Medicare vs Private Health Insurance
In Australia, we’re very fortunate to have access to a public healthcare system (aka Medicare). However, there are certain things it doesn’t cover, which can lead to out-of-pocket expenses for you—maybe even needing you to take out a small emergency loan.
So, is it worth investing in private health insurance to cover the gaps? It ultimately depends on your circumstances. To help, we’ve broken down the advantages and disadvantages of Medicare vs private health insurance for you. Keep reading to learn more.
- The difference between Medicare & private health insurance
- What is Medicare?
- What is private health insurance?
- Medicare vs private health insurance: pros & cons
What is the difference between Medicare and private health insurance?
To distil it down to basics, Medicare is mandatory and it’s paid for by your taxes. Private health insurance, on the other hand, is completely optional.
The main difference between the two, is that Medicare pays for patients to be treated in the public health system and private health insurance pays for patients to be treated in the private healthcare system. Other differences include:
- How you pay for treatments
- The waiting periods for treatment
- Where and which doctor/hospital you get treated at
- What you pay in tax each year
We’ll get into the differences between Medicare vs private health insurance more below.
Do you need Medicare if you have private health insurance?
In a nutshell, yes. Medicare is a universal health insurance scheme that covers things (such as the cost of seeing a GP), which private health insurance does not. You’ll need to consider costs, but you can have a combination of both Medicare and private health insurance.
What is Medicare?
Medicare is available to Australian citizens and most permanent residents. It funds the public health system through the Medicare levy, paid when you submit your tax return each year.
The following is covered by Medicare:
- Part of the cost of seeing a GP or specialist
- Most prescription medicines
- Free treatment and accommodation in public hospitals. (As a public patient in a public hospital, you’ll be treated by hospital-appointed doctors and subject to waitlists for non-emergency treatment.)
When considering Medicare vs private health insurance, you must consider what Medicare doesn’t cover, which includes:
- The cost of ambulance services, glasses/contact lenses or hearing aids
- Therapies such as speech pathology, osteopathy and remedial massage.
This is where private health insurance can fill the gaps and give you more choice over treatment.
What is private health insurance?
As the name suggests, having private health care allows you to access the private health system. There are many different levels of cover to choose from, and it can include:
- Hospital cover
- Extras cover (such as dental, physiotherapy or optical)
- Ambulance cover
Private health insurance can be purchased from a registered health insurer and you will pay regular premiums to maintain your cover.
Is private health insurance better than Medicare? While private health insurance has many benefits, you do need to weigh up the pros and cons of it. So, let’s look at the advantages/disadvantages of medicare vs private health insurance.
Medicare vs private health insurance: pros & cons
To help you decide, we’ve summarised the main pros and cons of Medicare vs private health insurance.
Main advantages of Medicare Australia:
- Treatment at no upfront cost (or a reduced cost)
- No insurance premiums or excess
Main disadvantages of Medicare Australia:
- Some treatments aren’t covered
- Longer wait times & less choice
Main advantages of private health insurance in Australia:
- Shorter wait times & more choice
- Money saved on out-of-hospital services
Main disadvantages of private health insurance in Australia:
- Must pay an excess when you claim
- Some treatments may not be covered depending on your policy
Is Medicare or private insurance better?
Now you’ve learned about the advantages and disadvantages of Medicare and private health insurance, you have to decide which one suits you!
How? It’s a simple cost-benefit analysis. If you are generally in good health and don’t wear glasses, health insurance may be a waste of money. You could instead put aside the money you would spend on a premium for emergency expenses—or trust the public system to take care of you. If you have regular medical expenses or a chronic health problem, then private health cover could save you money and time.
If you are looking for an easy way to compare plans, head to Compare the Market. They compare dozens of companies at different levels of cover.
Should you have additional unexpected medical expenses that you don’t have the cash for, we can help. Find out how to apply for a payday loan online and then apply for a cash loan in a few easy steps!