Are Health Insurance Extras Worth It?
You've seen the ads. Get dental! Get optical! Get physio! Are you covered for extras? Why aren't you covered for extras?
Bupa, NIB, AHM and the other major health insurers are eager to sell extras. But should you be covered for these cherries on top? As with any health insurance question, the answer isn't black or white.
But by arming yourself with a little bit of information, you'll be able to make a far better decision as to whether health insurance extras are right for you.
What are Extras?
First thing's first: what exactly are health insurance extras? All private health insurance products fit under one of two umbrellas - hospital cover or extras cover.
Hospital cover does what it says on the packet, helping to pay for treatment during in-hospital stays.
Extras, on the other hand, is for all health treatments offered outside of hospital. Things like dentistry and physiotherapy. It works less like regular home, car and hospital insurance in that it's more of a budgeting tool than an 'in case of emergency' tool.
Extras differ from hospital cover in the following ways:
It's optional and not as critical: Extras are called extras because they are precisely that. While extras may be handy to have day-to-day, they won't help you in an emergency in the way that hospital cover will.
Waiting periods. Unlike hospital insurance where maximum waiting periods are set by the government, these are set by the insurer. Before accessing your extras, you'll need to ensure waiting periods are met and these may differ from insurer to insurer.
They won't save you at tax time: Government levies and Medicare surcharge rebates apply to hospital cover, not extras. Having extras alone will not save you any money at tax time nor for other government levies for that matter.
Do I need Extras?
This is the billion-dollar question, for insurers at least. There's no one answer, but once you understand a little bit more about how extras work, it becomes more obvious whether it's the right choice for you.
Extras can be great value for:
Those with regular needs: Do you get a new pair of glasses every year? Do you visit the physio and dentist regularly? If you feel as though you'll actually use all the extras included in your plan, it can be a great option.
Large families: The premium for children can often be free on family policies, with some insurers even offering no gap extras cover for kids. This can make it far easier for families to get their money's worth.
Older individuals: Statistically, the 55-74 age bracket receive the most benefits paid per person, meaning extras could be worthwhile for those in this age bracket.
Extras may not be great value for:
Singles and couples: Without any dependents, it can be more difficult for singles and couples to get value from their extras.
Healthy individuals: If you're sound in both body and mind, blessed with good teeth and eyesight, the reality is that you'll probably pay more for extras than what you will get back.
Young people: The fact is that while you're young and healthy, you don't have as much need for what extras offers. Statistically, a 30-year-old male will only receive $316 in benefits paid, which will often be far less than the cost of an extras policy. This simple calculation applies to all individuals who pay out more than they get back.
This is why many people are choosing to keep hospital cover while dropping their extras.
Beware the Fine Print!
Insurance isn't often described as exciting or fun. Policy documentation can sometimes feel as though it has been designed to be confusing, filled with strange words and endless numbers. But it's incredibly important to read and understand the fine print. Case in point: sub-limits.
Sub-limits are caps that your insurer places on the amount you can claim - say $300 for dental or physio per year. While limitless policies exist, they are always the most expensive. Looking for good value, then please check the sub-limits that apply to your extras. You'll need to ensure these are large enough to cover your annual usage of that particular service, but not so large that you're paying for something you won't use.
How iSelf Can Help.
Are extras worth it? If you want an accurate answer to that question, you'll need to crunch the numbers.
If you already have extras, this is a relatively simple process. Request a claims statement from your health insurer and check how much you paid for your extras cover against how much of it you actually used. If you received back more than you paid, awesome! If you paid more in premium than you received back, it might be worth considering dropping extras. Perhaps even choosing to self-insure, a topic we'll look at in another blog.
But what if you want to check the numbers further? iSelf is here to help! Use the iSelf Health Wizard to undertake your extras check-up. This will provide you with the average amount of benefits received for those covered under your policy, and help you make an informed decision as to whether extras are worth it.
Extras cover is a great option for a lot of people, but it may not be the universal saver that the big health insurers sell it as.
What it is to you will depend on your situation. Happily, it isn't too hard to find out, and doing so could save you some serious cash.
Want to find out more?
Visit us at iself.com.au.