The Barefoot Investor has advised a family hold onto their private health insurance after they said they wanted to give it up because it cost $9,300-a-year.
Fiona wrote to Scott Pape, saying she was ‘wondering if health insurance is necessary in , where we have good public health care’.
She added her family-of-four is paying $9,300-a-year and she wondered if they would be better off putting that money into an investment account instead.
The Barefoot Investor’s reply opened with a joke, saying Fiona was ‘giving me a heart attack (rush me to a public hospital!)’.
But he quickly changed to a serious tone and said the fact she was paying $9,300-a-year indicated a few things.
The first was that she ‘must be a higher-income earner, so you don’t get any rebate’, he wrote in a column for News Corp.
His next point was to say that ‘private health insurance is an absolute disgrace’.
‘It’s incredibly complicated, and increasingly unaffordable, which is why people are opting out of the system in droves,’ he said.
But having said that, he did not suggest the family give up on their private health insurance, because ‘as a higher income earner the government has a gun pointed at your head’.
‘If you don’t hold private health insurance they’ll hit you with a penalty tax called the Medicare Levy Surcharge, which will cost more than shutting up and just buying private health insurance.’
However, Mr Pape told Fiona her family is ‘paying way too much’.
He said she should go to the privatehealth.gov.au website, which he said is ‘so much better than the slick sales sites like comparethemarket or iSelect’.
From there, the financial guru said she should go to the ‘Compare policies’ section and type in her policy ID number, which is on the family’s policy statement.
They should consider selecting ‘hospital-only’ cove, he said, as ‘Most people don’t get much value from extras cover.’
If she’s not sure about what benefits she gets from her health fund, he said she should ask it for a claims benefit statement.
Her future family plans also could make a big difference, Mr Pape said.
‘If you’re done having kids, you could downgrade from Gold to Silver or Bronze and save thousands – just check the exclusions.’
She and her family should then compare what the privatehealth.gov.au website shows with their current policy, he said.
‘These are the exact steps I take every year when my premium is due. It only takes a few minutes but it can save you thousands,’ the Barefoot Investor said.