What does Medicare Cover?

Each year when paying taxes, part of the proceeds go towards funding universal health insurance.   According to PrivateHealth.gov.au, Medicare covers hospital expenses, medical expenses, and pharmaceutical expenses. Through Medicare,  a public hospital will treat you at no charge with a hospital-appointed doctor.  You can also visit a general practitioner and receive reimbursement.  Finally, you only will have to pay a portion of the costs for most prescription medications you might be required to take.

If Medicare Covers Me, What Does Private Insurance Cover?

Even though Medicare covers everyone, many still choose to purchase private health insurance.  This is because while Medicare covers most of the expenses for healthcare, Medicare does not cover everything you may require to remain healthy through your lifetime.  In addition, if your income is over a certain threshold, unless you carry private medical insurance, you will be subjected to the Medicare tax levy.

Items not covered by Medicare include:

• Ambulance costs
• Private patient hospital costs
• Medical costs incurred while traveling
• Medical costs related to surgeries or services that are not deemed necessary
• Examinations for the purposes of obtaining life insurance
• Vision care needs
• Dental Care needs
• Hearing aids
• Long-term care through home nursing
• Physiotherapy, speech therapy, psychology, etc.

You can purchase private insurance to cover many of the above expenses.

What Types of Private Insurance Exist?

Basically, there are two types of private medical coverage:  hospital and general treatment.  Hospital coverage is just like it sounds, it covers you at various levels in case of a visit to the hospital.  General treatment coverage provides coverage for services including dental, vision, occupational therapy and more.

Hospital Cover – There are four categories of private hospital coverage:

• Top private hospital cover – this has no exclusions restrictions on what will be paid by the company
• Medium private hospital cover – no exclusions, but there are restrictions on some items for coverage
• Budget private hospital cover – this excludes at least one coverage item
• Public hospital cover – it covers benefits only if you are treated in a public hospital.

General Cover – There are three categories of general coverage

• Comprehensive cover – this coverage includes at the very least dental, orthodontics, vision, physiotherapy, occupational therapy, hearing aids, pharmaceuticals, chiropractic and podiatry
• Medium Cover – this level of coverage leaves out orthodontics and health management and more, but it does include dental, optical, and physiotherapy and more
• Budget cover – it includes at least one area such as dental, optical, physiotherapy and chiropractic services (for more information, you may wish to view the glossary page at PrivateHealth.gov.au).

Finding the Policy that Works for You

Finally, once you know what additional medical coverage you would like (if any), then you can research the different companies that offer that level of coverage.  In order to decide whether you would like a private health insurance policy, you may find the publication, “Insure? Not sure?”, is an invaluable resource.  The PrivateHealth.gov.au website features a tool that can help you find approved companies for your medical insurance needs.  The website sorts the companies by monthly premium price, and features links to each provider’s website.

Photo by celestehodges

Medicare

Medicare is the primary source of health cover in Australia. Funded and managed by the government through Medicare Australia, it covers citizens and most permanent residents (except the poor residents of Norfolk Island).

Medicare covers 100% of the costs incurred if you enter a public hospital as a public patient. However, you generally cannot choose your doctor (one is assigned to you by the hospital for each stay) or your admission time. If you see a doctor outside of the hospital setting, Medicare will pay for 100% of the consultation for a general practitioner and 85% of the fee for a specialist. If you choose to be admitted to a hospital as a private patient, Medicare will pay for 75% of the fee, according to their set fee schedule. Medicare also pays for a percentage of any medications you may be prescribed as well under something called the PBS – Pharmaceutical Benefits Scheme.

Medicare is funded by a 1.5% Medicare levy on salaries as well as a 1.0% penalty levy on higher income earners who have not taken out private insurance. The bulk of the money comes from the government’s general fund, as the levies aren’t nearly enough to fund the cost of the Medicare system.

As with any insurance cover Medicare has a list of exclusions, such as optical or vision care. Visit the Medicare site to find out more about the program.

Private Hospital Cover

Like the name implies, this cover kicks in when you choose to be admitted as a private patient in either a public or private hospital. The big benefit to this is that you get to choose your doctor and hospital, and wait times are generally much shorter in private settings.

Private hospital cover kicks in after Medicare pays its part, which is usually 75% of the bill. Some policies will provide ambulance cover as well, since Medicare does not cover any costs related to transport by ambulance. Residents of Tasmania and Queensland have ambulance transport provided by the state government, so if you live there skipping this cover is probably a good idea.

There are plenty of different private plans to choose from, and the cost will vary according to a number of factors, including the following.

• Excess – Plans that require you to pay part of the bill before the plan does will lower your premium. The higher the excess, the lower the premium will be. Be aware that a hospital stay that is less than the amount of excess required by your plan will have to be paid directly by you.
• Co-payment – Some plans will require you to make a co-payment at the time you receive services eligible to be covered by the plan. This could be on a per day basis for hospital stays or on a per case basis. Co-payments will sometimes have a yearly cap on them and once you accumulate that much in payments, you won’t need to make co-payments for the rest of the year.
• Exclusions – Many plans will exclude or restrict certain types of illnesses and treatments. By accepting a plan with exclusions, you should expect to play less in monthly premiums.
• Hospital Substitutes – Some plans will cover alternative methods of treating and managing ailments that would normally occur in a hospital but happen in smaller, specialized treatment centres instead.

In an effort to relieve some of the burden from the Medicare plan, the government currently pays a 30% rebate for the cost of private health cover premiums as well as a charge a penalty to high income families and individuals who do not opt to take out private health cover.

While the array of funds and premiums can be confusing, the Private Health Insurance Ombudsman and the government’s Private Health initiative site are great places to do your research as these sites, especially the latter, contain encyclopedic listings and details from every health fund and policy on offer.

Private General Treatment Cover

This other type of private cover is available to help pay for treatment not covered by Medicare, such as optical and dental treatment as well as speech and physiotherapy treatments. Many people opt to purchase this type of private cover and rely on Medicare and public hospitals for any major illness or injury.

Many plans package general treatment cover, also known as ancillary cover, with hospital cover to create a comprehensive private health plan to supplement your Medicare cover.

Lifetime Health Cover

Technically not a type of health cover, the lifetime cover program has been enacted by the government to encourage citizens to take out private cover when they are young and to maintain throughout their life. The program does this by raising premiums for first time insurance buyers proportionate to their age.

You have until the July 1^st after your 31^st birthday to take out private hospital cover without having to pay any sort of premium loading. For every year you wait after that there will be a 2% loading added to the premium, up to a maximum of 70%.

There are some caveats and conditions to determine your loading if you are beyond the age of 31 and don’t have private hospital cover yet. The government created a calculator that will consider any exemptions you might have and determine your loading percentage if you were to take out insurance between now and your next birthday.

In Conclusion

The long waiting periods and lack of choice in the Medicare program, as well as the lack of cover for certain things, make having private health cover a prudent decision for anyone that can afford it. Having private cover provides you with more choices. If you choose to use Medicare and go to a public hospital, then it is a choice you made that best fits your situation. But if you feel as though you need to use your private cover and choose your doctor and hospital, then you will have that option as well.

The best physician-patient relationships are based on trust and built up over the course of time. Your health shouldn’t have to wait for an opening at a crowded public hospital. You should be able to determine, with your physician, the best time for you to have any procedure performed. Think about it, do you really want to have a health issue that requires hospitalization and never have even met the doctor who will be treating you?

Photo by mr nightshade