What happens to private health cover after losing my job?

The professional landscape is always changing, and nobody's job is truly safe.

Companies crash out of nowhere which forces layoffs, and you might find yourself on the chopping block.

If you're worried about losing your job or have recently fallen victim to a series of layoffs, you might be wondering: what happens to my private insurance when I lose my job?

The loss of income often means you'll have to scale-back spending for a while.

Sometimes, this means your health insurance premium might be too high to pay.

Thankfully, there are a few ways to avoid completely losing your private health insurance.

Ahead, we detail what to expect when you no longer have enough money to afford private health insurance.

Healthcare assistance

Losing your job and primary income doesn't need to be the end of the road for your private health insurance.

There are a couple of ways insurance providers can assist you in keeping up with your premium payments.

We stress that you check the specifics of your health cover before buying, especially if you foresee layoffs coming down the line.

Redundancy insurance

If your employer makes you redundant or you otherwise find yourself involuntarily unemployed, your first line of defence will be redundancy insurance or unemployment cover.

If you're in a position to save your money, we recommend you do so.

You never know when you're going to find yourself out of work, and having a few months of expenses covered in a safety net savings fund will make a world of difference.

Since it's hard to save money while purchasing necessities and planning for the future, unemployment cover can be incredibly useful for unexpected job loss.

Redundancy insurance is a relatively new concept.

General insurers have only started offering Australians the option recently.

Competition in the marketplace has forced companies to create more beneficial programs, and redundancy insurance is one of them.

Unemployment cover offers limited financial protection if you lose your job.

This is often enough money to cover some expenses, including a private health insurance premium.

Some plans will even cover the cost of your premiums for up to a year, depending on how long you're unemployed.

While this is a fantastic benefit and one that everyone should consider, it only applies to the person earning the primary income in your home.

If your husband or wife contributes more money to the household income, they're the person who needs redundancy insurance.

The loss of secondary or supplemental income won't be enough for insurance companies to cover your health insurance premiums.

Suspending your cover

Another reason we recommend comparing private health coverage before you buy is that some private health funds allow you to suspend your coverage in times of need.

If your health fund allows you to suspend your coverage, you won't have to pay premiums for a designated period, but you also won't be able to claim any benefits.

While you're looking for work and suspending your premiums, you'll maintain coverage through Medicare.

You won't be able to take advantage of the benefits of private health insurance at this time but can claim them again once your suspension is over and you find a new job.

If you handle the suspension properly and your health fund allows you a suspension under your circumstances, you shouldn't have a waiting period once you reclaim your coverage.

If your skillset is in-demand, suspending your premium payments is probably the best option.

Of course, you'll have to make sure your health fund allows the suspension of premium payments.

Worst case scenario

Redundancy coverage and suspended premiums are fantastic if you have them, but a lot of people won't.

Some private insurers don't allow you to suspend payments, and most people don't plan for layoffs with redundancy insurance.

If you lose your job and don't have one of the above safety nets, you'll face losing your private health coverage while you search for a new source of income.

Lifetime Health Cover

Lifetime health cover (LHC) is one of the systems that the government put in place to incentivise buying private health insurance.

Here are some quick facts to help you better understand LHC:

• Your "LHC age" starts the 1st of July after your 31st birthday.

• To incentivise early buying, those who buy insurance with private hospital coverage before that date can avoid the Lifetime Health Cover loading.

• Good Samaritans injured while performing a good Samaritan act

• The younger you are when you sign up for private hospital cover, the less you'll pay in loadings.

• Gaps in coverage can affect how much you'll end up paying.

Losing private health coverage

Private health insurance has a long list of benefits attached that are hard to let go of.

When you rely solely on Medicare, you can't skip waiting lines, choose your surgeon, or possibly afford "elective" treatments and surgeries without potentially waiting months or even years.

While it's the "worst case scenario" to lose your private health coverage, it isn't the end of the world.

Medicare provides a substantial safety net for people who can't afford to pay their premiums.

Medicare may be your only option if you can't seem to find suitable employment after an extended period.

If you fall into this category, you can expect to see the following coverage differences in Medicare and Private Health Insurance.

Private health insurance rebate levels

There are, of course, other benefits to choosing private health coverage, such as the ability to choose your doctor and have a private hospital room.

If the bare-bones benefits of Medicare are enough until you find a new job, though, you don't have too much to worry about.

Medicare covers almost any emergency you could need, so you'll have coverage if disaster strikes.

Planning for the worst

It's worth planning for the possibility of losing your job -- even if you're secure in your position.

Compare insurance plans to ensure they allow you to suspend coverage in case of an emergency.

If you're already committed to a plan, investigate redundancy insurance as a possible backup.

Avoiding gaps in your insurance is ideal, so it's essential that you choose an insurance plan with the most flexibility.

Related Articles

A Guide To Income Protection Insurance in Australia

A Guide To The Medicare Benefits Schedule (mbs) Health

How Job Loss Impacts Health Insurance: A Guide for Medical Professionals

Chris Stanley is the sales & operations manager of health insurance at Compare Club. With extensive experience and expertise, Chris is a trusted leader known for his deep understanding of health insurance markets, policies, and coverage options. As the sales & operations manager of health insurance, Chris leads a team of dedicated professionals committed to helping individuals and families make informed decisions about their health insurance needs.

Meet our health insurance expert, Chris Stanley

Chris's top health insurance tips

• 1

  Australia’s public health system is world-class, but wait times for public hospitals can be long, inconvenient - and leave you living in constant pain while you wait.

• 2

  An appropriate private health insurance policy can speed up your surgery, relieving your pain sooner.

• 3

  Family health cover means your children are covered under the same policy as you.

• 4

  Many health insurance policies come with a 12-month waiting period for pregnancy-related cover, so it’s a good idea to get a family policy organized well before starting your family. This means your child will be covered from birth until at least their early twenties (depending on which health fund you select).