Health insurance extras remains popular despite cost-of-living pain

More Australians have health insurance extras policies than private hospital cover. It’s wise to check if you’re wasting money.

A couple of mates of mine haven’t seen a dentist in decades, which makes me very jealous of their teeth.

“Unusually high calcium levels in my bones and teeth” is one’s explanation. Lucky bastard. Meanwhile I’ve dealt with crowns, cracks, grinding damage, night guards and other expensive treatments, and am thankful I have private health insurance extras cover to help pay for it.

It also makes me question if people who avoid dentists can still get value for money from their extras policies, especially as Australians are about to be hit with more private health price rises from April 1.

Extras cover is an interesting household expense, and only really worth the money if you use it.

The best description I’ve heard for extras is like a book of discount tickets – like those old-fashioned restaurant and entertainment discount books people used to proudly carry.

But instead of a nice steak or parmigiana, you get discounts for dental, physiotherapy, massage, optical, chiropractic and other treatments, and often free ambulance cover. My insurance offers 60 per cent discounts until its annual limits per person are spent.

New figures from the Australian Prudential Regulation Authority show that despite the cost-of-living crunch, the number of people with extras cover rose 2.1 per cent last year to 14.7 million.

Dentistry is just one treatment covered by Extras, and the savings can be big. Picture: iStock

Fewer Australians have private hospital cover, where policyholders climbed 2.5 per cent to 12.1 million in 2023.

However, cancelling extras does not come with the tax penalties for higher-income earners that apply to those without hospital cover. The 1 per cent Medicare Levy Surcharge inflicted on people earning more than $93,000 – below today’s average wage – and households earning more than $186,000 makes private hospital cover a no-brainer for many.

That extra tax rises to 1.5 per cent as your income rises. I can imagine there are people out there earning $150,000 who don’t have hospital cover, so they are slugged with an extra $2250 each year in tax, even though a typical hospital-only policy can cost about the same.

People who don’t take out private hospital cover before age 31 are slapped with a Lifetime health cover loading of up to 70 per cent on their premiums for a decade.

It’s all designed to get younger and richer people paying for private health insurance even if they don’t use it much.

Extras cover does not have to be through the same provider as your hospital cover, so shop around for a policy that suits you.

Or cancel it, if you’re not using it or not getting value for money, because you won’t be penalised.

Health funds often have apps that allow people to track their extras usage and remaining benefit limits, and remember that benefits reset annually – usually January 1, but on July 1 for some funds.

It may be tempting to cancel extras in the current cost-of-living crunch, but remember if you restate it later you will have fresh waiting periods to deal with.

As for the initial question about whether my mate with super teeth should have extras, he thinks so because it helps out with regular chiro and physio.

Likewise for me, with dental, optical, physio and natural therapies.

For you? That depends on whether you use it or want that peace of mind. Just don’t pay extra for extras if it’s not worth it.

Originally published as Health insurance extras remains popular despite cost-of-living pain