Of all the insurance products you’ll need as a student, health insurance is probably the most important – and the most difficult to understand.
Whether you’re travelling around Australia or studying at university, health insurance can help you to recover from illness or injuries with a vastly reduced financial cost. Even better, there are a wide range of services that are covered by it.
To help you understand what can be a complicated industry, we’ve compiled a handy guide for students on how health insurance works, and all the things you need to know about it.
What is health insurance?
Like any other insurance, health insurance is simply a service where you pay a monthly fee so that in the event of an accident, your insurance provider will cover the vast majority of your costs. Health insurance covers both minor and major medical incidents. In Australia, we have a comprehensive public health cover system (Medicare) and it’s important to know the distinction between public (Medicare) cover and private health cover.
Medicare is Australia’s universal healthcare system which is funded by your taxes. Thanks to Medicare, all Australian citizens are entitled to free treatment and accommodation at public hospitals, as well as free treatment by general practitioners (if they bulk bill) as well as a rebate for treatment by most specialists. Medicare provides a fantastic service, but you are limited in where you go and how many services you can use. As a result, many Aussies choose to take out private health insurance as well, and doing so has some significant benefits.
What are the perks of private health insurance?
With private health insurance, you have a wider choice of hospitals that you can choose for treatment, with at least some of your cost being covered by your health insurer. The level of cost that is covered will depend on the level of private health insurance you have chosen.
You may find that the private hospitals of your choice has a shorter wait times than the equivalent public hospital, and you can often schedule non-urgent medical procedures with your specialist for a convenient time.
Private health cover is divided into two areas: hospital cover, which covers all of the hospital services covered by Medicare and extras cover, which covers non-urgent, everyday medical expenses such as dental, physio, optometry and many others. Both hospital and extras come in several categories, and depending on your healthcare provider you can often customise your health cover based on your age, health and other factors; for example, if you have perfect vision, you may not want optical cover in your plan.
Do I need health insurance?
There’s no requirement, legal or otherwise, for you to get private health insurance, as Medicare ensures that you’ll receive free or subsidised treatment for most unforseen issues. That said, private health insurance is a great thing to get because it opens up a wider range of options for you when you require both urgent and non-urgent medical help.
There are a number of incentives to encourage people to take out private health cover, because doing so eases the burden on Medicare. The government provides a percentage rebate on health insurance premiums for those with private health insurance (subject to a means test), and there’s also a Medicare Levy Surcharge for people without private hospital cover; the former decreases the greater your income gets, and the latter increases. A good representation of this appears on the Medibank website.
Furthermore, once you’re over the age of 31, Lifetime Health Cover loading clicks in and you pay an extra 2% on your health insurance premiums for every year you don’t have hospital cover, up to a maximum of 70%; for example, if you only take out private hospital cover at the age of 36 (5 years after you’ve turned 31), you’ll pay an extra 10% on your premiums. This is meant to encourage young people (including students!) to take out private health insurance early and maintain it.
So whilst we’re lucky enough in Australia to have a comprehensive public health system, the many benefits of health insurance are definitely worth considering.
How do I know what insurance to get?
There are various factors that come into play when deciding what level of cover to get. Most funds offer several tiers of both hospital and extras cover, which you can sometimes mix and match to tailor to your needs – for example, you might want the top level of extras cover for things such as physio and optometry, but only the basic level of hospital cover. When deciding what cover to take out, you should consider:
- Your health: Whether you have any pre-existing conditions which might require future treatment, whether you have a history of illness or injuries, and whether you have family history of certain conditions (e.g. diabetes).
- Your lifestyle: Are you a sporty, active person who does a lot of exercise? If so you’re probably more interested in high-level extras such as physio, chiropractic or podiatry. Do you love extreme sports and risky activities? You’ll probably want a high level of hospital cover!
The fact of the matter is that every person is different, so think carefully about what cover you’re likely to need. Most health funds have comprehensive comparison tools that you can use to pick your ideal policy; just remember, when in doubt it’s probably better to have too much cover than too little.
What does it cost?
Our latest Health Insurance Star Ratings report on health insurance provided a lot of insight into Australia’s typical insurance premiums (i.e. the amount you pay your health fund each year). We researched health insurance premiums for a variety of different profiles, and the most relevant here are the premiums for young singles, with the differences between men and women being only a few dollars at most. The average annual premium across all states was $1,648.
So as a student, you’ll definitely need some significant income to pay for private health cover, which can be difficult if you’re living out of home on a tight budget. See our comparison table below for a snapshot of the current low premium policies available. Please note that this table has been formulated based on a single male seeking hospital only cover in NSW. You can use this tool to compare health insurance here.
Can I be covered under my parents’ insurance policy?
Until you turn 18, you’re considered a dependent and are automatically covered under your parent’s insurance, regardless of your circumstances. Between the ages of 18 and 24, it’s up to your insurer to decide whether or not you can be considered a dependent: most of them attach some conditions to this, such as requiring you to be a full-time student. If not, you can often stay as a dependent in return for a greater insurance premium, the size of which is again up to your health fund. Beyond the age of 25, you’ll need to take out your own health insurance if you want to be covered.
What if I’m an overseas student?
If you’re an overseas student studying in Australia, then one of your student visa requirements is that you must have health insurance for the duration of your stay. This is known as Overseas Student Health Cover (OSHC), and there are policies offered by pretty much all private health funds. Your OSHC policy typically gives you cover for hospital treatment, visits to doctors and specialists, ambulance fees and prescription medication costs; however, you’re not covered for extras, something which is typically done to save costs.
Compare health insurance policies
Canstar make it easy for you to compare your health insurance needs. Our most recent Star Ratings obtained more than 26,000 quotes from some 707 eligible health insurance products provided by 22 health insurers and measured against 13 demographic profiles. Click below to find out more!