Author Topic: Australian Private Health Insurance - Post FIRE  (Read 2955 times)

misterhorsey

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Australian Private Health Insurance - Post FIRE
« on: August 23, 2016, 08:09:14 PM »
Just wondering what people do about Australian health insurance post FIRE?

I'm nearing FI or have possibly achieved it already if I take an early retirement extreme approach - not sure how realistic that is for me however.  Due to boredom, lack of motivation and a few work related issues, I'm contemplating pulling the trigger on a mini retirement/sabbatical/time off/break sometime later this year.

I currently pay for private health insurance cover purely to avoid the medicare levy surcharge.  Because I have only basic hospital cover only its marginally cheaper than the surcharge.  I'm 40 and currently fit and healthy, though I know one can't take these things for granted.

Anyway, just wondering what people do to manage this expense going into a lower tax bracket, whether for a temporary period or indefinitely.

I know if I do take a bit of time off my income with drop dramatically so I'll no longer be compelled to pay for the surcharge.

I don't see any value in private health insurance but that could be a smug younger healthier version of me talking.

I think one can suspend cover when going overseas, and even for a period of time (1094 days!)
http://www.privatehealth.gov.au/healthinsurance/incentivessurcharges/lifetimehealthcover.htm

But i'm a bit more curious about how people approach private health cover from a stategic/risk management perspective. And what's the cheapest approach without sacrificing any actual benefits!

I seem to recall an article in the age explaining how a younger lower income earner is better off forgoing private health insurance (assuming they don't have to pay the surchage), investing the savings, then paying the loading later in life if they feel the need. Can't find that at the moment.

Thanks in advance for your advice.


Ozstache

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Re: Australian Private Health Insurance - Post FIRE
« Reply #1 on: August 23, 2016, 10:19:25 PM »
I think this an article like the one you're looking for: http://www.canberratimes.com.au/money/saving/dont-be-fooled-by-the-private-health-insurance-industrys-pitch-to-30yearolds-20160719-gq8w5p.html

Quote
But i'm a bit more curious about how people approach private health cover from a stategic/risk management perspective.
My strategy is that since my wife and I don't pay MLS (since we are so 'poor' earning < $180K pa as a family in FIRE lol), we are reasonably healthy and Australia's mostly-FREE Medicare system is pretty awesome by world standards, we choose to self-insure. If Medicare fails us on something major or (in our view) more time critical, the Bank of Ozstache chips in. If it's really bad, we take up health insurance and have the Bank of Ozstache fund non-Medicare treatment until the relevant waiting period for the pre-existing condition expires. 25 years of not having private health insurance has given the stash a more than adequate buffer to handle this, especially since it hasn't been called upon for anything major yet.

misterhorsey

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Re: Australian Private Health Insurance - Post FIRE
« Reply #2 on: August 24, 2016, 04:15:45 AM »
Thanks for the reply ozstache. 

And that's the article I was referring to. Very hand for any under 30s out there.

The only reason I've been with private is because its actually cheaper to pay the premium than to pay the medicare surcharge.

But sounds like I might try and self insure as well.

Actually, it occurs to me that if I am going to quit later this year I may as well suspend my membership now as my income for the financial year will likely be below the threshold. Ah the wonders of thinking aloud! 


marty998

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Re: Australian Private Health Insurance - Post FIRE
« Reply #3 on: August 24, 2016, 04:55:53 AM »
Probably works out equal for me to pay the surcharge or pay for health insurance on a headline basis.

But the Medicare Levy Surcharge isn't going to give me dental and optical benefits....

steveo

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Re: Australian Private Health Insurance - Post FIRE
« Reply #4 on: August 24, 2016, 03:49:15 PM »
My strategy is that since my wife and I don't pay MLS (since we are so 'poor' earning < $180K pa as a family in FIRE lol), we are reasonably healthy and Australia's mostly-FREE Medicare system is pretty awesome by world standards, we choose to self-insure. If Medicare fails us on something major or (in our view) more time critical, the Bank of Ozstache chips in. If it's really bad, we take up health insurance and have the Bank of Ozstache fund non-Medicare treatment until the relevant waiting period for the pre-existing condition expires. 25 years of not having private health insurance has given the stash a more than adequate buffer to handle this, especially since it hasn't been called upon for anything major yet.

