Private Medical Fund

[heidim]

Can someone please explain to me the purpose of having a private medical fund. I know it's a legal requirement, but I would like to understand why. Is it to alleviate pressure of Medicare?

[21yearsoutofrsa]

Having a private medical insurance is a requirement of a 457 visa, citizens and PR visa holders are not required to have private insurance.

Medicare is funded by the medicare levy and by general taxation.

Private medical insurance (subject to the conditions of the scheme) allow the insured to select to have medical proceedure when they want,and are not subjct to waiting lists which medicare patients may be.

Having medical insurance can reduce your medicare levy (rules are pretty complex)

Certain items e.g. dental for adults are not covered by medicare, they can be covered by medical insurance.

Edited January 16, 2013 by 16yearsoutofrsa

[AndreaL]

Hi HeidiM

All residents pay 1% of their salary for Medicare, if you earn above a certain amount you are liable to pay a Medicare levy surcharge of an extra 1.5% unless you have private medical insurance

http://www.ato.gov.au/individuals/content.aspx?doc=/content/00250854.htm&page=11

Also, if one day you do decide that you need medical insurance you will be charged an additional percentage called Lifetime Healthcover Loading on top of your normal fee for every year above the age of 30 that you are. The exemption is new migrants, you have 12 months to join a private medical scheme and not have to pay the LHC http://www.privatehealth.gov.au/

For tax purposes, it can be beneficial to take out some form of medical insurance to avoid paying the surcharge if you earn above a certain threshold, additionally your medical insurance will pay a small portion of dental costs which is not covered through Medicare. all 457 visa holders have to have private medical insurance.

Have a look through the links to see what your options are. I would recommend some sort of cover, even just hospital cover.

Edited January 15, 2013 by AndreaL

[Lyn]

And ambulance cover.

My son twisted his ankle last Christmas at the bus interchange - the staff insisted on calling the ambos - the Canberra Hospital was only about 1-2kms away - the bill $800. Not covered my Medicare. Paid in full my NIB.

Like Andrea I too would recommend at least the basics.

[Werns]

Could I add a question on here?

I am wondering about the LHC. If I only take private medical for Extras (I think that is what they call it) and not a full plan, would I have to pay LHC later if I decide to move to a more comprehensive plan?

Thanks

[AndreaL]

Could I add a question on here?

I am wondering about the LHC. If I only take private medical for Extras (I think that is what they call it) and not a full plan, would I have to pay LHC later if I decide to move to a more comprehensive plan?

Thanks

From what I can make out- yes- the LHC loading a only apply to hospital cover not extras. I would be taking the hospital cover and then working out what extras to add and come up with a full plan. I had a quick look on Bupa and for a family with father aged 37, mother aged 30 and kids you can get budget hospital cover for $ 31.15 per week with a $500 excess.

You would be absolutely sunk by hospital costs if you didn't have this cover.

If you decide to take out hospital cover later and not during the first 12 months of your p.r. You would pay an extra 2% in loadings for each year you are above age 30 ....an extra 20% for a 40 year old.

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

"If you don’t want to pay a LHC loading you need to buy hospital cover before your LHC deadline. Your deadline is 1 July following your 31st birthday; or for new migrants, 12 months from your registration for Medicare.

LHC loadings apply only to hospital cover. They do not apply to private health insurance general treatment cover (also known as ancillary cover or extras)." http://www.privatehealth.gov.au/assets/lhcbrochures/lhcenglish.pdf

http://www.bupa.com.au/health-insurance/best-matching-covers/ci.budget-hospital.phi

[Werns]

You would be absolutely sunk by hospital costs if you didn't have this cover.

Thanks for that, but what do you mean by the quote above?

Isn't normal hospital costs covered by Medicare?

[Mara]

Werns the long and short of private vs medicare is as follows:

Medicare : doctor tells you that you need a knee replacement. You go on the waiting list to await your surgery, could be anywhere in the future, even three or four years down the line. I know an elderly lady that needed this surgery and she waited just over two years.

