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Sunday, February 20, 2011

Introduction to the Health System in Australia (and the Role of Private Health Insurance)

Health care in Australia is comprised of both the public and private health care systems.

Public health care in Australia

The public health system is called Medicare, and is funded partly through an income tax levy of 1.5%, with the rest of the costs coming from the general budget.

Under Medicare, Australians can receive free treatment as public patients in public hospitals; free or subsidised treatment by doctors and specialists; free x-rays and pathology tests, and eye examinations performed by optometrists.

Private health care in Australia

Private health care goes a step further than Medicare, as it includes private hospitals and ancillary (outside of hospital) services like dental, physiotherapy, chiropractic, etc.

In total, the private sector funds about a third of all health care in Australia.

The role of health insurance

Health funds provide average Australians with access to the private health system through the means of insurance. Private health insurance pays benefits toward a wide range of health services including:

- hospital treatment as a private patient
- cover in private hospitals
- doctors' and specialists' fees for in-patient costs
- dental and optical care
- therapies like physiotherapy, chiropractic and psychology
- natural therapies including acupuncture, naturopathy, remedial massage
- equipment like glucose monitors and hearing aids

In addition to these services, private health insurance also allows people to choose the hospital they wish to go to and the doctor they want to treat them. It also ensures shorter waiting times and greater flexibility in scheduling surgery.

Private health cover is supported by the Australian Government through various means.

1. insurance rebate

The Australian Government currently offers a 30% rebate on the cost of private health insurance to all Australians. This applies to both hospital and ancillary cover.

The elderly are offered higher rebates, with 65-69 year olds eligible for 35%, and over 70s eligible for 40% rebate.

2. The Medicare Levy Surcharge

Higher income earners who do not have hospital cover must pay an extra 1% tax in the form of the Medicare Levy Surcharge. This is on top of the normal 1.5% Medicare Levy that all taxpayers contribute towards.

To avoid the Medicare Levy Surcharge, Australians are encouraged to take out private cover.

3. Lifetime Health Cover

Lifetime Health Cover is a Government initiative that encourages people to take out health insurance earlier in life. By joining before they turn 30, young people can lock in the lowest base rate premium. After this age, a loading of 2% is charged for every year without health cover after the age of 30.

The type of private health insurance you require depends on your circumstances. Health insurance comparison sites can help you compare different policies from a range of top Australian health funds, providing you with the most suitable cover for your needs at no charge.

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