We pay for health insurance at the moment but I'm thinking when we FIRE that we don't pay anymore. Did you never pay health insurance ?

Ozstache

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Re: Australian Private Health Insurance - Post FIRE
« Reply #5 on: August 24, 2016, 07:31:53 PM »
We pay for health insurance at the moment but I'm thinking when we FIRE that we don't pay anymore. Did you never pay health insurance ?
I had free health cover for the 30 years that I was with Defence but have not taken private health insurance since I got out 2.5 years ago. My wife briefly had health insurance when she was having our first child, which we promptly dropped after all the gap payments we had to make that would have otherwise been free if we had declared ourselves public for the birth. We had two postings to the USA of 7 years duration total where the Oz government provided free health and dental cover for the entire family.

Otherwise, it has all been Medicare and PAYG ancillaries. There may have been one year or two where we have paid out more in PAYG for ancillary stuff than what the private health premium would have been, but there have been vastly more years where we have paid little or nothing that would have been claimed, even bringing up two kids to adulthood. Interestingly, when you tell places that you will be PAYG, the price for treatment tends to drop quite significantly, not unlike if you take in a car to get crash repaired and say it's not an insurance job. Also, you tend to not get over serviced, which IMO is a moral hazard that afflicts private health insurance policy holders and service providers alike (eg. Service Provider: You have private health insurance? There's all these additional treatments we could give you. Come on down! You: I may as well get X and Y done too as I am paying good money for health insurance so I may as well get my money's worth) The vast majority of our medical expenses over the years has been for medicine or GP visits that would have received little or no refund from a private health insurance policy in any case.

All in all, I reckon we have saved about $75K by not having private health insurance all these years. I agree with others here that if you are faced with the choice of MLS or private health insurance for the same or lower cost, then of course you should go with private health insurance. However, when MLS gets removed from the equation upon FIREing, you're relatively young and healthy, you know Medicare will come to the party if you have an accident or sudden major illness, your stash could help out with PAYG if you really NEED an elective surgery with an otherwise unacceptable waiting time to achieve and you can always get private health insurance later if life really threw a curve ball at you, why would you need perpetual private health insurance when in the long run you will more than likely be way better off financially by not having it until it is really needed?

steveo

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Re: Australian Private Health Insurance - Post FIRE
« Reply #6 on: August 24, 2016, 11:12:42 PM »
Ozstache - thanks for that. I pay for health insurance now but I really don't see the point. My parents would pay for top cover. My dad has had two strokes over the last couple of years. Neither stroke was a real problem and he is fully recovered. Anyway the private health insurance got him a free paper in the hospital. Everything else was public care.

misterhorsey

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Re: Australian Private Health Insurance - Post FIRE
« Reply #7 on: August 25, 2016, 12:24:23 AM »
Probably works out equal for me to pay the surcharge or pay for health insurance on a headline basis.

But the Medicare Levy Surcharge isn't going to give me dental and optical benefits....

My Private Health insurance doesn't cover dental or optical either, after I dropped the Extras.  After I did my sums it was cheaper for me to fork out money for glasses and contact lens, and dental appointments, when I needed them rather than pay the extras.  Obviously everyone's dental and optical needs will vary.  And my savings aren't huge, but they accumulate over time. 

misterhorsey

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Re: Australian Private Health Insurance - Post FIRE
« Reply #8 on: August 25, 2016, 12:26:07 AM »
Thanks for the detail OzStache. The savings over time are not to be sneezed at.

Fresh Bread

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Re: Australian Private Health Insurance - Post FIRE
« Reply #9 on: August 25, 2016, 01:29:23 AM »
It's good to hear your story Ozstache. We are thinking of dropping our cover entirely and self insuring but I'm dragging my feet because of the possibility of expensive joint reconstructions.

DH likes slightly dangerous sports and we both like skiing - a knee recon can be $30k or more, and who knows how much inpatient rehab is. Then there's hip replacements in old age, I guess they are a similar cost. Of course, you can wait for Medicare but it could be years waiting in pain. Maybe once I'm 70 I won't care about sharing a bathroom with the gentleman's ward but right now, ick. The cheapest insurance incl reconstructions is about $300 for a couple once you add in our age loading, so significant.

