Have you ever noticed that ads for private health insurance seem to be aimed increasingly at millennials?
Australia’s millennial generation is like the Holy Grail to insurance companies.
This is the reason behind those nauseatingly “young” ads on TV about “adulting” and complementary health care services like optical and physio.
But why the focus on us?
Apart from the obvious – to increase revenues – why is it that private health insurance companies have to work so hard to bring millennials on board?
The Big Question: Do Millennials Need Private Health Insurance?
Private health insurance companies are keen to get as many millennials signed up as possible because they know that millennials are less likely to draw on their insurance cover as older Australians are.
In effect, the insurance dollars of millennials are subsidising the cost of baby boomers’ policies. Those guys are the generation who tend to draw on their insurance much more regularly than we do.
This is just another reason why it’s so important to be a savvy consumer.
Don’t get me wrong, this is not to say that you or any other young Australian doesn’t need private health insurance.
Depending on your circumstances, private health insurance could be an excellent decision, both financially and for peace of mind.
But it just means that you need to weigh up your options and make a decision for yourself, on your own criteria, rather than because private health insurance is seen as a necessity or just part of being a “real adult”.
The Pros and Cons of Ditching Private Health Insurance
There’s really only one advantage to ditching private health insurance, but it’s a big one.
In Australia, our public healthcare system – Medicare – is well-established, available to all Australians, and completely free.
Medicare doesn’t cover everything, of course, but in terms of essential medical care, visits to a GP, and emergency care if you’re sick or injured, by accessing the Medicare system you won’t have to pay a cent.
We mentioned above that Medicare doesn’t cover everything, and this remains the biggest disadvantage of relying solely on the public healthcare system.
Ambulance services, for example, are generally not covered by Medicare (and they’re expensive!), nor is dental care for adults (also expensive!).
Any surgery considered to be elective could involve exorbitant out-of-pocket costs for your hospital stay as well as surgeons, anaesthetists, and any other specialists or procedures involved.
Also – and this is something that insurance companies repeatedly mention, especially around tax time – if you don’t take out private health insurance by the time you’re 31, you will be penalised with higher premiums when you do decide to take it out.
Known as Lifetime Health Cover loading, you’ll be penalised an additional two percent on your premiums for every year that you were uninsured after turning 31.
If you never take out private health insurance, this won’t apply to you – you can forget all about it.
But if you wait until you’re over 31 to consider it and then take out cover, you will be hit with extra fees for no additional benefits.
This is another reason why it’s important to stay fully informed and make your own decision about whether private health insurance is the right choice for you.
The key takeaway here is simply that there is no hard and fast rule that every millennial simply must have private health insurance.
This is Australia, and we have one of the finest public healthcare systems in the world. If you become sick or injured, you will be treated at a hospital and you will receive an acceptable standard of healthcare.
Private health insurance should be seen as an additional level of cover, and it is up to every person to decide whether they feel like they could benefit from the added security & available benefits, or not.
While it’s impossible to completely predict the future, you may have some idea of whether you plan on having elective surgery in the near future, or whether there are other circumstances which would warrant being privately insured.
If you’re trying for a baby, for example, you may feel comforted by the thought of being able to choose your obstetrician and to enjoy the privacy of your own room.
Insurance companies aim to make you feel either that private health insurance is a must have, or that you’re not a “real adult” if you don’t take out private cover.
Look through the smoke screen and see these messages for what they really are – highly targeted advertisements aimed specifically at Millennials to boost revenues that fund claims.
Work out whether YOU need the cover. And then look for the best policy for YOU.
And keep reviewing it too – like anything, things change and so do you.
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