Public Hospital - Private Patient Insurance (Tax Purposes)

Hi All,

This seems like a good place to ask the question since its about how far to go to save money.

If I get basic hospital cover to avoid tax (Private patient in public hospital), and my partner or I need to go to the hospital
A) Is it possible to present as a public patient and avoid $500 excess?
B) Is it wrong/immoral to do this?

Background:

Last tax year I had to pay the MLS (Medicare levy surcharge) as our combined income was over the threshold (Some capital gains pushed us into the 1.25% bracket but I expect to be in the 1% bracket for the foreseeable future).

That means I paid tax surcharges of around $2600 for not having private health insurance last year, I will probably have to pay a similar amount this year. I'm happy to pay that towards the government because I'm fortunate and believe in socialized medicine (I wish Australia went full NHS like the UK, dislike private health).

However, I can get a basic health policy that would make me a private patient in public hospitals and avoid the tax for $1760 a year with a $500 excess. That saves me $840 a year if we don't use it. Even though I think the system is crazy and all high earners should pay the tax, I also like to save money!

Other considerations
Don't care about choosing my doctor
Don't care about private rooms
Not interested in private hospitals
Do have a new infant, born in the public system (Great experience) (I believe children are excess free anyway)

Poll Options

  • 22
    Possible and you should save the money!
  • 0
    Possible but immoral
  • 3
    Not Possible, must present as private

Comments

  • I don't necessarily agree with your stance on socialized medicine and your belief that all high earners should pay tax (which means the biggest user of health system don't have to pay for it while the group of people who uses least of it have to pay for it = freeloaders)

    However, since the thread is nothing to do with that, these are the considerations for you

    1. The main benefit of Private System is to do with waiting list and the ability to choose the doctor (which can be a surgeon, really famous surgeon like Dr. Charlie Teo). Going public means you are on the waiting list and depending if you can persuade your GP to up your urgency status, then there will be a considerable wait.

    2. You can present yourself as private patient in public hospital. My friends in medical profession said the main benefit of this is own room and probably a bit more pamper service. You still cannot choose your doctor and still in waiting list. The latter information came from my ENT surgeon so that adds more credibility. HOWEVER, you are effectively asking the hospital to bill private health insurer for a system that is already funded by Medicare, a service that should have been free for you.

    That gives an effect of increased premium for every policy holders because of how insurance works (more claim = more premium). Additionally, since public hospitals are largely funded by State Government, it then budgeted for reduced hospital funding in an effort to encourage Public Hospitals to attract private patient and bill them accordingly.

    That, in my view, is immoral.

    1. However, on the other hand, I understand why people are doing it. Going private is like giving licence for surgeons, anaesthetists, and other ancillary services such as pathologist to charge gaps. Surgeons charge gaps, anaesthetists charge gaps - sometimes larger than Gap Cover arrangement, and some pathologists are not fully funded (eg: TissuePath not funded by Medibank Private) so more gaps. These gaps run to $2,000 for simple procedure and that excludes excess fee of $500.

    Little wonder why people going to public system as private. So go ahead, do that and you will save your $500 excess

    1. Lastly, be very careful. Basic Cover sometimes has this exclusion clause. For example this is Medibank Private

    "All other in-hospital services where a Medicare benefit is payable unless they are Limited or Excluded"

    That effectively excludes more than 90% of common services such as appendectomy, tumour extraction, tonsillectomy, etc and your basic cover is only covered for up to 3-5 procedures. Back 10 years ago, it used to be a hospital cover covers everything except blah blah blah

    Now it becomes the other way around, the insurance only covers specific procedures and excludes everything by virtue of that exclusion clause. Be very careful. This makes your cover a junk cover.

    Hope this helps

    TLDR: Go ahead and do as you plan even though it contributes to your premium increase but please be careful to make sure your cover does not have a specific exclusion clause of "All other in-hospital services where a Medicare benefit is payable unless they are Limited or Excluded"

    EDIT: I don't know why my numbering appears at 1,2,1,1 when in edit it says 1,2,3,4

    • I don't necessarily agree with your stance on socialized medicine and your belief that all high earners should pay tax (which means the biggest user of health system don't have to pay for it while the group of people who uses least of it have to pay for it = freeloaders)

      This statement seems to be wrong. The biggest users of the health system are old people who generally have worked and paid taxes their entire life?