If something else expensive like cancer hits, I assume Medicare wouldn't make you wait and the only difference would be comfort levels while you are hooked up to chemo, so no worries there.

For emergencies, broken bones and the like, you're stuck with Medicare anyway. When I went to A&E last year all my private health care got me was a long wait waiting for the most senior surgeon to get off the golf course, so it actually extended my stay!! For post-op outpatient rehab, the amount I got back from extras cover was minimal.

Also, when I had an op a few years ago through private, I was shocked at having to pay $4k from a total bill of about $10k. Someone I know, who definitely does not have $4k lying around, was debating recently whether to get cover. I explained the high out of pocket costs and the rort that is extras cover, but there were too many people bad at maths and financial management arguing the opposite: "what if you need physio?" (Then you pay for it from the money you didn't spend on extras cover...)

I guess in summary, I wouldn't bother having hospital cover if I didn't think we were at increased risk of needing some major expensive ops. I'm pretty sure basic hospital cover wouldn't cover us for anything we wouldn't self insure or be happy to do through Medicare. I definitely wouldn't bother with extras.

marty998

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Re: Australian Private Health Insurance - Post FIRE
« Reply #10 on: August 25, 2016, 01:40:29 AM »
Probably works out equal for me to pay the surcharge or pay for health insurance on a headline basis.

But the Medicare Levy Surcharge isn't going to give me dental and optical benefits....

My Private Health insurance doesn't cover dental or optical either, after I dropped the Extras.  After I did my sums it was cheaper for me to fork out money for glasses and contact lens, and dental appointments, when I needed them rather than pay the extras.  Obviously everyone's dental and optical needs will vary.  And my savings aren't huge, but they accumulate over time.

Fair enough.

I get a new pair of specs every 12-18 months, and dental every year so I do make use of it. I can see why you could make the choice to drop it.

misterhorsey

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Re: Australian Private Health Insurance - Post FIRE
« Reply #11 on: August 25, 2016, 05:08:51 AM »
I just did a quick calculation and I've had 2 pairs of glasses over 14 years. 

I do wear contacts daily though, which is a moderate expense.  Glasses tend to last longer when you don't wear them!

I also have an in principle opposition to the fact that most Private Health Insurers subsidise the cost of complementary medicines that are not proven to work. 

Roundabouts

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Re: Australian Private Health Insurance - Post FIRE
« Reply #12 on: August 27, 2016, 04:27:36 AM »
Also, when I had an op a few years ago through private, I was shocked at having to pay $4k from a total bill of about $10k.

I've just been through elective day surgery recently, for the first time.  It's been a learning experience as to what insurance pays for what things.  Could you share a little of where the charges came from for yours, without giving anything away about your treatment of course.  I'm mostly thinking about if I had expensive medical care in the future, what things I might have to account for.

My own charges worked out like this:
  • $800 for the hospital charges, limited to my excess of $500 (private health insurance)
  • $800 specialist fee, minus $250 from Medicare
  • still waiting for the anesthetist's bill

For a fairly small procedure.

Fresh Bread

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Re: Australian Private Health Insurance - Post FIRE
« Reply #13 on: August 27, 2016, 05:19:04 AM »

Could you share a little of where the charges came from for yours

My own charges worked out like this:
  • $800 for the hospital charges, limited to my excess of $500 (private health insurance)
  • $800 specialist fee, minus $250 from Medicare
  • still waiting for the anesthetist's bill

I had an op that should have been an hour but turned into 3 hrs :/ My poor hubby thought I must be dead. It was 2013 so I can't remember the details. It was something like $250 or $500 for the excess for an overnight stay. The cost of a night in a hospital is a few thou, day surgery obviously a bit less - the hospital accommodation is where you get the value from your fund. The rest of my gap payment unfortunately was the gap for 2 surgeons (it got complicated) and an anaesthetist for 3 hrs. The health fund and Medicare rebates were flat fees for the actual operation I guess. 

