Medicare versus Health Insurance


We are very lucky in Australia to have a medical system that offers free treatment and care and that should the need arise there will be professionals awaiting our care in the public hospital system.

I remember being caught up in the hype of 2010 that urged us to avoid the scary TAX levy by taking out private health insurance. The older you were at commencement the more expensive your insurance became so there was a sense of urgency to get quotes and signup before the next increase.  Little did I know that the Medicare Levy Surcharge (MLS) was based on my annual gross income from a salary bracket I had no likelihood of reaching. My commitment would have been zero.

However, I trudged ahead and took out my cover which cost me $34.30 per fortnight. Fast-forward to 2016 and I have just been informed by my provider that my insurance will now be $57.15 per fortnight which is a hike of 39.98% over five years. At this rate my insurance will certainly become unsustainable given my yearly pay rise is around 2.5%. And measuring the fact that over the five year period I paid a whopping $6,627 in premiums with very little claims made, I couldn’t see the benefit of continuing given the fact my wife is not covered under the policy.

As controversial as it might be to suddenly drop out of the health insurance racket at fifty years old, I choose to opt for the public hospital system and utilise my existing insurance premium on other beneficial investments. Let me show you my premiums over the five years.

Health Insurance stats

Now let me show the MLS table for 2014-2015.

Medicare Level Thresholds

This means that my wife and my combined yearly salary would have to reach $180,000 before we would liable to pay the levy. I can’t see that happening in the near future.

So what does Medicare cover:

  • Free treatment as a public patient in a public hospital
  • Free or subsidised treatment by allied health professionals such as doctors, specialists, and optometrists
  • Free tests and examinations, including x-rays and pathology tests
  • 100% of prescription medicine costs and most immunisations

I realise the weight of using the public system would mean endless hours waiting in cues for care, but I really don’t mind paying my own doctor to cover the essentials as he is familiar with my health history.

So, I am NOT advocating you drop your health insurance cover. What I would like you to do is review it. Is there necessity to change providers for lower premiums or lower your cover? Each of us will have different needs.

I have the discipline ( finally) to take my premiums and add them to my savings account for any future medical needs. And my goal for the future is to open a separate account that I will call our HEALTH account and park a sum of money in it that will cover any emergency treatments etc.