7.4 PHI

Question 1

Private Health Insurance (PHI)

Answer 1

a type of insurance under which members pay a premium (or fee) in return for payment towards health-related costs not covered by Medicare. It is an optional form of health insurance that can be purchased in addition to Medicare.

Question 2

private health insurance options

Answer 2

• private hospital cover
• general treatment cover
• combined cover

Question 3

private health insurance incentives

Answer 3

• private health insurance rebate
• lifetime health cover
• medicare levy surcharge
• age-based discount

Question 4

Private health insurance rebate

Answer 4

Under this scheme, policyholders received a 30 per cent rebate (or refund) on their premiums for private health insurance.

Question 5

Lifetime Health Cover

Answer 5

People who take up private insurance after the age of 31 pay an extra 2 per cent on their premiums for every year they are over the age of 30.

Question 6

Medicare levy surcharge

Answer 6

People earning $97 001 or more a year ($194 001 or more for families) pay an extra tax as a Medicare levy surcharge if they do not purchase private health insurance. The Medicare levy surcharge is calculated according to income and ranges from 1 per cent to 1.5 per cent. This encourages high income earners to take out private health insurance.

Question 7

Age-based discount

Answer 7

Under this initiative, insurers have the option of offering young people aged 18–29 a discount of up to 10% for hospital cover. The discount allows for a 2% reduction in premiums for each year that the person is aged under 30, to a maximum of 10%

Question 8

advantages of PHI

Answer 8

• Enables access to private hospital care
• Choice of doctor while in public or private hospital
• Shorter waiting times for some medical procedures, such as elective surgery
• Depending on the level of cover purchased, services such as dental, chiropractic, physiotherapy, optometry and dietetics could be paid for
• Helps to keep the costs of operating Medicare under control
• High income earners with private health insurance do not have to pay the additional tax, called the Medicare levy surcharge
• Government rebate for eligible policy holders
• Lifetime Health Cover incentive
• The age-based discount may provide cheaper private cover for those aged 18–29.

Question 9

disadvantages of PHI

Answer 9

• Costly in terms of the premiums that have to be paid
• Sometimes have a ‘gap’, which means the insurance doesn’t cover the whole fee and the individual must pay the difference
• Qualifying periods apply for some conditions, such as pregnancy
• Policies can be complex to understand and so create confusion for the average person