Should I consider health insurance in my 20s?
From maintaining your health to affordability, here’s the top things to consider when it comes to health cover in your 20s.
There are many reasons to consider taking out private health cover in your 20s, and now there’s one more. Medibank has opted to offer discounts for 18-29 year olds on eligible hospital cover+.
But beyond the discount, there are already a number of reasons why it makes sense to take out private health cover in your 20s - some more well known than others. To help you make your own decision, we’ve drawn up a list of things you should know when making your decision.
1. Your health needs
Your health history, lifestyle and peace of mind are all important factors to consider when it comes to health insurance. For instance, if you play sport, you may be looking for cover that includes knee reconstructions -- one of the top claims for young Medibank members in their 20s. Maybe you want cover that pays towards dental surgery, in case you need your wisdom teeth removed and don’t want to wait in the public system. Or maybe you want the peace of mind of knowing you can choose your own doctor and have treatment in a private hospital. Keep in mind that waiting periods apply, including twelve months for pre-existing conditions.
2. Better health and value through your extras
When you think of health insurance, you might think of having cover for the unexpected. However, health cover is also about maintaining your overall health and taking steps to prevent further issues down the line.
If you take up extras cover, it can help you maintain good health through a range of non-hospital treatments, like dental, physio, chiro, optical and remedial massage. What’s more, with the right provider, you can get a lot of value, with Medibank offering 100% back on up to two dental check ups at a Member’s Choice Advantage dentist every calendar year, including x-rays (a 2 month waiting period applies)*.
And if you wear glasses, you can get 100% back on all optical items at recognised providers up to annual limits**.
3. A discount for 18-29 year olds
Medibank is offering a discount for 18-29 year olds who take out eligible hospital cover+. A person’s discount will depend on their age when they first take out hospital cover, and will range from from 10% (if they take out cover before the age of 25) to 2% (if they take out cover at the age of 29).
The best part is, if you fall within this age bracket and stay on eligible cover, you’ll maintain the discount until you turn 41. After that, it will reduce by 2% every year until it reaches zero. The aim of this change is to give young Australians more choice when it comes to their health, including an affordable way to maintain private health cover.
If you’re currently on couples cover, the discount will be calculated by taking an average of the discount applied to all adults on the hospital cover. So, if one person has a 10% discount and their partner has no discount, the discount applied is 5% overall. Not all health funds are opting to offer this new discount like Medibank, so it’s worth checking that before make your decision.
And if you’re already an eligible Medibank member, the discount was automatically applied to your premium on 1 April 2019. Use our calculator to find out how much better off you could be.
4. Avoid the Medicare Levy Surcharge
Many people’s main financial consideration when taking out health insurance is whether it it will help them to avoid the Medicare Levy Surcharge (MLS). MLS is a government surcharge designed to encourage Australians who earn over a certain amount to take out hospital cover and help ease the burden on the public health system.
It works by charging extra tax to any Australian who earns over $90,000 a year as a single, or $180,000 as a couple/family^, and doesn’t hold an appropriate level of private hospital cover for the full tax year. The MLS can be anywhere from 0 to 1.5% of a person’s income, depending on their income bracket.
For example, if you’re earning over $100,000 a year as a single and you don’t have hospital cover, you may pay an extra $1,000 in tax for that year.
If you’re in this income bracket, you can determine the additional tax you might pay using our Medibank Levy Surcharge calculator Medibank Levy Surcharge calculator.
5. Lifetime Health Cover loading from the age of 31
Lifetime Health Cover loading is an Australian Government initiative designed to encourage people to take out hospital insurance earlier in life and to maintain their cover. From the 1 July following your 31st birthday, a 2% loading may be added to your hospital cover premium (when you eventually take it out) for every year you’re without cover from the age of 30. For example, if you wait until 35 to get hospital cover, your loading will be 10%. So, a $100 monthly hospital premium would become $110 with the added loading.
This is called the Lifetime Health Cover (LHC) loading. To avoid it, you just need to take out hospital cover by 1 July following your 31st birthday, which is called your base day. If you have a combined policy, for example hospital and extras cover, the LHC loading is only applied to the hospital portion of your premium.
What does it mean for me?
Like all things in life, it’s important to make a decision based on your personal health and financial situation. But with surcharges, loading and discounts, it can be complicated to figure it out on your own. Visit our Understanding Health Insurance guides or chat to one of our friendly staff members on webchat, over the phone, or at one of our retail stores to find out if health insurance is better for you.
* Limited to two dental check ups on all extras annually. Maximum two bitewing x-rays per check-up, where clinically needed. Not available in all areas.
** 6 month waiting period applies. Some lens coatings excluded.
^ Income for Medicare Levy Surcharge purposes.
+ Excludes dependants on family memberships.
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