HEALTH INSURANCE OR SELF INSURANCE?

The uptake of private health insurance in New Zealand is dropping. With our public health system and ACC meeting the cost of urgent medical care, and some resultant income loss, you might ask “is health insurance worth it?”

Self-insuring to save on insurance costs can be a valid option if you have self- discipline and won’t be tempted to spend your medical emergency fund on a tropical holiday or a new car.

For most people, private health insurance is a good idea. Not only does it provide cover for non-essential medical treatment, more importantly, it also enables you to avoid public waiting lists and to choose your doctor.

When you are battling a severe or chronic medical condition, timing and your choice of doctor can make all the difference.

If you choose private health insurance, there are some critical considerations. Firstly, shop around and find the cover and cost that suits your needs. An insurance broker can help, and there are also websites online that can compare health insurance policies and premiums for you.

Secondly, you will need to make full and frank disclosure of your medical history when taking out health insurance. Your health insurer can decline a claim if you fail to disclose material information, for example, a pre-existing medical condition, illness or injury, even if the eventual claim is entirely unrelated to the initial non-disclosure.

Smoking, mental health issues, and chronic pain conditions are all red flag areas here.

Thirdly, the younger you are when taking out health insurance, the better; as you will usually have less medical history to remember and disclose (and potentially for the insurer to exclude from cover).

Fourthly, if you can avoid it, it’s best not to change health insurer. Changing insurer will trigger a whole new disclosure obligation and the risk of you overlooking disclosing something.

Finally, if you do make a claim and your insurer has concerns about that claim, it may decide to investigate, which can include obtaining your medical records and/or reviewing your social media presence. Most material non-disclosures are identified this way.

Ultimately, while health insurance can meet your medical costs, your loss of income during a period of illness or incapacitation (not caused by an accident) can also be a significant burden. Income protection insurance, which can be bundled up with your health insurance, is worth considering too.

So, what will it be: a holiday in Fiji or private health insurance?