The soaring cost of private health insurance is forcing many older people to cancel their policies and rely on the public system. If you’re considering following suit, please think about it first. There are a few things you can do to help lighten the load, without putting your quality of life at risk.
Dodgy joints, dicky hearts and things generally not working properly are all side effects of the aging process. And right at the time when our bodies start needing a bit more maintenance and repair, our medical insurance premiums dramatically start to rise.
Due to our aging population and rising healthcare costs, New Zealand’s public health system will be under significant pressure in the coming years, so waiting times for non-urgent operations like knee and hip replacements are likely to get much worse. The affect such conditions have on our quality of life if untreated is extremely debilitating, especially at the stage in our lives when we want to do the things we have been planning.
Some say we need to have large enough nest eggs to be able to pay the premiums in retirement, or to foot the bill entirely for such operations. Not many of us could afford to stump up in excess of $40,000 and even if we could, it would seriously impact on the travelling fund!
If you do have medical insurance, then you can get your operation done privately and be back at work or doing what you love again in no time. If not, you can expect either an extremely large bill or suffer a lengthy and painful wait. So what’s the most affordable way of maintaining medical insurance as you age?
One option is to choose a plan which has a higher excess - some companies offer excesses up to $10,000. The higher the excess, the lower your premiums will be, although procedures under that amount wouldn’t be covered. However, other than diagnostic ones most procedures these days are $6,000+ (with heart surgery reaching a whopping $65,000). At least you can be secure in the knowledge that you can afford to maintain the cover and know that in the event of needing major surgery you will only need to find the excess amount and this can always be built into your financial planning.
The Government is also currently considering The Affordable Healthcare Bill which proposes a 25% health insurance premium rebate for people aged over 65. This would be a great initiative and would help keep premium costs affordable. So while medical insurance does get more expensive as you age, we encourage you to find a way to keep it going, even if you have to review your plan or excess. Before you make a decision consider all options and remember you can always give us a call.
At Foresight Financial Planning we offer free advice and consultations. To get in touch with us, please call (06) 751 4510 or email [email protected]
A free disclosure statement is available on request.
Foresight Financial Planning received Highly Commended in the New Business Excellence category in the Taranaki Business Awards 2013.