Stop Wasting Money On Junk Health Insurance

It’s tax time – and that means lots of Australians are taking out health insurance for the first time. Maybe it’s to avoid the Medicare Levy Surcharge* or the Lifetime Health Cover loading.

But while tax minimisation strategies can be money savers, the shocking truth is that each year more than 20,000 Aussies will waste more than $26.4 million of hard-earned money on ‘junk’ health insurance policies.

Definitely a false economy that needs to change.

How you can avoid wasting money on useless health insurance

If your budget limits you to the cheapest possible policy, ‘basic-tier’ hospital cover might seem like it will tick the right boxes to help you avoid those pesky tax penalties. But, really?

The research from Compare Club specialists shows they offer extremely limited cover. For just a few dollars more each month, a more comprehensive basic or bronze-tier policy presents significantly better value for money.

Value? What value?

Analysis from Compare Club suggests the current average cost of a basic policy is $101.33 a month, with some policies costing as little as $79.15 a month. Sounds great, right?

Be warned. These Basic level policies only offer ambulance cover and a small number of restricted services – and that means your ‘affordable’ health insurance cover is actually returning very little value for money.

As an alternative, Compare Club has uncovered comprehensive Basic Plus and Bronze Plus hospital cover that cost $91 and $97.87 a month respectively. These are both significantly less than the average, and could provide better cover – and save you between $42 to $125 each year!

Policy	Monthly cost	Included in policy
Cheapest Basic Cover	$79.15	Accident Protection and Emergency Ambulance only. 3 restricted items**
Most expensive Basic Cover	$137.72^	Ambulance Cover for NSW & ACT residents, Accident Protection, Hospital accommodation in a public hospital. All other items restricted
Basic+ Cover	$91	14 items including hernia, dental surgery, gynaecology and tonsils. 3 restricted items
Bronze+ Cover	$98.87	32 full items including all items found in Basic+ as well as items such as joint reconstructions, kidney & bladder, breast surgery, and diabetes management. 2 restricted items

How to boost the value of your health insurance cover

Compare Club senior health insurance broker Eli Boroda says it’s easy for people taking out health insurance to get confused. But the good news? It is possible to avoid taxes and still get value for money.

“Health insurance can be really confusing if you’re trying to figure out what cover you need to avoid tax. We’ve spoken to people who’ve just been told to get the cheapest policy but have no idea that it’s got no real value beyond just tax savings,” she says.

“This often leads to customers becoming disenfranchised with the whole system, as when they come to use their policy, they find they’re not even covered for common treatments such as wisdom teeth or tonsil removal. In reality, there are lots of affordable policies that are great value for money and in some cases cost less than a very limited Basic policy. People are often shocked that a much more comprehensive level of cover only costs at worst a few dollars more a month than a junk basic policy.”

More bandages for your bucks

To avoid falling into this trap, doing your own online comparisons is highly recommended.

It’s all about cutting through the cluttered marketing spiel the insurance providers themselves will spin to you. Cheap can sometimes be positive but it’s often only a bandaid fix.

To get the health cover protection you need, and value for money, compare what’s out there to look for that perfect sweet spot between a budget-friendly premium AND actual health insurance cover benefits that give you more bandages for your bucks.

The bottom line

Try these top tips to get the most from your health insurance:

don't take out extras on its own, if you're looking to avoid taxes. You can only avoid the Medicare Levy Surcharge and Lifetime Health Cover loading with hospital or combined cover
avoid policies that only offer ambulance and accident cover
think about what you'll need in the future. If you haven’t had your wisdom teeth out, look for a policy that covers dental surgery, while many Basic+ and Bronze policies cover common procedures such as gynaecology, hernias and tonsil removal.

Go deeper: Most expensive health insurance policies revealed

For more information visit https://compareclub.com.au/health-insurance/medicare-levy-surcharge/

*The Medicare Levy Surcharge is applied when you earn over $90k or $180k as a couple. This threshold will increase to $93k and $186k respectively from 1 July.

**Restricted services only attract partial benefits, which means you are only partially covered for those treatments or services.

With restricted services, you may also have to pay significant out-of-pocket expenses.

All costs calculated are for a Single, 31 year old in NSW with an excess of $750. Policies correct as of 09/06/2023.

^Policy comes with no excess

Financial disclaimer

The information contained on this web page is of general nature only and has been prepared without taking into consideration your objectives, needs and financial situation. You should check with a financial professional before making any decisions. Any opinions expressed within an article are those of the author and do not specifically reflect the views of Compare Club Australia Pty Ltd.