Australian Private Health Insurance - a Mustachian perspective

[professorgoose]

I am 32 year old, single male who is generally in pretty good health. I am currently trying to work out if private health insurance is really worth it for me.

I have a fairly active lifestyle including running, gym and other activities. Ideally within the next year I'd like to ditch my car, and start running/cycling to commute.

My income is well under the extra Medicare levy surcharge (probably under 40K this year). I am self-employed so my income can be a bit variable but I expect my income will be under the threshold for a couple of years (and perhaps even longer).

I've come to the conclusion that extras insurance isn't really worth it for me. The only things I would really claim on is dental (once a year checkup), optical (perhaps a pair of glasses every few years at best), and perhaps the odd physio session. By covering myself by paying out-of-pocket I figure that I can save some money here.

Regarding hospital cover, the only real benefit I can see for me would be elective operations in that you can avoid a long waiting list. For example I may be waiting on an operation which isn't a critical emergency, but is lifestyle affecting. However, I figure that if I self-insure (invest the money) then I could always pay privately for an operation if that was required.

Just wanted to see the Mustachian advice in this kind of situation. Would you opt for no cover or some form of hospital cover?

[mxt0133]

Young and healthy is good.  Do you have any risky hobbies that might increase your probability of needed i elective operations, sorry not really familiar what is elective or not?

But I guess the most important thing about self-insuring is being able to cover the cost.  If the cost will severely impact your future plans or drain your cash then you might need the insurance until you can build enough reserve cash.

[NykkiC]

As someone who is currently self-insuring, I think the big thing to remember is that you can change your decision. I'm in much the same boat as you (healthy and unlikely to need elective surgery) and, in going on six months, the only time I could have used it was when I went to the dentist. However, if my health deteriorated and the maths changed, I could go and get covered, even if I have to pay a little more because I waited. The probabilities just don't make sense for me, and (at least for the moment) the public system is good enough that its not going to be a matter of life and death.

[deborah]

I have no kids so pregnancy and the associated health costs were not part of the equation. I did insure because of the tax implications and the cheaper insurance in older years. I did self insure until these came in, and may have in my 30s and 40s (the jury is out on the 50s) without these. But if your income is lower, the age increase may not be an issue for you.

[alsoknownasDean]

One concern might be the surcharge you are charged if you decide to take up cover again.

[Ozstache]

For the same reason I don't buy extended warranties, my age and current health status puts me in the middle of the 'health' bathtub curve (see http://en.wikipedia.org/wiki/Bathtub_curve), so I don't have private health insurance. Medicare is also a pretty awesome fallback for unexpected health emergencies.

[This_Is_My_Username]

i am in a similar situation (Australia).

there are three considerations:

(1) are you more risky / expensive than 95 % of the general population.  If yes, insurance is a financially correct decision.  If not, insurance will make you financially worse off. 

(2) do you earn more than 80k, and pay the medicare levy surcharge?  if yes, you can save money by buying cheap and nasty hospital cover.

(3) lifetime health loading.  for each year over 30 without private health insurance, you will pay 2% extra premium when you finally DO buy private health insurance.  e.g. if a 45-year old buys private cover for the first time, they will pay a 30% penalty.

But the penalty is paid for a maximum of 10 years. 

http://www.privatehealth.gov.au/healthinsurance/incentivessurcharges/lifetimehealthcover.htm

this makes it only slightly more desirable to buy private cover.  But it is still not worthwhile.   It is cheaper to save the premiums not-paid, and pay the penalty later.



(4) also, buy prescription spectacles from Zenni for $10-15.