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Compensation for this post was provided by Choosewell.
The private health insurance industry has found itself in a bit of a pickle after customer advocacy group Choice recently ousted several major providers as proponents of ‘junk’ health insurance policies. Arguing that these policies represent a complete waste of money for consumers, Choice has demanded attention from the Federal Government.
It’s unclear if the government can help, as it seems fairly evident that the government itself set the scene for junk policies to be created when it introduced policies and tax incentives to reduce the supposed strain on Medicare. By shifting the focus of health insurance away from support and directing it towards tax breaks, what is the true reason for getting private health cover?
What is a ‘junk’ policy?
Private health insurance has a many different products and packages to suit the variety of consumer in Australia. Some of these policies don’t actually represent the value that consumers think they’re getting – these are junk policies. Many basic packages exist only to attract consumers with tax benefits, others seemingly don’t include expected services. Effectively, they provide little to no real benefit.
Is tax part of the problem?
Many younger Australians – and this writer is no exception – have flocked to inexpensive Basic Hospital cover packages through private health providers in order to save money at tax time. The Lifetime Health Scheme and Medicare Levy Surcharge encourage taxpayers on higher incomes over the age of 31 to have private health insurance. This situation has effectively encouraged private health providers to develop packages to meet the demand for tax savings, not effective health cover.
What about Medicare?
Medicare is inadvertently part of the problem. Given that all Australians can get free, world-class health cover through Medicare means that anyone who realises they are not covered by their junk policy can still be treated by the public system. The result is that a consumer has to join a waiting list (typically 30 to 60 days) to receive that treatment. Arguably they feel betrayed and cheated too, but sadly there’s no insurance for that.
How to avoid junk policies
Clearly it’s an issue of why have health insurance: to save on tax or to be supported by slightly higher quality health cover? It’s important for all consumers to know why they are choosing to employ a service like health insurance. If it’s to save money on tax, then it doesn’t really matter what your insurance does, but if you are taking out health insurance because you want or need the support and peace of mind, then be sure to compare your options very seriously.
Choosewell, a free health insurance comparison service, can provide side-by-side policy review with a team of Health Insurance Advisors standing by to answer any questions. This is the best way to find a package that meets your needs while having an expert on standby to answer any questions. Contact Choosewell on 1300 421 154 to get out of your junk policy.