Health Insurance Milestones: When to reevaluate your insurance

Not everyone benefits from having the same health insurance policy, and this is partly why health insurers offer hospital cover and extras at different levels. As you begin a new life stage, you (and your family) should review your needs to check whether you should update your health insurance. Doing so can ensure you’re getting the maximum benefits possible. Here are the top life stages to reevaluate your health insurance along with the common factors that you should consider.

Milestone 1: Independence

Children can be covered under their family’s policy, and you might be covered as a dependent under your parents’ health insurance policy after you turn 18 up to when you turn 25 if you are full time studying. Once you stop becoming a full-time student or dependent however, your parents’ health fund might require you be insured on your own. Similarly if you move out and are no longer a dependent as your health fund defines it, you might need to get your own policy to stay covered.

Detour: Reliance

After you become an independent adult, you might end up taking an unexpected detour and moving back home to live with your parents. If you become a dependent again, such as becoming a full-time student, and you’re under 25 years of age, your parents’ health fund might allow you to be covered under your parent’s policy. If you’re not a dependent according to your health fund’s definition, you might need to have your own policy even if you’ve moved back home.

Note: If you’re moving from one health fund to another for the same or lower level of benefit, you don’t need to re-serve waiting periods. If you’re cancelling your old policy, your health fund should repay any premiums you’ve made in advance.

Milestone 2: Marriage

Getting married is another major milestone in life, and you’ll want to review your health insurance to see if it’s still meeting your needs. Some health funds might offer lower premiums or other benefits if you and your partner combine your policies into a couples’ policy. Getting married is also a great time to consider whether your previous health insurance policy and extras covered are right for both you and your partner, especially if you may not need the same levels of cover.

Detour: Divorce

If you get divorced and you were on a couples’ policy, you’ll need to switch to a health insurance policy for singles as you’ll no longer be eligible for the couples’ policy. If you have dependent children, you might be able to obtain family health insurance designed specifically for single parents, though this will depend on your health fund. Single-parent families and families or couples are subject to different income levels when it comes to the Private Health Insurance Rebate, so remember to keep this in mind at each life stage.

Aside: Why 31?

Are you wondering about the significance of turning 31 for health insurance? Turning 31 is a major milestone to look out for when it comes to health insurance. This is because a surcharge – the Lifetime Health Cover (LCH) loading – applies on top of your premium if you take out hospital cover after the 1st July after your 31st birthday (your base day).

The LCH loading increases by 2% (up to 70%) for every year you go without hospital cover after your base day, so the longer you wait after this date to take out hospital cover, the higher the loading will be. The LCH is designed to encourage people to take out hospital insurance earlier in life.

Likewise, you’ll have to pay the Medicare Levy Surcharge (MLS) if you don’t take out private hospital cover and earn above given thresholds. The MLS rule applies regardless of your age.

Other than considering the LCH loading, there’s no “right age” for when you should start taking out health insurance, and health insurance is more about address your needs and life stage. You should weigh up the pros and cons of getting health insurance in your unique circumstances.

Milestone 3: Expecting Children

If you’re expecting children, congratulations! Don’t forget to review your health insurance policy well ahead of time so you’re covered for things like pregnancy and obstetrics-related services if you’d would like to have private care for those. You might want to be covered for additional options like IVF. A waiting period likely applies, so start reviewing insurance when you’re planning to start a family as this means you’ll be covered when the time comes.

Milestone 4: Having a Family

When your children start arriving, it’s important to add them to your policy so they’re covered for the private services you want them to be covered for. Private health insurance might allow your child to get the healthcare they need from the doctor or hospital of your choice. Avoiding public hospital waiting lists and reducing out-of-pocket costs for things like dentists and optometrist visits could be other benefits. Check for annual limits per person and per family as you’re choosing your policy.

And as your babies grow into young children and then teenagers, you could be facing different coverage needs, so review these to make sure you’re covered at the level you want. For example, you might find it beneficial to get higher tiers of extras cover to help cover costly dental and optical checkups.

Milestone 5: Retirement

Once you retire, you’re entering yet another major life stage – one that might come with changing healthcare needs. As we get older, we might be more susceptible to common aging conditions. While Australia has a good public health system for emergency situations, you could face waiting lists for non-urgent surgeries and services that nevertheless improve your quality of life. Private hospital and/or extras cover might give you access to the timely, quality care you need. So retirement might be time to upgrade your cover to a higher level of cover, for example.

Detour: Widowed

Losing a partner is something we’d all prefer not to think about at any stage of our lives, but as we head into our retirement years, the reality is, unfortunately, something that many people need to consider. If you’ve become widowed at any stage, you’ll need to switch from couples or family insurance to singles insurance or single-parents’ insurance. Take the opportunity to make sure your level of cover is still meeting your needs. For example, you might realise you’ll be better served with a higher level of cover as you get older.

Health insurance, like any type of insurance, shouldn’t be considered in a ‘fixed’ state. As you shift into a life stage and hit new milestones, review your insurance so you can maximise your benefits while matching what you’re getting with your current priorities. Consider things like coverage level, government surcharges and incentives, and your needs. Your health insurance is an investment that could protect you and your family’s health, so make time to review it whenever your life circumstances change.

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