Alan Clarke: Considering health insurance?

By Alan Clarke

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Having a full medical annually might uncover ailments before they get out of hand. Photo / Thinkstock

A doctor associate read the article I wrote on this subject about three months ago and sent some helpful tips for those debating (or struggling with) the costs of medical insurance.

A couple aged 65-70 will spend about $80,000 to $120,000 on premiums if they keep medical insurance to ages 85 to 90.

A younger couple paying from 40 to 90 could spend close to $200,000 over 50 years.

The New Zealand public health system
Our health system does most procedures fairly promptly but if they aren't too serious then you might wait quite a while - even years: not great if you are in pain from a worn-out hip or knee.

So medical insurance has its place, but the cost does rise with your age. Costs rise too, because the medical research industry keeps inventing new procedures that the insurers have to pay for.

The doctor's advice
My doctor associate suggests taking two key steps:

*Have a full medical with your doctor reviewing your health, family history, longevity, and what operations (if any) you might need.
*Examine the public health system in your region - ask around - and investigate waiting times for different procedures. Which types of procedure are slowest and are those likely to be ones that affect you?

Younger people
If you are under 55, your doctor gave your family a clean bill of good health and you're a disciplined saver, why not deposit the equivalent of the premiums into a separate fund and pay any medical bills yourself?

If you never need private health care, you're a winner. If you do need it, you'll probably still win. If you're unlucky, you'll have to pay extra.

This approach carries a risk and needs careful consideration..

Important note: You can easily get medical insurance if you are in good health, but if your health is playing up, it may be hard to get or more costly.

Once you are over 60, the cost rises sharply
You are also much more likely to make a claim over age 60, too - that's the dilemma.

The first step is to have a check up with your doctor, then review the situation.

If the cost is placing your finances under stress and your doctor says you have good health, maybe you can let it go. Remember, our public health system is not bad.

If you are neither rich nor poor and your doctor says your health is good, then you have more information to work with. Next, take a look at how good or slow the public health system is in your region. If you do cancel, put some money aside for medical events - say $25,000.

If you are comfortably off and your doctor confirms your health is good, reserve about $50,000 for medical events and carry the risk yourself.

Warning: If you do have health issues and let your medical insurance lapse, you may not be able to get it back again.

If you fret over the thought of writing a big cheque, then you may wish to reconsider. Fretting is likely to make your health worse.

Likewise, the feeling of security and peace of mind might be worth it.

Annual check-ups a must - with both insurer and doctor Often we put insurance in place, set up automatic payments and forget it. Don't. Call your medical insurer yearly and check what you are and aren't covered for. Costs can be reduced by taking a lesser plan and/or a higher excess.

Having a full medical annually might uncover ailments before they get out of hand. Be proactive - you could save both money and your health.

*Alan Clarke is a financial and retirement adviser, and author. His second book, The Great NZ Work, Money & Retirement Puzzle is available at Alan is an independent authorised financial adviser (AFA) FSP26532; his disclosure statement is available on request and free of charge.

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