      • "The biggest users of the health system are old people who generally have worked and paid taxes their entire life?"

        Not the only group of people. There are others too.

        But the least users of the health systems tend to be people who generally take care of themselves and young/healthy and/or singles yet they are the ones that pay the most.

        • But the least users of the health systems tend to be people who generally take care of themselves and young/healthy and/or singles yet they are the ones that pay the most.

          I agree, I think I would fall into that category myself, but I also accept that I'll be old one day and probably end up using the health system.

          I think there are other considerations as well. For example, if individuals don't have to pay exhorbitant fees every time they visit a GP, then issues are likely to be detected early and don't end up being more expensive…etc.

          That said, I do think that you open up a very big can of worms. For example, you could also make similar arguments about other social amenities. If someone only takes public transport, why should they pay for roads, if someone only drives, why should they pay for public transport. Why should we pay to send troops to faraway places that are no threat to AU? Why should we pay for education, the police…etc.?

          • -1 vote

            @p1 ama: Yeah it basically comes down to 'the more you have to lose' the more you need the services of the courts / police / army etc to keep you safe.

            And the USA is a great example of how poorly things go when the governments responsibilities are reduced to 'keeping people alive only' it costs everyone more for a worse system. Things that could be dealt with quickly aren't until they're expensive and life threatening.

            • @DisabledUser110229:

              Yeah it basically comes down to 'the more you have to lose' the more you need the services of the courts / police / army etc to keep you safe.

              That's such bad logic, not to mention only speaking financially. By the same logic - the more relatives you have (and like), the more you should pay because there are more of them available to be kidnapped and ransomed.

              Not to mention it's also just wrong, because if you look at policing costs, poorer areas generally take up the lion's share of policing work just because there are more crime there. Unless you'd take the tack that since the people there are poor and have nothing to lose, no need to keep them safe?

              •  

                @HighAndDry:

                That's such bad logic, not to mention only speaking financially. By the same logic - the more relatives you have (and like), the more you should pay because there are more of them available to be kidnapped and ransomed.

                Not to mention it's also just wrong, because if you look at policing costs, poorer areas generally take up the lion's share of policing work just because there are more crime there. Unless you'd take the tack that since the people there are poor and have nothing to lose, no need to keep them safe?

                Wow, full of assumptions here:

                • That you'd pay ransom, or that ransom was likely.
                • That policing poor areas (And I agree the poorer areas have more CONTACT with police services) means they're actually getting the most benefit.

                I've spent a lot of time in countries with poor governments and high crime. Even the wealthy can't go out at night without worrying about being gunned down in their driveways if their gate doesn't open at exactly the right time. It's not worth the low taxes by a long shot.

                The reality is that providing services to the poorest definitely 'trickles up' providing a healthy, largely safe workforce of people that DO have something to lose and so aren't going turn into a lynch mob at a moment's notice.

                Unless you'd take the tack that since the people there are poor and have nothing to lose, no need to keep them safe?

                Quite the opposite, ensuring the poor people have something to lose keeps everyone safe.

                Do you wonder where 'the great Australian dream' of owning a home came from? Historically it wasn't a thing, but it was heavily pushed post WWII in order to provide a bulwark against communism. The logic being, if almost everyone owned property, none of them would be too keen on the idea of giving up property rights in exchange for a welfare state.

              •  

                @HighAndDry: Wow you talk so much rubbish.

                When was the last time a person was kindapped and ransomed in Australia?

                • @DisabledUser143859: I was responding to this:

                  you need the services of the courts / police / army etc to keep you safe

                  When was the last time Australia was invaded, smartass?

                  •  

                    @HighAndDry:

                    When was the last time Australia was invaded, smartass?

                    The last time there wasn't an Army… Prevention is better than a cure…

                    How is this anything other than mafia, "nice XYZ you got there, shame if something happened to it"-style extortion logic?

                    Hint: Taxes aren't supposed to be protection money.

