3 solid reasons you (might) need health insurance in your twenties

By Ysabel Tang

6 minutes

18 May 2018

Health Insurance in your twenties

Between the government’s sticks and insuring your most important asset (your health), there are three solid arguments for why you need health insurance. But then again, you might not.

Here are those three reasons explained so you can make up your own mind about whether you need to get covered.

1. Medicare is great but private health insurance has its advantages

Right now, you might be thinking, “but wait, isn’t going to a public hospital free?” Yes, it is. That’s thanks to Medicare and the taxes you pay.

But while going public is free, going private has its advantages.

The real benefit of hospital insurance is you can go to a private hospital and choose your time of treatment (instead of going on a public hospital waiting list and potentially waiting months or years for surgery—which is no fun if you’re injured or sick).

Hospital insurance also lets you choose your own doctor and gain access to a private room (if it’s covered on your hospital insurance product and available).

Then there’s extras insurance. It helps cover the cost of health services outside of the hospital—things like dental, glasses and physio. Medicare generally doesn’t cover those things so extras insurance is always handy.

2. Hospital insurance helps you avoid the Medicare Levy Surcharge

If you’re super successful, you might have to pay extra tax if you don’t have hospital insurance.

This tax is called the Medicare Levy Surcharge (MLS). It applies if you don’t have hospital insurance and your income for MLS purposes* is more than $90,000 as an individual or $180,000 as a family.

The MLS sits at 1 – 1.5 percent depending on your income.

The tax exists to encourage people who can afford it to take out hospital insurance, use private hospitals, and reduce some of the pressure on the public system.

Avoiding the MLS is easy. Simply take out an appropriate level of hospital insurance. Just a heads up—if you only buy extras insurance, the MLS will still apply.

If you do get hospital insurance to avoid the MLS, make sure you get a product that covers what you need. Some products only cover the bare minimum, so you might find that, while it helps you avoid the MLS, if you try to use it you might not be covered.

RELATED: Medicare Levy Surcharge FAQs

3. Getting hospital insurance earlier in life will save you money later

You’re probably vaguely aware of a turning 30 and health insurance thing.

It’s called Lifetime Health Cover loading, and it’s an extra cost added to the base price of hospital insurance. Like the MLS, it’s designed to get you to buy hospital insurance.

If you’re 31 or older and you don’t have hospital insurance, you’ll get hit by the loading if you buy hospital insurance later in life.

When you do take it out, for every year you are over 30, you’ll pay an extra 2 percent for your hospital insurance. The most you can pay in loading is 70 percent.

For example, if you’re 40 and taking out hospital insurance for the first time, you’ll pay 20 percent more than a 30-year-old you.

Most people think you need to get hospital insurance before you turn 30 to avoid the loading, but you have more time than you think. The turning-30-thing is actually a turning-31-thing.

To avoid the loading, you need to buy hospital insurance on or before 1 July following your 31st birthday. This is the case for most people, but there are exceptions.

RELATED: Lifetime Health Cover loading FAQs

And that’s all you need to know! If you’re interested in learning more about choosing a health insurance policy that suits your needs and budget, check out our helpful article: “How to save on health cover”.

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