Private : doctor tells you that you need a knee replacement. You tell him you have private medical cover so he should go ahead and make the arrangements. As long as your private cover is happy to pay (it all depends on what you are covered for) you have your surgery done the following week!

Need I say more?

The only time medicare will deal with you immediately is if it is a life threatening emergency.

[AndreaL]

Sorry Werns, I should have clarified further as Mara did. I spent 15 months with a slipped disc and trapped nerve. Went the chiropractor, physio, acupuncture route but the pain got so sever I ended up seeing a specialist and needed back surgery. Had I gone on the waiting list I might have waited a year or two ( like my neighbour) before I could have the surgery through Medicare. I would have had minimal costs. I opted to go through my private medical insurance and had the surgery two weeks later. I didn't pay a cent for the hospital stay which could have been around $5000 because of my hospital cover. I did have to pay a lot of the differences between what the Dr charged, what Medicare paid and what my private medical paid.

There are specialists and Dr's who participate in a gap cover scheme. I believe that it means they get paid by both Medicare and your private insurance, however this Dr didn't ( I think it is because they wait a long time for their bills to be paid and prefer the patient to pay and claim back)

As Mara said, in an emergency Medicare is great, but for non life threatening surgery the wait lists can be long.

[AndreaL]

Further, part of the reason the government is trying to get people to take out private cover and private hospital cover is to take the burden off medicare. Hence the LHC loading if you don't take out cover by the age of 30.

" The Federal Government introduced the Lifetime Health Cover loading to encourage Australians to take out private hospital cover at a younger age. Basically, it recognises the length of time you’ve had private health insurance and rewards that loyalty by offering lower premiums – so the earlier you take out health cover, the cheaper your premiums. "

[Werns]

Thanks for the explanations.

Could you possibly tell me a bit more about how the waiting times work on Medicare?

Is it a waiting list per hospital or system wide? If it is per hospital then surely it depends on where you are and how busy the hospital in your area is?

If it is system wide, well that would be crazy, and then I really understand the need for Private hospital cover.

[heidim]

Thanks for all the replies and advise. I just wanted to understand why we're doing it (and not just because hubby said so!).

[Mara]

Werns, it is per hospital, not countrywide, you gamble on getting seen, at your own risk.

Check out the link:

https://www.google.com.au/#hl=en&tbo=d&sclient=psy-ab&q=surgery+waiting+lists+at+public+hospitals&oq=surgery+waiting+&gs_l=hp.1.2.0l4.0.0.1.1771.0.0.0.0.0.0.0.0..0.0.les%3B..0.0...1c.SSEVfSuWGnY&pbx=1&bav=on.2,or.r_gc.r_pw.r_cp.r_qf.&bvm=bv.41018144,d.dGY&fp=e95bc0b176b0c8c4&biw=1536&bih=770

[Riekie]

The main difference between a private and public patient is the "privilege" to choose your own doctor and not having to go on a waiting list for surgery. It also covers dental, eyes etc which is not covered by the public health system. And you can get a massage....

[Fish]

Sorry Werns, I should have clarified further as Mara did. I spent 15 months with a slipped disc and trapped nerve. Went the chiropractor, physio, acupuncture route but the pain got so sever I ended up seeing a specialist and needed back surgery. Had I gone on the waiting list I might have waited a year or two ( like my neighbour) before I could have the surgery through Medicare. I would have had minimal costs. I opted to go through my private medical insurance and had the surgery two weeks later. I didn't pay a cent for the hospital stay which could have been around $5000 because of my hospital cover. I did have to pay a lot of the differences between what the Dr charged, what Medicare paid and what my private medical paid.

There are specialists and Dr's who participate in a gap cover scheme. I believe that it means they get paid by both Medicare and your private insurance, however this Dr didn't ( I think it is because they wait a long time for their bills to be paid and prefer the patient to pay and claim back)

As Mara said, in an emergency Medicare is great, but for non life threatening surgery the wait lists can be long.

