The mother’s dilemma – which child uses my health care limits?

When it comes to health insurance extras, we are faced with a dilemma, which child uses the family limits and which child goes without? There are alternatives which need to be discussed.

We all want to ensure our children are safe and get the best care, which is why nearly half of Australians have private health insurance. However, when it comes to health extras, we are faced with a dilemma. Which child uses the family limits and which child goes without? Are health care extras worth it? There are alternatives which need to be discussed.

The mother’s dilemma

We all know the scenario, you have a fixed limit on your extras (general treatments) policy for the family and both of your children need dental work. The dilemma begins; which child receives the dental treatment and uses the limits and which child waits until next year, or even the year after next. Women take the reins when it comes to their family’s financial situation. 89 per cent of women are at least jointly responsible for making major financial decisions for their households, while 48 per cent are the key decision-maker [1]. It’s mothers who are faced with this dilemma.

87% of Australian women find it empowering to take control of their finances and 51% feeling they have average financial knowledge [2]z  It is time to weight up health care options, assess whether health care extras policies are worth it and explore alternatives.

What type of health insurance is available?

Private health insurance is generally divided into hospital cover, general treatment cover (also known as extras cover) and ambulance cover. Ambulance cover may be separately available, combined with other policies, or in some cases is covered by your state government. The insurance is ‘community-rated’, rather than ‘risk-rated’ like most forms of insurance.  Private health insurers cannot refuse to insure any person, and must charge everyone the same premium for the same level of cover, despite their risk profile and likelihood of using health services.

How can I ensure my children have health insurance?

It’s good to know how to ensure your dependent children are covered on your current health insurance. Dependent children can be covered under your health insurance policy as long as you select the correct family status and provide their details on your application. Your kids and dependents will fall into one of three different categories:

  • Child dependents: unmarried children under 18 years old (although some funds allow up to 25, even if they are not studying)
  • Student dependents: single full-time students, trainees or apprentices generally between 18-25 years old
  • Adult dependents: single adults not studying full-time aged between 18 and 25 years old

Your family status can be for either two-parent or single-parent households. Dependant children rules vary from fund to fund, so if you are ensure talk to your health fund.

Does the public health system cover kids?

Before diving into the idea of dropping extras cover and looking at alternatives such as an investment or savings account, it can help to know what is available in the public system. The Australian Government does subsidise the cost of some health services for children, and also provides free medical treatments. For example:

  • Medicare covers the cost of basic dental services under the Child Dental Benefits Schedule, up to a certain limit and within a set time frame. The parent or child must be receiving payments from the Government to be eligible. Individual states also have their own dental programs for children.
  • The National Immunisation Program provides free vaccines for certain diseases or conditions for children and youths from zero to 19 years old.
  • Medicare covers treatment as a public patient in a public hospital.

Some optometrists bulk-bill their eye tests through Medicare, which applies to children as well as adults. The cost of the glasses themselves aren’t covered by Medicare but might be under an extras policy usually coupled with out of pocket expenses.

General Practitioner (GP) visits are subsidised by Medicare, and you’ll get a rebate for some of the cost back when taking your family to see the doctor. Some GPs may bulk-bill, which means you will not be out of pocket for the consultation.

Government surcharges do not apply to extras cover

A lot of us sign up for health insurance to avoid the government’s Medicare Levy Surcharge (MLS) and the Lifetime Health Cover (LHC) loading?  if your insurer ‘forgot’ to tell you that government surcharges only apply if you don’t have private hospital insurance – you don’t also need extras cover to avoid the charges. Dropping your extras cover doesn’t impact any government surcharges or the lifetime loading.  

How do I work out if extras health cover is worth it?

Before thinking,  “But what about cover for glasses? Dental bills? And massages?”, you should stop to work out how much of your extras cover you’re actually using.  It’s also good to know the maximum amount you can claim for on your extras cover. There will be limits to how much you can claim for each person in a year and for each treatment covered by the policy. There may also be group limits for certain services as well as policy limits for the whole family.  Details of these limits should be available in your policy brochure.

Completing the two steps below will help you work out if you are paying more than you’re receiving for the last year.  If you find your premium is substantially higher than the benefits you receive and you don’t anticipate your health needs will change any time soon, maybe it’s time to considering cancelling extras health insurance altogether and save for health extras using a savings or investment account. Note that you’ll be subjected to waiting periods before you can make a claim if you take up extras again.

You can work out if your extras health insurance is offering you value for money by following the two step below:

  • Step 1:  An annual claims statement from your health care fund will show you the total benefits you received in the last financial year. You can request one from your fund; and
  • Step 2: Compare your premium with your extras benefits. This will help you to work out if you paying more than you’re getting in return.

If you have combined extras and hospital cover, a bit more is required. Select a standalone hospital insurance policy from your health care provider that’s comparable to the hospital cover in your combined cover (with the same excess and cover level), then deduct its price from the premium you pay. The difference will give you the amount you pay for extras health insurance.

The Australia Prudential Regulatory Authority (APRA) have produced a chart which can help with your analysis if you don’t have an annual claims statement. The charts shows the general treatment (extras) benefits per person by age during the year (to December 2019) by age. The average benefits per person to December 2019 was $438.

Source: APRA Quarterly Private Health Insurance Statistics 2019
Source: APRA Quarterly Private Health Insurance Statistics 2019

What alternatives are available?

46.7% [3] of Australians do not have extras cover. If you have done the maths and think extras are not giving you value for money, an alternative could be to save to pay for your families health care using a savings or investment account. What would this look like? Work out what you expect to pay on extras per year for your family, divide this cost by 52 and put weekly amounts into a savings or investment account.

You may earn interest on the savings account and an investment return on the investments. Each option has their pros and cons. With a savings account the chances are the rate of return will be lower than that received through an investment account but there is likely less risk of loss and you can access your funds at the point of sale. With an investment account (e.g. purchasing units in a registered managed investment scheme), you may get a better rate of return but there could be more risk of the return becoming negative and it is unlikely you’ll be able to access your funds at the point of sale. You usually have to wait 5-10 days.

Another alternative is an ExtrasJar account. You can purchase hospital cover through ExtrasJar and set up an investment account which allows you access to your funds at the point of sale, a unique feature. The founding team are setting up this product because there was no credible alternative, read more about their experience here.  No more low-interest rates or waiting 5-10 days to receive your funds. Sign up to the wait list to learn more.

Where can I find financial tips and tricks for mothers?

It’s not just health care where smart and savvy financial decisions can be made. However, with a plethora of information out there, it is exhausting and overwhelming to find the right resource to help you become an effective Chief Financial Officer of your household. The team at ExtrasJar has done some of the ground work to find some of the best websites for mothers. Here are some our favourites sites:

  • MumCFOs – Mum CFOs is designed to provide you with as much information as they can gather, from expert contributors, to help you navigate the financial maze and feel completely in control;
  • Financial Fit Female  – Their goal is to inspire Australia women to be wealthy, woke and wise by improving female financial literacy.
  • Women with cents – The team at Women with cents write useful blogs on a range of topics such as banking, insurance, debt and superannuation and it’s worth a read.


[1] BT Australian Financial Health Index 2017

[2] Her Pulse Women + Politics Survey

[3] APRA Quarterly Health Insurance Statistics

Share Article

Stay up to date