Expat Health Insurance & Private Medical Care in Australia

Mixing state and private health care is a cornerstone of the Australian approach to medicine and partnership, between both sectors, is actively encouraged. Medicare, which is Australia’s system for universal medical cover, is considered to be the best and it was introduced in 1984. Anyone living in Australia for more than just a couple of months, should take full advantage of Medicare although they should be aware that there are some age restrictions that will apply to those looking to join.
Payments

Basic rate taxpayers make a contribution of 1.5% of income to Medicare but higher earners will have to contribute 2.5%. These contributions generally fall short of the budget needed to sustain it and central government therefore provides the remainder of the funding.

Most people are covered for three-quarters of their primary care costs and are also covered for 100% of their in-patient care but people can, if they wish, buy “top-up” insurance to cover the shortfall. The state sector subsidises premiums for private health insurance cover and those policyholders who are aged 65-69, are reimbursed by 30%-35% and people aged 70+ receive a 40% refund.

This rebate is popular, as it applies irrespective of income and wealth, but the labour government is trying to force through plans to means test this rebate. So far, this means testing has been rejected twice by the Australian parliament but if it managed to get through, it could cost wealthier households an extra A$1,300, which converts to £880 a year.

What healthcare is included ?

Three-quarters of GP charges, including services for physiotherapy, are reimbursed through the state sector or by the insurer and the patient then pays the remainder. At least half the population has top-up insurance to cover this shortfall. Costs for hospital in-patient services are covered by Medicare units but if you opted to be treated in a private hospital, Medicare would cover your costs to the level that would have been incurred in a state hospital.

Payments for Medication

Individuals make payments towards the cost of their medicines, on a “co-pay” basis which is currently up to A$38.80 at the standard rate and A$6.30 for the concessionary rate, with the state paying anything above (Pbs.gov.au, 2017). Only one sixth of the fee is paid by those on low incomes and welfare benefits.

What healthcare is excluded?

Fees for optometry, dentistry and ambulance transport are not reimbursed under Medicare, although help may be given to individuals with a Low Income Earner card.

Does private care work?

Australia has avoided the worst aspects of all-out private care, as demonstrated by the US in high cost and lack of cover for the poor and chronic sick. It also escapes some features of the UKs NHS-style

state-funded care in Austrailia

In 2013 the health care expenses in Australia, as a proportion of GDP, was 9.4% which compares to the average of 9.3 in other advanced countries (Aihw.gov.au, 2016).

Refining the Medicare rebate

If an individual hasn’t purchased cover for hospital care by July 1st following their 30th birthday, their premiums are loaded by 2% a year. The Lifetime Health Cover scheme states that this loading continues for 10 years and the director of international insurer, ALC health stated “It’s a way of penalising those who don’t take out cover in their youth, and then at a later date decide to do so. While the 2% levy is removed after 10 years, the cost to the individual can work out to be quite expensive.”

Another reason to buy private cover is because of the government levy of an additional 1% tax on high earners, but this only applies if they don’t have adequate private hospital cover. This will be on top of the standard 1.5% Medicare tax.

Types of health insurance plan

There are two types of health insurance plans, and these are; hospital policies for in-patient cover and general treatment schemes. Hospital plans are created cover in-patient costs which are not met by Medicare, for private patients being treated in public hospitals. Where doctors charge a higher rate than the official schedule of fees, these fees would need to be met by an insurance plan or by the patient themselves. It should be noted that a third of hospital beds are already in private hospitals.

Insurance providers

There is now a choice of some 36 insurance companies, within Australia, for expats newly arriving in Australia as well as for the 600,000 expats who are already there.
Within Australia, insurers are either structured for a “for-profit” or “non-profit” basis. The best known providers are, Medibank Australian Unity, BUPA, NIB and HCF. HCF insurance is one of the many non-profit insurers.

BUPA Australia has a strong following, and much of the £1.44 billion BUPA obtained from the sale of its UK hospital chain, was reinvested into Australia. During 2011, MBF, HBA and Mutual Community were merged into BUPA Australia, giving them a total of 3.3 million members. They also offer optical, dental and other complementary health services and have now become as big as its UK counterpart.
BUPA International, the expatriate health insurance division, works in partnership with BUPA Australia, to provide cover to Australians moving abroad.

Pool-risk premiums

The system in Australia is completely different to the cover offered in Britain. In Britain, premiums are set according to the perceived risk of the policyholder, whereas in Australia, premiums are determined more on a “pool risk” basis.

This “community rating” approach doesn’t pay any regard to age, past medical history or current state of health, and insurers are not allowed to discriminate according to race, religion, sex or sexual orientation but insurers can apply moratoriums, under which new policyholders are temporarily not covered for treatment. New plans usually start after two months of the date of first premium payment and this waiting period can be extended for up to a year, for any treatments relating to obstetrics.

Choosing an insurer

Your insurer must be a registered fund, in order to qualify for the 30-40% government rebate and Expats and residents can to buy cover online. Moneytime, iSelect and HelpMeChoose, are comparison websites that can help to find the best cover for you.

Dealing with brokers

Private cover is available for those who would like to stay outside of Medicare and for this, a broker may be needed. This also applies to those needing international cover and in both cases, it is wise to ensure that the broker is an agent of more than one insurer and has access to a range of providers.

Average premium increases by insurer for the past 3 years

Insurer Average increase with rate protection (%)

2015 2016 2017
Australian Unity Health LTD 4.96 6.19 4.70
BUPA HI Pty LTD 5.59 5.69 4.90
CBHS Health Fund LTD 6.58 5.92 3.29
Health Insurance Fund of Australia LTD 4.49 6.55 7.99
Medibank Private LTD 6.59 5.64 4.60
NIIB Health Funds LTD 6.55 5.55 4.48
Transport Health Pty LTD 4.84 6.49 4.93
Westfund LTD 7.92 5.94 4.96

(Health.goc.au,2017)

The middle-aged and retirees

Australia’s immigration policy aims to let in only those who are deemed likely to contribute to the economy. Medicare is available for anyone who is moving to Australia, provided they have been issued with a permanent visa. However, individuals aged over 55 do not qualify for permanent visas and will need to show that they will not become a burden on the Australia’s welfare or health system. Retirees will need an adequate health insurance package and, or, appropriate financial investments.

Reciprocal healthcare agreement UK-Australia

UK residents, who have arranged an approved visit to Australia, are covered by Medicare. The European Health Insurance Card is similar to this. This cover applies only to “medically necessary treatment” and if injury or ill-health occurs, whilst in Australia, the condition would need to be treated in Australia before returning home.

The Down Under experience

To get the best outcome, the health care systems of the UK and Australia can be combined and health outcomes, within Australia, suggest that things are better organised there. Premiums are being kept low through competition between the large numbers of insurers and as Australia encourages the use of private cover, this tends to attract new entrants into the market, keeping competition alive and costs down.

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