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FINANCIAL INDEPENDENCE

Turning 30 - Private health insurance or self-insuring?

I'm turning 30 soon and thinking about private health insurance but struggling to justify the cost. I know there’s a 2% loading each year if you delay getting it and public wait times can be long, but I’m considering self-insuring instead. My idea is to keep a separate savings account for medical expenses, adding to it regularly or topping it up after using it for treatments. Has anyone tried this? How much would you recommend saving to start, and how should I plan contributions? Thanks!

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Mason King.

15 January 2025

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Dave Gow - Strong Money Australia

INVESTOR

14 days ago

Hi Mason,

This is an interesting topic that not many people talk about.

I actually do this myself – self insuring. I’m simply happy to use the public system and will pay out of pocket if there happens to be something more elective that I need that isn’t an emergency. While I don’t keep a separate account or portfolio for this, all the money I’ve saved on insurance has gone into my main portfolio, which compounds over time, and I’ll dip into it if I need to.

It also depends on the trajectory of your income over time, how strong your finances are, what your health and lifestyle risk looks like etc. If you’re a higher income earner – say over 100k – it often makes sense to look at hospital-only cover as the cost is often similar to the medicare levy you’d otherwise pay. Maybe get some quotes for the lowest plan you can get and then compare it to the medicare levy for your income.

Cheers, Dave

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