Is Private Health Insurance Worth it?

Should I get Private Health Insurance?

Private Health Insurance is a weird and wonderful topic that we could talk for hours about. It's stirs quite a bit of controversy. Our stance is that Goodlife Dental Studio is a privately owned and locally operated practice and we wish to keep it that way.

There is no doubt that Health Insurance Extras Cover can be helpful in some circumstances however for most it is an expensive monthly bill that is almost never used to your advantage.

You will find that you will pay your insurer far more in the long run than you will get back in rebates.

For example, if you were looking into orthodontic treatment which is a higher level of extras cover, it can cost you about $40-60 a month ON TOP of your hospital cover. That's $480-720 a year that could have gone towards your orthodontic treatment. Not to mention the 12 month waiting list. So by the end of your braces which can easily hit the $10,000 mark you would have paid well over $2000 on health insurance which could have just gone towards the treatment in the first place.

We don't think there is value in having dental (also known as extras/ancillary) cover as part of your private health insurance. Yes you may get massages for $20 but realistically unless your getting multiple massages a week, your far better off paying for you once a month massage outright.

None the less, it does pay off in those situations where you have difficulty putting money away or you have a family and want that reassurance.

How does private Health Insurance affect my Tax?

Firstly, for most, 2% of your taxable income is paid to the government the same way as your taxes are paid. This is known as the Medicare Levy Fee. This is to help fund some of the costs of the Australian Health System known as Medicare.

Then to put it simply, there is a Medicare Levy Surcharge, that is an amount dependent on your income, that is charged on top of the Medicare Levy Fee if you earn over the threshold (find out more about the income thresholds here). This has been designed to encourage Australians to use the private health system and insurers to relieve pressure from the public system.

This surcharge can be reduced or avoided if you take out an appropriate level of private health Hospital Cover. As long as you have an appropriate level of cover (which should be disclosed when talking to your insurer), you do not need to have an extras cover, this includes dental.

Despite what the marketing/sales team of health insurance companies might say, it is really not worth having health insurance at all if your taxable income is less than $90,000 per year as a single or $180,000 as a couple as you will get no tax benefit.

Current and more information can be found at the ATO website:

Private health has its place in Australia as it relieves pressure from the Medicare public system however we believe that private health insurers are abusing that power.

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