                    Well the mafia I imagine would ensure something 'did' happen to your XYZ. On the other hand the government is using your taxes to ensure that something 'doesn't' happen to your XYZ. And that 'ABC' thing you need to make more XYZ, that also gets funded.

                    This isn't someone wanting to the system to be like this, it's a simple case of the system being like this. If you look at countries where the wealth inequality is highest, they tend towards violence. Now you can absolutely end up in a system that has private protection, rather than government protection, but taxes and government protection is cheaper, even for those paying the most because it's an economy of scale.

                    You can jump up and down all you like about taxes not supposed to be 'x' but if you go and look at countries with weak governments and no taxes you can see exactly what taxes are by what their absence causes to go missing.

                    You can see great examples of this with the extremely wealthy engaging private security in addition to police etc, because they have so much they end up being targets for kidnapping / robbery etc disproportionately to anyone else.

                    Even your kidnapping thing, you think 'more people' means more likely to be kidnapped? Poor people don't get kidnapped and ransomed, there's no money in it, no matter how many relatives you have.

                    You can look back on history and watch what happens. I'm not so much making a statement as to 'how things should be' or 'how things will be' more like 'how they have always been, based on hundreds of years of written evidence'.

        • +1 vote

          But the least users of the health systems tend to be people who generally take care of themselves and young/healthy and/or singles

          But this come back to investment and inevitable of cumulative effect.

          A young healthy person takes care of themselves, never goes to the doctor. Saving themselves and the medicare time and money
          ignores their awkward posture, that mole on their back, that tingling in their right eye and hand

          What is the effect of this?
          Enormous surgery bills and pain on their not so young anymore birthday.
          Life is riddled with young healthy people that have had well advanced cancers, heart problems, bone problems, joint issues,

          In reality saving $1 a year for 10 years costs $20 per year from year 10

      • This statement seems to be wrong. The biggest users of the health system are old people who generally have worked and paid taxes their entire life?

        That's only looking at population demographics by age. But in all age groups, those in higher income brackets tend to have better health outcomes (due to less physical working careers, more healthy eating habits, better exercise and discipline, more preventative healthcare, etc) than those in lower income brackets.

        And unless there are major changes to our tax system, it can be assume that everyone will ultimately pay taxes into the system corresponding to their lifetime earnings, and not their current age (and their lifetime total age can be assumed to stay relatively equal).

  • Further to my post above, you could present yourself as Public even though you have Private Health cover.

    You just need NOT to declare that you have private health coverage. The moment you disclose that fact, the public hospital will charge the private health insurer.

    These days, depending on which doctor I visit, I can choose not to disclose my private health coverage.

    The tips I got is, if your waiting period is expected to be short, do it that way (GP can usually be persuaded to upgrade urgency) but if your surgery is expected to be largely elective, then you can disclose your private health coverage. The key is how long can you wait.

    • +2 votes

      The moment you disclose that fact, the public hospital will charge the private health insurer.

      That's not correct, the hospital will in usually try you to get you to go in as a private patient but it is your choice.

  •  

    /thread

  •  

    You'll be surprised when private health insurance comes in handy (eg, there's an 18 month waiting list for an elective procedure which won't kill you, but will severely hamper your quality of life in the mean time). I had a procedure done privately inside of 2 weeks that had a 6 month waiting list in the public system, and I got to choose my doctor which, given there were cosmetic implications was comforting. Now would it have killed me to wait 6 months? No, but it would have been extremely inconvenient and very uncomfortable.

  • I suffered an extreme burn a few years ago, while semi lucid in the ambulance the ambos told me they were taking me to xyz public hospital as it had the best burns unit, I protested telling them I had private cover and wanted to go to abc hospital. Anyway I wansnt really in a position to be putting up too much of an argument I ended up at the public hospital, after about a week the staff came to me and asked if I wanted to be handled as a private or public patient, the only difference they explained was the hospital would receive slightly more from my heatlth insurer and I’d receive a daily news paper, they asked me nicely to be handled as a private patient but said it was 100% my choice.

