What is basic health cover and how much does it cost?
Basic hospital cover is the lowest level of health insurance that offers limited services for the lowest cost. But is it worth it in the long run?
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With so many different health insurance policies to choose from, it can be overwhelming to pick a policy that works for you.
The Australian government introduced a four-tier system for people to easily compare private hospital cover to best suit their current and future needs.
Basic hospital cover is at the bottom of the standardised system, offering Australians the cheapest policy, but has faced criticism for providing limited and restricted cover.
Private Healthcare Australia CEO Dr Rachel David said basic cover is a good starting point for younger Australians when they’re looking to take out private health insurance.
“Basic policies are an important entry level product for Australian consumers and are popular among younger and healthier people, who often upgrade to higher value products as their health status changes and income increases,” she said.
However, while basic cover is the cheapest option, it may not provide you adequate or worthwhile coverage so it’s really important to do your digging.
Personal finance expert at Life Sherpa Christopher Zinn said basic cover has “its place for entering public health insurance, avoiding tax or needing cover for accidents.”
“But comparison services are careful to point out the restrictions and advise extending the level of cover by selecting a Basic Plus option which can add specific items,” he said.
Mr Zinn advises customers to be clear in their mind why they’re choosing basic cover and what it does not cover.
“It’s tempting to save money on health insurance, but it can be a false economy if you had to pay the full freight for an operation or procedure,” he said.
What is Basic health insurance?
Basic hospital cover offers the lowest tier of cover at the lowest price and sits below the Bronze, Silver and Gold tier.
The basic tier is only required to cover a total of 3 clinical categories, compared to the 21 categories for Bronze, 29 for Silver and 38 categories for the highest tier, Gold.
While it may offer a way out of paying the Medicare Levy surcharge, customers should consider a higher coverage policy such as bronze, silver or gold as they may be able to provide better value and more adequate cover for their needs.
What does Basic health insurance cover?
Basic health insurance offers the lowest coverage out of Bronze, Silver and Gold tiers.
Mr Zinn advises that basic policies will provide services for a “very limited range” of medical procedures and ailments.
“Basic policies provide for treatment in a public hospital in a very limited range of circumstances limited to end-of-life palliative care, rehabilitation and psychiatric care,” he said.
“You do not get to jump the public hospital waiting list, but you can get to choose your own doctor.”
Find more valuable health cover
If you chose to go with Basic cover, expect to receive a restricted cover for the following three categories:
1. Rehabilitation: Hospital treatment for physical rehabilitation for a patient related to surgery or illness. According to the Department of Health, this relates to inpatient and admitted day patient rehabilitation, stroke recovery and cardiac rehabilitation.
2. Hospital psychiatric services: Hospital treatment for the treatment and care of patients with psychiatric, mental, addiction or behavioural disorders. This includes treatment for schizophrenia, mood disorders such as depression, eating disorders and addiction therapy.
3. Palliative care: Hospital treatment for care to provide quality of life for a patient with a terminal illness, including treatment to alleviate and manage pain.
What doesn’t Basic health insurance cover?
Mr Zinn said basic insurance does not cover “knee, heart, eye or any of the myriad of conditions people use health insurance for.”
Some of the other health categories basic-tiered cover does not cover are of the heart and vascular system; lung and chest; blood; back, neck, and spine; medically necessary plastic and reconstructive surgery; dental surgery; podiatric surgery; implantation of hearing devices; cataracts; joint replacements; dialysis for chronic kidney failure; pregnancy and birth; assisted reproductive services; weight loss surgery; insulin pumps; pain management with device; and sleep studies.
While health insurers offer cover for additional treatments on a restricted basis in the Basic tier, which are known as Basic Plus [+], you may want to consider Bronze, Silver or Gold tier policies if your circumstances require cover for the above.
Who is most suited to Basic health insurance?
For those seeking to avoid the Medicare levy Surcharge of 1% on your income, Mr Zinn said a basic health insurance policy can prove cheaper.
However, he advised that the value of the cover is “very limited as essentially you are highly unlikely to use it.”
“You can pay a bit more for a Basic Plus or even a Bronze policy and get much more for your money.”
“Younger people may be most attracted to the savings but older people who are more likely to claim should steer clear of basic unless they have no other choice.”
Look for a better suited health policy
How much does a Basic insurance plan cost?
According to the Private Health Insurance Ombudsman’s comparison of health insurance policies, Basic and Basic Plus hospital cover for a single adult in NSW can range from around $101 to $116 per month before any rebates are applied.
Basic cover will generally cost less than the other three tiers of health insurance, as there’s less available services on offer.
The cost of basic cover will depend on what’s included in your policy and the prices set by your insurer.
Mr Zinn also advised prices will vary depending on where you live and your marital status.
“If you are a single or a family and how much you earn because there is a rebate on premiums if you earn less than a certain threshold,” he said.
“You can agree to pay a higher excess and get a lower premium.”
However, for some people basic cover could actually be preventing you from saving money when it comes to tax time.
“For a single earning around $100,000 a Basic policy could cost around $1,000 or roughly the same amount as the Medicare Levy Surcharge they may be trying to avoid,” Mr Zinn said.
What about out-of-hospital treatments?
Basic cover has a limited selection of out-of-hospital services including ambulance and in some cases, home nursing.
If you decide to choose Basic hospital cover, you’ll have access to palliative care, rehabilitation and hospital psychiatric services. But keep in mind restrictions may apply and you might be only able to access services as a private patient in a public hospital.
It’s important to remember a basic policy won’t offer you the same level of services as Gold, Silver and Bronze tiers, but some insurers can offer ‘Basic Plus’ policies with some additional treatments. Make sure to contact your insurer to see if the offer applies.
What do I need to know about excess?
Excess is a payment customers are obligated to make to their health insurer when making a claim.
This is an amount that must be paid alongside the out-of-pocket costs of a hospital stay and can sometimes be applied to hospital insurance and help lower the cost of your premium.
It’s important to check with your insurer to confirm how much excess you can expect to pay.
RELATED: How to get cheaper private health insurance in Australia
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