Just as a FYI Andrea, the No Gap Scheme usually just means the specialist agrees to accept the governments "scheduled fee" for the operation (the scheduled fee component of an operation is always paid 75% by medicare and 25% by your private insurance). As you say they send the bills straight to the insurer.

If the doctor won't offer you No Gap then the amount up to the scheduled fee is covered 75% by medicare and 25% by your insurance, and then you pay the extra on top.

[Fish]

Werns, it is per hospital, not countrywide, you gamble on getting seen, at your own risk.

Check out the link:

https://www.google.c...iw=1536&bih=770

This site, http://www.myhospitals.gov.au/, is really good to look up your individual hospital waiting times. Sometimes the public system is great and even treats elective patients within acceptable timeframes and sometimes not. It usually comes down to the hospital and whether there is a shortage (sometimes worldwide) of those types of specialists.

Note hospitals report elective surgery waiting times from the time your specialist saw you and recommended the surgery was necessary to the time of the surgery. So note that it doesn't include the time you spent waiting for that initial appointment to find out what was wrong.

[AndreaL]

Thanks Fish, I meant something along those lines but am still new to some of the terminology used in Australia. When I had my back operation Medicare told me to ask if the specialist participated in the No Gap scheme.......... His secretary must have been a Rottweiler in another life and was quite exasperated with me when I asked her to explain this to me.

A lot of us who come from South Africa struggle to understand the 75 25 principle and the fact that we will still have to pay more if the Dr doesn't participate in the No Gap scheme, as if you have private medical aid in South Africa it pretty much covers the whole cost bar a few differences between what certain specialists like anaesthetists and paediatricians charge.

When I had my son in 2005 I had to be medivacced from Namibia to Cape Town and he spent 10 days in neonatal after an emergency c section, the cost was around R 127 000 but I only had to pay around R 5000 which comprised the difference the anaesthetist and paediatrician charged and what my medical aid were willing to pay. So sometimes private medical insurance can be a bit of a struggle for us to get our heads round.

I know where to come with my medical questions now

[Fish]

Thanks Fish, I meant something along those lines but am still new to some of the terminology used in Australia. When I had my back operation Medicare told me to ask if the specialist participated in the No Gap scheme.......... His secretary must have been a Rottweiler in another life and was quite exasperated with me when I asked her to explain this to me.

A lot of us who come from South Africa struggle to understand the 75 25 principle and the fact that we will still have to pay more if the Dr doesn't participate in the No Gap scheme, as if you have private medical aid in South Africa it pretty much covers the whole cost bar a few differences between what certain specialists like anaesthetists and paediatricians charge.

When I had my son in 2005 I had to be medivacced from Namibia to Cape Town and he spent 10 days in neonatal after an emergency c section, the cost was around R 127 000 but I only had to pay around R 5000 which comprised the difference the anaesthetist and paediatrician charged and what my medical aid were willing to pay. So sometimes private medical insurance can be a bit of a struggle for us to get our heads round.

I know where to come with my medical questions now

No worries

Yes it is a different style of private insurance scheme with some particular Australian govt regulation influencing it.

One good thing that it generally has over the proper full private schemes (eg USA) is that it is illegal to deny cover to people with pre-existing conditions (can only set waiting periods), old people or those who have made previous claims, and also illegal to charge them more than other healthier people. It's called a community rating system and is one of its key strengths.

As you know in the USA if you are old, make big claims or have pre-existing you will often struggle to find further insurance and/or will be charged massive premiums etc. They also have teams of people scouring your medical history trying to deny your claim. I think Obama is making some progress in this area.

Out of interest the scheduled fee for most GP services are covered 100% by medicare and then the patient pays any gap the GP charges on top of the scheduled fee. That's why a GP who bulk bills (accepts the scheduled fee with no gap) claims the whole amount from medicare.

You probably already know this Andrea but thought I would pop it in for anyone else who's interested...