To minimise the risk of a massive bill, you could find a surgeon & anaesthetist that has a no gap arrangement with your fund. And get a quote and shop around. The thing is, sometimes there isn't a no-gap one nearby and who wants the 'cheap' option when they are under the knife?? For me I was having my first ever op and didn't know it would be so much and wasn't in a position to shop around being terrified and needing to get in as soon as poss.

deborah

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Re: Australian Private Health Insurance - Post FIRE
« Reply #14 on: August 27, 2016, 04:14:00 PM »
I had something done a few years ago. I was told by the surgeon that it would cost $500 after the health insurance etc. (and that it would cost several thousand if I didn't have insurance). It cost NOTHING. When I got my health insurance, I checked what hospitals each provider covered, and this one covered the lot.

I don't have extras as they seem to be a lurk, but the health insurer I have is cheap and covers more than others do (they were based in the WA Goldfields even though I am in the ACT) - for instance, hospital visits to elsewhere (many Canberra people have to go to Sydney for some things)... I think you really need to read the comparisons between providers before you decide upon one, as they can be really different.

I originally had health cover because of reasons sited above, so I was ahead when I stopped work, and I'm still ahead because of that procedure.

alhart345

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Re: Australian Private Health Insurance - Post FIRE
« Reply #15 on: May 25, 2017, 09:06:37 PM »
I wanted to add another perspective, perhaps not available to all, but worth considering.  My family and I have lived in Taiwan these past ten years or so, and enjoy the excellent national health insurance system here, similar to Medicare, but including dental.  As we retire to Australia, we plan to make annual trips back to see my wife's family, and will likely take that time to get our dental affairs in order.  For a variety of reasons (the biggest being population density), medical care is a lot cheaper in Taiwan, so even on a non-insured cash basis, this is cheaper than Oz.  Even to the point for something like say a root canal or implant, jumping on a plane and paying cash could work out.  Likewise for wear and tear replacements of knees and hips.

Not for everybody, works for us as we a comfortable with the setting and language and wife has a medical background.  But, if a bill looks to be heading into the tens of thousands, and has an element of time freedom in it, worth considering.

expatartist

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Re: Australian Private Health Insurance - Post FIRE
« Reply #16 on: May 25, 2017, 11:35:49 PM »
Thailand may be even cheaper. It's where I go for all my dental work when possible. Also for annual in depth health exams (sonograms, mammogram, blood tests etc) only about UD$300.
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alhart345

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Re: Australian Private Health Insurance - Post FIRE
« Reply #17 on: May 26, 2017, 10:53:28 PM »
Thailand would definitely be more convenient from Oz, and has a great reputation for this sort of thing.  From my experience you can find good care and English speaking services in all the major cities of Asia.  With perhaps the exception of Singapore and Japan, there would cost advantages to be had.  Time it with your holidays, pick the place you have most knowledge and comfort to visit.

Leisured

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Re: Australian Private Health Insurance - Post FIRE
« Reply #18 on: June 26, 2017, 12:06:36 AM »
I am Australian, and I am 72 and DW 67. We have private health insurance, which costs us about $3000 a year. The main advantage is that we can jump a queue at a public hospital, and the minor advantage is that the food in a private hospital is better than at a public.

We also do not insure for dental and optometry.

Recently I was diagnosed with early bladder cancer, now in remission, and when the specialist knew I had private insurance, I had an exploratory procedure a few weeks earlier than if I had to rely on the public hospital. Bills vary; my first cystoscopy (what is known as camera surgery, to see what is there) cost $200 for the anesthetist, and $80 for the specialist, these charges being above schedule fee. I was referred to another specialist which cost about $200. I have had a few more cystoscopies, which cost nothing. Schedule fee is what the health professional is paid from the national health scheme. Private insurance can cover part of any surcharge charged by the health professional. I understand that surcharges by health professionals vary a lot. They have to pay off their Porches somehow.   

I am happy with the Australian system.

My local doctor (do Americans call a local doctor a GP, as we do?) charges more than the schedule fee, about $12 more, but his surgery is within walking distance.

A hundred years ago, a national health scheme would have been less effective, because doctors had less power to cure illness. The more effective doctors are, the more society had to pay to keep living longer.

Australia and NZ got a national health schemes mid seventies, and we thought we were slow, compared to Europe. Canada got a national health scheme about mid eighties.

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stashgrower

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Re: Australian Private Health Insurance - Post FIRE
« Reply #19 on: June 26, 2017, 06:41:10 AM »
Posting to follow.