“Out of pocket” expenses refer to the difference between what your doctor charges you for treatment and what your Medicare or health fund covers. This difference has to be paid by you since it is not covered by the health insurance policy.

Out of pocket expenses can occur due to a number of reasons including:
a) You are claiming for items that are not covered by your policy.
b) You have to undergo a procedure that is not recognised by Medicare and hence benefits are not payable.
c) You want treatment at a hospital that is not contracted by your health insurance company.
d) There is no suitable health cover for your treatment at the hospital.
e) You are still within the “waiting periods” after just joining a health fund or upgrading your level of cover.

How to avoid out of pocket expenses
As you prepare to go to hospital and are organising your hospital stay, ask the doctor for a cost estimate for your procedure. If other medical specialists will be involved, for example, anesthetists and assisting surgeons, have them included in the estimates.

With the estimates at hand, contact your private health insurance company. They will check whether your procedure is covered, whether you have served the mandatory waiting period and whether the hospital you want to get treatment at is contracted to them. Opting for a hospital not contracted with your health fund will cost you more.

Inform your health fund manager of the total cost estimates for both doctors and specialists that will be involved. The estimate should also include MBS items. The manager will check how much is covered by your policy. You will know whether you are covered 100 percent or if not, what out of pocket expenses you will have to cater for.

Some private health insurance companies have agreements with doctors to cover the out of pocket expenses you are likely to incur. With these agreements, the doctors agree to charge you less than what they have quoted. The agreements are known as “Medical Gap Scheme”.

One way of eliminating out of pocket expenses is to inquire from the doctors and specialists who will be carrying out your procedure whether they will participate in your health insurance’s Medical Gap Scheme. However, it is not mandatory for them to participate. Each doctor and/or specialist involved can choose whether or not they wish to participate.

In case the doctors and/or specialists do not wish to participate in your health insurance’s Medical Gap Scheme, you can look for another doctor who is willing to do so. Alternatively, opt to have the procedure done at a public hospital. While Gaps are not pleasant, they keep the cost of health insurance down and make it affordable.

With private health insurance, you can choose the doctor and hospital you want and avoid the waiting list in public hospitals. This gives you peace of mind.

In the Australian health insurance industry the difference in the amount your insurance covers and what a medical practitioner charges falls into the hands of the individual to pay. This is referred to as ‘Gap’ or in other countries ‘co-payments’.

The Medicare Benefits Schedule (MBS) outlines schedules fees for different medical procedures, 75% of this rate is covered by Medicare (government) and the remaining 25% by your health fund. Gap occurs when health professionals charge more than the scheduled fee for procedures, leaving the patient out of pocket.

When does gap occur?

• - If you have an arrangement with your health fund in return for lower premiums
• - If your procedure is one not covered by your policy
• - When your hospital does not have an agreement with your health insurance provider
• - When your medical professional charges more than the fee described in the MBS

How to avoid Gap

• - Find a health insurance policy that pays the gap
• - Find out from doctors and other treating medical professionals if they charge a higher than scheduled fee prior to treatment
• - Only use hospitals that have an agreement with your health fund

Studies have found that as many as 1 in 6 people that have had medical procedures that incurred a gap where not of it and as a result were left with a large bill despite having a private health insurance policy.

Here are 5 easy steps you should take to make sure you have adequate health insurance for you and your family.

1. What type of cover do I need?

There are two main types of cover available, hospital and extras. You may decide you only require hospital, or you may get both either from the same insurer (package) or separately.

Hospital cover will help you with the cost of staying in hospital including all fees and procedures that occur within the hospital. Extras or ?ancillary? services are those medical services that are not necessary to maintain life. Dental, optical, chiropractic and remedial massage are examples of services that would be included in most extras cover.

2. What level of cover do I need?

Different levels of health insurance are more suitable to different people. For example an elderly person or a person at risk of becoming injured or developing illnesses would require a higher level of insurance to ensure they are covered for a higher than average amount of medical treatment.

On the other hand it may make more financial sense for a young, healthy person to have a lower level of cover.

As a general rule of thumb, buy the highest level of cover you can afford, so that you are guarded from any unforseen circumstances that are detrimental to your health.

3. What features should I look for?

The features you require will completely depend on your lifestyle and plans for the future.

For example, an individual with a history of heart disease should choose a plan that includes cardiac cover. While a young couple that are planning on having children will require obstetrics cover.

It is also a good idea to have a health check with your general practitioner to reveal any other conditions that may need to be covered by your insurance (bulk billing GP?s are no cost to Australian citizens with a Medicare card.)

4. Out of pocket charges

If you hold a steady job and manage your cash well you may find that you have sufficient cash flow at any one time to allow you to chose a co-pay option to reduce your monthly premiums. If you find that you spend all excess money it is a good idea to chose a health insurance policy that has minimal or no gap.

