnosed with cancer again five years later.
And what if you do a physical job and injure something like a knee? In the public system, knee reconstruction waitlists can be 18 months or more.
I have always made sure my family has top-level private health cover. Here are my three simple secrets to affording it.
The three secrets to health-cover savings
1. Up your excess
Your excess can be up to $750 for a single and $1,500 for a couple and still exempt you from the 1.5 per cent Medicare levy surcharge.
Choosing an excess this high might be worth the lower premiums, especially as you only pay excess once a year, if needed, and never for children.
2. Tailor-make your cover
The last thing you want to do is pay for insurance you don’t need. This is why you should choose an insurer that lets you pick and mix your policy. For example, you might need obstetrics but run little risk of needing a hip replacement any time soon, or vice versa.
The cynical, profit-motivated insurers tend to bundle such things together while the not-for-profits are often more situation-appropriate.
3. Buy, then use, extras to combat the cost
My family and I essentially get our private health insurance free. Extras cost more but it lets you claim on a range of health services like osteopathy, physiotherapy, remedial massage, optical and more.
Even the free teeth clean and checks, twice a year for a family of four, save roughly $800. This might wipe two months of premiums. A ‘health management’ bucket of funds should also include, maybe, $200 subsidies for gym membership (if a GP signs off that it is medically necessary) and even for kids' swimming lessons. Working your extras well can entirely cancel the insurance cost.
My health was in good hands when I became sick and, thanks to my health insurance I was breast-cancer clear, with no further risk, inside six months. But what about my lost income in that period?
How to protect income from a health shock
Income protection insurance replaces up to 75 per cent of your salary if you are unable to work due to illness or injury, usually all the way through to your retirement. It is expensive but essential to your financial survival. And it’s not just vital for those with dependents. Remember, if you’re single, there is no other salary to fall back on.
And if you’re worried about affordability, there is one secret to cutting the cost of this part of your family’s health safety net: Wait a little longer. No, don’t delay buying the insurance but, instead, delay the date a payout would begin. Choosing a longer waiting period before you start getting replacement income dramatically cuts your premiums (which, note, is also tax deductible).
A word of warning: don’t choose the ‘any occupation’ option to limit your premiums. You want to be eligible for payouts if you can no longer perform your chosen job, not just any job. Instead, select the ‘own occupation’ definition to ensure you won’t be denied a payout for your chosen job.
Finally, life insurance is critical, especially if your medical story has an unhappy ending. The beauty of this cover is that it often comes with a terminal illness trigger – as in, if you are sadly given, say, less than six months to live, it will pay out before you die, so you and your loved ones can enjoy – as fully as you can – the time you have left.
Yes, times are tight but please make sure your family has a health safety net in place, one that is as cheap and effective as mine. And please, please, check your breasts.
Nicole Pedersen-McKinnon is the author of How to Get Mortgage-Free Like Me, available at www.nicolessmartmoney.com. Follow Nicole on Facebook, Twitter and Instagram.
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