Sydney, 26 June 2024: As tax time approaches, many Australians rush to take out private health cover to avoid the Medicare Levy Surcharge or Lifetime Health Cover Loading. However, research reveals a concerning trend—over 2 million Australians hold Basic-tier hospital cover, often described as 'junk' policies that provide bare minimum coverage. Consequently, Aussies are collectively wasting a staggering $167 million annually on these subpar health insurance products.*
The Medicare Levy Surcharge applied to individuals earning over $97k or couples over $194k, and the Lifetime Health Cover Loading for those turning 31 are government measures encouraging private health insurance uptake. Many opt for cheaper basic-tier hospital coverage to avoid these penalties, often without realising how limited their coverage is.
Compare Club's analysis reveals that while the average Basic policy costs $101.33 monthly, some are as low as $79.15, and many only offer ambulance cover and a few restricted services**, providing little value. Surprisingly, more comprehensive Basic Plus and Bronze hospitals cover costs just $91 and $97.87 monthly, respectively—less than the average—offering better coverage while saving between $42 to $125 yearly.
"Health insurance is really complicated, and it's very easy to accidentally shortchange yourself by purchasing a Basic level cover without knowing you could have far better coverage for just a few dollars more," says Kate Browne, Head of Research at Compare Club.
"This is why talking to an expert before taking out private health insurance is so important. An expert can fully assess your needs and budget before helping you find a good value policy that will do more than just help you dodge a tax."
Research indicates that most 'junk' Basic policy buyers purchase online without speaking to an expert. While these policies offset health insurance-related taxes, people often pay more for less coverage due to the complexities of private health insurance.
Compare Club found stark contrasts between Basic covers and some Basic vs Bronze covers:
Basic Cover - most expensive policies
Health Fund | Cover | Cost | What’s covered |
ACA Health Benefits Fund | Basic | $126 monthly | Ambulance / restricted cover for all other procedures |
CBHS Health Fund Limited | Basic plus hospital | $122.07 monthly | Ambulance / restricted cover for all other procedures |
Hunter Health Insurance | Basic hospital cover | $142.40 monthly | Ambulance / restricted cover for all other procedures |
Mildura Health Fund | Basic plus
| $147.85 monthly | Ambulance / restricted cover for all other procedures |
Best value Bronze policies
Health Fund | Cover | Cost | What’s covered |
La Trobe | Bronze Hospital | $97.38 monthly | Ambulance and over 20 common procedures, including cancer treatment, Ear, nose and throat, and digestive. |
AHM | BronzeStarter hospital | $99.81 monthly | Ambulance and over 20 common procedures, including cancer treatment, Ear, nose and throat, digestive. |
La Trobe | Bronze Plus Hospital | $101.93 monthly | Ambulance, Dental surgery and over 20 common procedures, including cancer treatment, ear, nose and throat, and digestive. |
HBF | Basic Hospital plus
| $131.90 monthly | Ambulance, Dental surgery and other common procedures, including cancer treatment, ear, nose and throat, digestive |
"Some Basic policies only cover ambulance. If you live in Tasmania or Queensland, the state already covers that. People are often shocked that much more comprehensive cover costs a few dollars more monthly than a 'junk' Basic policy. That’s why we recommend that you speak with a broker to navigate the jargon and easily compare policies side by side, ensuring they get the best value for their health insurance dollar,” says Kate Browne.
TIPS FOR TAKING OUR FIRST-TIME HEALTH COVER
Don't take out an extras policy alone if you want to avoid taxes. You can only avoid the Medicare Levy Surcharge and Lifetime Health Cover loading with hospital cover or a combined hospital and extras cover.
Avoid policies that only offer ambulance and accident cover.
While it can be tricky, try to think about what procedures you might need in the next few years. For example, some really common procedures that are often covered by Basic Plus or Bronze policies include gynaecology, hernias, and tonsil removal. If you still have wisdom teeth or problem teeth, look for a policy that covers dental surgery.
-ENDS-
NOTES FOR EDITORS
*This is calculated using IPSOS data that found that 2,150,820 Australians are on some kind of basic policy. The average cost of a basic policy is $77.69.
**Restricted services only attract partial benefits, meaning you're only partially covered for those treatments.
For media enquiries:
Jasmine Kostas
Media + Capital Partners
0425 327 224
jasmine.kostas@mcpartners.com.au
About Compare Club
Compare Club is one of Australia’s fastest-growing personal finance marketplaces. It helps Australians save money by navigating complicated and important financial decisions. Compare Club’s panel of experts offer bespoke advice to over 3.6 Million members, making 1 Million product enquiries per year on key financial decisions, including health insurance, electricity & gas bills, and personal, car and home loans. Compare Club is locally owned and employs 350 passionate staff across Sydney, Melbourne, Brisbane and another 50 staff in Indonesia and the Philippines.
