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As you age, one thing becomes clear: the cost of healthcare only seems to rise.
Private health insurance can be a great way to manage these expenses, but without a policy that’s tailored to your current needs or properly updated, it could end up costing more than it should.
Here’s what Australians over 50 need to understand about private health insurance.
Each of us has a unique family history and personal background, which means we’re all at risk for different health conditions.
That said, some common issues tend to emerge. Many older Australians face challenges such as tooth decay and vision problems. Additionally, joint issues, chronic illnesses, and other health concerns can become more prevalent—and costly to treat.
Your family history and current health can help you identify specific risks, such as diabetes, prostate or breast cancer, or high blood pressure.
Make sure to compare health insurance policies that provide coverage for the treatments and care you’re most likely to need.
Private health insurance is an important investment that can make a real difference when you need it most. Statistics from the Australian Prudential Regulatory Authority show that older Australians tend to rely on their health insurance more frequently than younger age groups.
Recent data highlights this trend: in the year leading up to September 2022, the number of Australians aged 50 and over with hospital cover grew by over 115,000, compared to just 47,500 among those under 50.
Official statistics reveal that older age groups are more likely to make claims on their health insurance.
Certain procedures can run into tens of thousands of dollars. When using a private hospital insurance policy, the excesses and out-of-pocket expenses are minimal compared to covering the entire cost of treatment without insurance.
While you can choose to receive care as a public patient, doing so means less control over your healthcare options. A private hospital policy offers several advantages, including:
Extras policies, on the other hand, cover healthcare services outside of hospitals that aren’t claimable through Medicare. Depending on the level of cover, extras can lower your expenses for services such as:
When you're treated as a private patient in a private hospital, Medicare covers 75% of the cost based on the Medicare Benefits Schedule (MBS)—a list of fees the Government deems appropriate for various medical services.
Health insurance typically covers the remaining 25% for treatments included in your policy. However, healthcare providers, including doctors and surgeons, often charge above the MBS fee. This additional amount becomes an out-of-pocket expense for the patient, known as a gap payment.
The cost of medical treatments varies widely depending on the procedure and the specialist performing it. For instance, let’s consider the costs associated with a hip replacement, a colonoscopy, and gall bladder removal to understand these variations.
| Treatment | Percentage of privately insured patients with out-of-pocket expense | Median doctors’ fees | Average out-of-pocket expense paid by patients* |
| Gall bladder removal | 70% | $2,800 | $400 |
| Colonoscopy | 20% | $1,400 | $200 |
| Hip replacement (single) | 83% | $5,100 | $600 |
| This amount is calculated after receiving payouts from Medicare and private health insurance, and it does not include any fees charged by the hospital. | |||
As the table illustrates, doctor’s fees can vary significantly, and the number of private health insurance holders who need to pay out-of-pocket varies by surgery. However, these out-of-pocket expenses are still considerably lower than the full cost of private treatment without insurance.
Although older generations tend to use their health insurance more frequently, their premiums don’t usually cost more. Health insurance is community rated, meaning your individual health risks or likelihood of making a claim won’t affect your premium. This is different from products like life insurance, which consider factors such as your occupation, health history, and other personal details when setting your premium.
This means that if you choose the same level of coverage as someone in their 30s, your base premiums will be the same. However, factors such as lifetime health cover loading and the Australian Government rebate on Private Health Insurance can influence what you pay.
Keep in mind that if you do make a claim, you’ll also need to consider out-of-pocket expenses.
Since everyone’s health needs are different, it’s a good idea to consult with an expert to understand how a private insurer can help cover the services you’re most likely to need.
Although health insurance often offers better value for those over 50 than for younger individuals, that doesn’t always mean you’re getting the best deal. This is especially true if you haven’t compared policies in a while.
Our experts are ready to assist you in shopping around for the best options. It only takes a quick phone call or a few minutes comparing plans on our website.