5. Compare plans

Once you have decided on what type of cover you need, it is time to find out where you will get it from. Using a health insurance comparison site can save you time and money by showing you similar plans from various insurers so that you can chose the cheapest one.

In order for the government to keep health care spending down, and to get the most out of the health care budget, it is in its best interest to have more Australian citizens insured privately.

The government offers incentives to encourage citizens to pay for private health insurance if it is within their means. The incentives include:

Private Health Insurance Rebate: The government subsidises the premiums that members of private health insurance are subject to for all cover. The size of that subsidy will become means tested and operate on a sliding scale in the near future under the Rudd government.

Lifetime Health Cover: All citizens who have no taken out private health insurance by the age of 30 are subject to a 2% higher premium for every year they are uninsured up to 70%. For example an individual who does not take out private health insurance until the age of 65 will pay a 70% higher premium than those who have had it since the age of 30.

This is to encourage the (typically) healthy young people of the nation to take out insurance early to ease the burden on the public system rather than waiting until they become frail and prone to sickness and disease (old age).

If you buy private health insurance when you are 35 and continue to hold private health insurance after you are 45, the 10% loading you accrued between 30 and 35 will be removed for as long as you retain your private health insurance.

Medicare Levy Surcharge: Singles who earn over $70,000 or couples who earn over $140,000 per year who are not adequately covered by private health insurance are subject to a 1% surcharge in addition to the existing 1.5% Medicare Levy.

The private health care system in Australia is funded by a number of private health insurance organisations.

Medibank Private is the largest private health insurer in Australia, and is owned by the government but operates as a separate entity. Medibank operates under the same strict regulations that other privately owned insurers are subject to.

Plans to privatise Medibank Private in 2007 under the Howard government were blocked by Kevin Rudd and the Australian Labor Party when they won the election.

Health insurance organisations may be either ?for profit? enterprises, or operate as a ?non-profit? organisation. HCF Health Insurance and GMHBA Health Insurance are examples non-profit insurers.

Insurers may also choose to open up membership to a certain demographic. For example, insurance company APIA only offers insurance to those over the age of 55 and no longer working full time. The majority of insurers in Australia however have open membership with varying rates depending on age, gender, occupation etc.

Health insurance is beneficial to individuals, couples or families because it protects them from the unknown. Sudden accidents or a decline in health rarely give warning or allow time for people to earn money to pay for treatment.

In Australia, where all citizens are covered by the universal health care system (Medicare) health insurance is useful for those areas not covered by the government.

Dentistry, optometry and ambulance services are not covered under Medicare, so an individual is urged to take out private health insurance to offset the costs of these services should the be required in the future.

Health insurance also gives you greater choice of doctors, access to private hospitals that are equipped with more luxurious items and shorter waiting times for some types of surgery.

One major benefit of health insurance is the ability to have elective surgery at your convenience without having to join the public health system waiting list that can be years long.

Private health insurance also benefits our public health care system by easing the burden on public hospitals. The availability of private health insurance and private hospitals mean that those who are insured are kept out of the public hospitals where those who cannot afford insurance, such as the poor and elderly, can have access to health care.

Life insurance quotes provides a variety of benefits to the loved ones of the insured upon their death. First, the payout that the beneficiary receives upon the death of the insured can be used to pay the costs of the funeral, which can be unexpectedly large in many cases.

Second, it is usually the chief wage earner of the family who carries the most life insurance, and the payout when the insured person dies can be used to replace the lost wages of the insured. Finally, the paid out benefits of life insurance policies, if they have been set high enough, will often allow for those who have been left behind to pay off large debts like home mortgages or car loans in addition to paying for the funeral and replacing the wages of the insured.

Life insurance policies that do all this generally come in one of two main forms: whole life insurance and term life insurance. Each plan has distinctive advantages, which should be carefully considered when trying to select the best life insurance cover for their families.

Whole life insurance covers one’s whole life. In other words, once a whole life policy is established, the insured is covered up until the point of death even if occurs decades in the future. As the premiums are paid, it covers the whole of life and does not end after a predetermined time limit.

One of the chief advantages of the whole life insurance policy is that it provides guaranteed coverage no matter the age of the insured. The plan that was opened at age 20 will still be good once the insured reaches age 70 if premium payments are up to date. The amount of these payments may change over time, but coverage is always there. Most whole life insurance policies also build up cash value over time and can be cashed in for a return of part of what has been paid into them if the insured desires to cancel the policy.

The chief disadvantage of whole life policies is that the premiums are usually subject to change over time. This is not the case with the term life rates charged for term life insurance. A term life insurance plan is taken out for a predetermined amount of time, say 20 or 30 years.

At the end of this period, there is not necessarily a guarantee that a new term policy can be opened. People generally go for term life insurance when they are looking for good cover that is relatively inexpensive. The monthly premiums for a term life insurance plan never change over the course of the term — that is their primary advantage.