IS IT a worthwhile cause for your generation to spend money on private health insurance?
Gen Ys - Justine Davies
HEALTH insurance premiums are set to rise by an average of 5.6 per cent on April 1, so it's a timely question.
Let's answer it with a few other questions:
If you have a non life-threatening condition, are you prepared to spend up to 27 hours in the your public hospital's emergency department?
Are you prepared to wait four months to have your tonsils out, six months to have a knee replacement or three months for a hernia operation?
Are you willing to be financially penalised for not having insurance?
If you answered "no" to any of those questions, you probably should be spending money on private health insurance.
Don't get me wrong, our public system is fantastic if you have a life-threatening condition, but for anything else you'll face a wait and could be in a fair amount of pain during that time. That can impact on your employment, study and social life.
Then there's the lifetime health cover loading. Basically, you need to have hospital cover by the June 30 after your 31st birthday, otherwise you'll pay a 2 per cent loading for each extra year you delay.
Plus there's the 1- 1.5 per cent Medicare levy surcharge which, if you earn more than $84,000 and don't have private cover, will be levied against your income. You're damned if you do and damned if you don't!
If you're under age 26 and still studying or training, you might still be covered under your parents' health insurance policy. Confirm this with their fund. Otherwise, you're on your own.
Shop around, because premiums and coverage can vary. Try privatehealth.gov.au for more information.
Justine Davies is finance editor and commentator with financial research and ratings firm Canstar.
Gen Xs - Bruce Brammall
THE question ain't fair! I'm a financial adviser. How can I possibly say no?
And I wouldn't say no. But I will say, emphatically, the Federal Government is making it really hard to say "yes" for Gen Xers. It's a bigger grudge purchase than insurance normally is.
The Government just ticked off on premium increases of an average of 5.6 per cent - more than 2.5 times current inflation.
That came after the removal of 30 per cent rebates for higher-income earners from July.
For many, from April 1, health insurance will cost 50 per cent more than a year ago. It's an income bracket that will impact Gen Xers and Boomers more than most.
About 54 per cent of Australians have private health insurance.
But household finances are under pressure. And like in that scene in Flying High, occasionally the brown, stinky, stuff hits the fan, at speed. And when it's your health, you don't want to be on that trolley waiting for a hospital room.
If you earn in excess of $84,000 as a single or $168,000 for a couple, then you're going to have to pay the hefty Medicare surcharge if you don't have private health cover.
And then there's the age penalty. If you're over 31 years old, there's an extra 2 per cent extra a year.
Private health insurance cover is a horrendously frustrating and complex system.
But Gen Xers, more so than most, with our tin lids and our big mortgages and our finances stretched to within a tissue paper of snapping ... yeah, Gen Xers need health insurance. Right! Just bite your tongue and buy it.
Bruce Brammall is the author of Debt Man Walking and principal adviser with Castellan Financial Consulting.
Boomers - Mark Bouris
HEALTH insurance gets more expensive the older you get and as you age, there is much more likelihood that you're going to need it.
I know a lot of people who see the costs go up and they decide to cancel their private cover, leaving them at the mercy of the public hospital system. It's understandable: Boomers are transitioning to reduced incomes, private health gets more expensive and for those who are healthy, it seems like an waste of money. In my mind, your health is your greatest asset. It's something that too many of us take for granted, that is, until something happens.
As Boomers, you've probably saved for decades to create a good retirement. But how good will it be if you're not healthy enough to enjoy it?
As you age, you're probably going to start having more frequent health issues, from common problems such as knee replacements, vision correction and daily medications, to more severe illnesses. It's part of getting older.
I read an article by demographer Bernard Salt where he said about 8000 pacemakers are implanted each year into public and private patients in Australia, with each device costing between $5000 and $12,000. A pacemaker is a device that regulates the heartbeat, and it could easily add years to a patient's life.
However for a patient without private health insurance, the cost of that surgery could be a deal-breaker. I'd hate to think anyone would have to jeopardise their health in that way, but I know it happens.
My advice is that if you can afford it, you should hold on to your private health cover. It's inevitable that you're going to need it, and the peace of mind you'll get from knowing that you're covered is invaluable.
Mark Bouris is executive chairman of wealth management and advice firm Yellow Brick Road.
Retirees - Kerrin Falconer
THERE is no doubt about it, we have one of the best healthcare systems in the world.
While many may complain about waiting times and crowded corridors in certain hospitals, if anyone is seriously ill and needs attention, he or she pretty well gets it when it is needed. We have dedicated doctors and nursing staff in our hospitals. They work long hours, often over and above the call of duty.
Having said that, the public system has its limits. It can't possibly be all things to all men and women, as much as it tries.
In a perfect world, both public and private hospitals would be funded with a never-ending stream from the money tree that is Canberra.
But it isn't a perfect world and there are always budgets, balance sheets and bottom lines to restrict services and supplies.
Retirees are a bit like vintage cars. They both have a few clicks on the clock. They require frequent oil and grease changes, valve regrinds, new gearboxes or starter motors and sometimes need major overhauls. They usually work well on short runs but often strike trouble on extended trips.
They simply aren't as young as they used to be, but are still pretty darn good.
Those prepared for the upkeep of these beauties have made a choice and are prepared to pay what it takes to keep them in good running order.
Similarly, retirees need to make a choice as to whether they are prepared to join the queue and wait for whichever doctor is available when and where they need some reconditioning.Or they can use private health insurance to ensure they can get the mechanic and the garage they choose, when they want it.
It's not cheap, but then neither is maintaining vintage cars.
Kerrin Falconer is a finance writer with 15 years of financial planning experience.