Edited January 17, 2013 by Fish

[Werns]

Here is a link to the hospital in the area we will be living in: http://www.health.qld.gov.au/hospitalperformance/es-main.aspx?hospital=68

The waiting times don't appear to be too bad.

We're going to be living off one salary, so saving is important for me. Naturally, I don't want to put my family at risk, but if it's just a comfort thing - I don't mind. Especially if the waiting times aren't that bad.

[OubaasDik]

Here is a link to the hospital in the area we will be living in: http://www.health.ql...spx?hospital=68

The waiting times don't appear to be too bad.

We're going to be living off one salary, so saving is important for me. Naturally, I don't want to put my family at risk, but if it's just a comfort thing - I don't mind. Especially if the waiting times aren't that bad.

Yes, but don't forget the extra tax if you don't have private medical. It might just be cheaper to take it.

[Riekie]

Our daughter is having surgery next week as a private patient with top private health cover. We will still be about $2500 out of pocket even after the hospital bill is fully covered as the health funds only cover a certain % of the scheduled fees for the surgeon & anaethestist - not the charged fees. A lot of ppl see 90% of surgeon fees covered and think they'll have their surgery almost free, but it is only the scheduled fees as per AMA. Surgeons can charge what they like and they do not have to stick to scheduled fees or Medicare rates at all. Health funds are quite misleading that way in my opinion...

[Fish]

Our daughter is having surgery next week as a private patient with top private health cover. We will still be about $2500 out of pocket even after the hospital bill is fully covered as the health funds only cover a certain % of the scheduled fees for the surgeon & anaethestist - not the charged fees. A lot of ppl see 90% of surgeon fees covered and think they'll have their surgery almost free, but it is only the scheduled fees as per AMA. Surgeons can charge what they like and they do not have to stick to scheduled fees or Medicare rates at all. Health funds are quite misleading that way in my opinion...

Yes, it has caught many people out. I recommend people always ask the specialists receptionist whether they will take you as a No Gap patient. This way the "scheduled fee" is covered like normal (75% medicare, the other 25% by your private hospital insurance) and because there is no gap on top of this you have nothing to pay.

Health fund websites often list specialists that have taken No Gap patients in the past. Note that they will only see some patients No Gap and being private practice are under no obligation to do this but we might as well ask...or ring around? We just always ask the specialist's receptionist. They have said yes most of the time we have asked so we have often paid no gaps at all.

Edited January 18, 2013 by Fish

[Werns]

Yes, but don't forget the extra tax if you don't have private medical. It might just be cheaper to take it.

Well, as far as I can see, I won't have to pay extra tax since our combined income will be less than the threshold:

The MLS rate for the 2012-13 financial year is determined using your income for (Medicare levy) surcharge purposes, or if you have a spouse on the last day of the income year, your combined income for (Medicare levy) surcharge purposes, against following tier thresholds:

Below

threshold Tier 1 Tier 2 Tier 3 Single $84,000 or less $84,001 - 97,000 $97,001 - 130,000 $130,001 or more Family $168,000 or less $168,001 - 194,000 $194,001 - 260,000 $260,001 or more MLS Nil 1% 1.25% 1.5%

Am I reading this right, or am I missing something?

[Werns]

Sorry, I copied a table and it came out weird.

But, basically we would have to earn a combined income of more than $168,000 to be liable to pay the extra tax - and that ain't gonna happen.

[naomiwarr]

Spin-off: Is there any gap cover insurance one could buy that would cover the portion of a specialist's fees that the phi won't pay?

I'm interested to know because we recently got a specialist invoice (for a hospital procedure) that was 6x (!!) the amount that our phi will pay. The phi said the amount they pay is equal to the medicare rate. I mentioned it to the specialist's assistant and she was surprised because she said the doctor charges the AMA suggested rates.

Luckily for us the doctor seems willing to negotiate on the bill this time due to some unintentional misleading information they gave us. I just wonder how one deals with this going forward? At this stage we don't qualify for medicare as we're on a 457 but when we do there are still times when you want to be able to choose your own doctor or not have to wait...