    • I have a massive problem with hospitals doing this. It effectively bleeds PHI!s and pushes up premiums when we are all contributing to Medicare anyway

      •  

        Public hospitals are only funded so much
        but it really bugs me too when the public hospitals act like hotels the exact same room and service however charge the insurer 100s dollars and bribe the inpatient with nothing more than a paper or wifi or TV access.

        When the difference is between staying at a Hilton hospital room and a Hostel Hospital room I think being asked to use private cover claim is reasonable, but generally is not the case

  • We earn well under the cover amount, but have maintained phi and have been happy to do so - especially since our younger daughter had spinal surgery for scoliosis. We could have waited for that, but were much happier to have it done with our chosen surgeon and hospital. Don't think our PHI has made any profit with our coverage.

    • Sorry for what your daughter is going through, but good to hear the PHI is helping out. That's how it's supposed to work - everyone who has it pays into the kitty, and whoever needs it benefits. In a way, insurance is basically socialism that actually works.

  • i would present as a public patient, its not just the excess that you have to pay, quite often tests and xrays have a gap for private patients, i have booked family in as public patients after using an ambulance under private health to get there.
    if public hospitals want to claim against private health insurance they need to wear the gap.
    public hospitals will tell you they treat everyone the same except the gaps for services for private patients.

    • Totally agree. I'd be more than happy for my PHI to pay for my public hospital bills if I don't end up with a gap payment (because at the end of the day, this is what our premiums are supposed to be for). However, why should I incur more out of pocket expenses for the same treatment and waiting time as what I'd receive as a public patient anyway?

      I can see the value in PHI when it comes to shorter waiting time for elective surgery & choosing your own surgeons when you are treated at a private hospital. But being a private patient at a public hospital just doesn't make sense.

  • You mentioned 'presenting' to hospital meaning Emergency Department, yes? ED is not covered by private health insurance.
    For elective procedures you should be offered the choice of public or private referral by your GP from the start, as is your right because you have paid tax for Medicare coverage.
    I would be interested to know how you decide which doctor you want to choose. Even from within the profession it's not always clear how to make a decision, I have no idea how lay people choose.

    • Are you sure? I was in the public ED a few years ago and I remember a lady beside me with private health insurance being asked to sign forms and them taking her PI card. I think the point of the insurance to avoid MLS is exactly this, to cover ED costs privately (And I guess the follow on treatment)

      • That is the State funded public hospital system trying to cost-shift to Federal (Medicare) funding IF the patient ends up being admitted from ED. In ED you are not an inpatient hence private insurance is not allowed to pay for outpatient services by law

  • In my past experiences you can choose to go public and tell them you have private insurance. They will often give you the option where they will waive the excess. This is the best of both worlds as a private patient if you need surgery you won’t get a trainee doctor and the hospital will get money from the insurance. As a general rule though you will get treated the same.

    • I thought the excess was set by the insurer, How does the hospital wave it? Surely the insurer will ask for it when they pay out the hospital?

    • just wanting to know in the scenario above as a private patient in public, can we demand specific doctors rather than the trainee doctor?

      • When my son had an operation in a public hospital we were told that if we went private, the surgeon would do the operation rather than the trainee. I don’t know if you can depend certain doctors, but what is the point of going private if you have a trainee?

  • Thanks everyone, To be clear the policy I'm looking at only covers what is already covered by medicare. It doesn't even cover a private room in a public hospital: https://quote.health.com.au/Documents/FactSheets/HEA-PolicyG...

    I think the conclusion is get the junk policy, Save the $ and don't use it unless there is an explicit advantage to doing so (Like a waiting list)

    I kind of feel bad as if I pay the MLS surcharge it goes to the government and then to my mind back into the health service
    If I buy the junk policy some for profit insurer gets my premium, and to avoid the excess I will not use it.

    The system was to take load off medicare but at least in my situation (I suspect I'm not the only one), Medicare still has the load and a private enterprise wins out of the situation.

    Anyway, Can't change the system and personal self interest is likely going to win in my case

    • that's why I'd rather pay a bit more for a slightly better policy that'd actually give me some coverage that I might use (e.g. elective surgery for non-life-threatening condition that would make my life miserable in the mean time)