If you have already decided you will opt for a private health insurance scheme rather than (or to complement) Australia’s Medicare system, there are still a number of issues you should consider first, to make sure you end up with the plan that is right for you. Many people take their employer-provided insurance by default, but if you are in good health, you may be able to shop around for cheaper and even better coverage. Consider how much you are really paying – take all costs into account. Find out how flexible your plan will be and what else is covered before you buy, and think about if a high deductible plan is right for you.

Buying Private Health Insurance

Is Your Employer’s Plan that Great?

Many people think that if their employer offers a health insurance plan, that it must be the best option for them. This is often true, as you are being provided group insurance that lumps you in with a relatively random (health-wise) group of people over whom the broad costs of medical expenses can be shared. However, if you are young and healthy, the average cost of the entire group may be higher than what you would otherwise pay. With a little shopping around, you may find a private health insurance plan that covers more than what your employer’s plan does, and even for a lower rate.

How Much Are You Really Paying?

Before you purchase a private health insurance scheme, you should understand what are all of the costs of participation in the plan. A lower monthly rate usually comes with other ways that the insurance company will charge you money. One of these is the co-pay or co-insurance, where the company will charge you a flat amount of money for each visit. Along with the co-pay is often a percentage of the total bill that is also charged, often around 20%. If your co-insurance is higher than 50% you should consider why you would purchase the plan to begin with. The final major charge that affects rates is the deductible. You should make sure the deductible is an annual deductible and not a per-visit deductible.

How Flexible is Your Plan?

Another consideration you should make before purchasing a plan is how flexible the plan is. Will you be able to choose the doctor or hospital you would like? Does it cover extras such as optometrist and dental visits? If it does not cover these things and these are common medical costs in your life, then you should be aware extra medical costs will surface on an annual basis that might be covered by a different plan.

Consider If a High Deductible Plan is Right for You

Finally, while high deductible plans seem scary at first (How will I pay $5,000 if I get sick?!), they may be a viable option for reducing long term health insurance costs. If you are relatively healthy and can set aside a savings account that will cover the deductible in case you need it, then the lower premiums associated with high deductible plans can be quite attractive (and you can add your savings to your ‘health savings account’ and get a plan with an even higher deductible in the future!). Read how this guy put his entire family on high deductible plans to save money. They are not for everyone, but they shouldn’t be immediately discarded just because of the higher out-of-pocket costs, since they may be less than the long term premiums!

The first thing to realize in looking for health insurance plans is that there is simply more than meets the eye. Higher premiums may seem like they are worth it because they protect you from those massive deductibles, but in the long term, you may end up paying significantly more in annual medical and insurance costs. Looking through and understanding your policy before purchasing will help you ensure you get the plan that is best for you.

This is a guest post by Marianne Ross, a freelance writer on health-related topics. You can read her health insurance advices on various blogs.

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