Our current health system pays for most procedures provided they are urgent.
However the NZ health system’s interpretation of urgent may be somewhat different to your expectations.
I would hate to have to wait three months for an appointment with a specialist to investigate something. Imagine a three months wait for a suspected cancer – highly stressful.
What might a medical procedure cost ?
$40,000 to $50,000 for a heart bypass - but the stress of waiting for the public health service to pay might kill you.
$10,000 to $30,000 waiting for cancer diagnosis and treatment - but the stress might advance the cancerous growth, or the stress of waiting might kill you.
$20,000 to $30,000 for a new knee or hip - suffer pain waiting, or pay up.
$10,000 for varicose veins - suffer pain waiting, or pay up.
And many many more.
“You need a good bedside manner with doctors or you will get nowhere.” ― William S. Burroughs
Medical insurance costs keep rising
Cost rises with age and becomes very expensive once you get over 65.
Premiums also get more and more expensive all the time, mainly because the medical research industry keeps inventing new procedures which the medical insurance companies have to pay for.
Regardless if whether you take out medical insurance or not, save into an emergency fund.
Later on, especially if your saving fund is getting quite large, split out some money and earmark it for medical emergencies. Then maybe you can drop your medical insurance off before it gets too costly.
Then if you have heath issues, you have the money and can pay. If you don’t need health treatment it, you can eventually use the money for something nicer.
Savers always win.
Over 65 ??
I commonly meet retired people who are paying $3,000 to $6,000 p.a. which in many cases is just too big a chunk of their retirement income. You have to look at:
· cost vs likelihood
· physical pain vs financial pain
· on going pain can be a big quality of life issue
Don’t cancel if you have serious health issues that they might pay for. If you have health issues and cancel, you may not be able to get insurance again.
Remember at worst you might spend $50,000 in a lifetime. And at best, nothing.
e.g. you are age 65 today, your medical insurance premium is $2,500 pa, and keeps rising. If you keep paying and live to 90, it will have cost you about $60,000 (just one person, not a couple).
Your choices, assuming good health:
· Just pay and keep paying
· Take out a minimum plan, plus save $2,000 to $4,000 pa. When you get up to $25,000, stop paying and carry the risk yourself
· Save and cancel the insurance, but allow say $25,000 in case you if you need a medical procedure before your funds have built up
· Keep working so you have more cashflow - to do any of the options above
· If you have sufficient funds, carry the risk of spending $50,000 of your own money
You must pay some attention to this rather than just paying the premiums. Call your medical insurance company at least once a year and check what you are covered for.
In particular check whether rather than the “gold plan”, maybe the cheaper “silver plan” or the even cheaper “bronze plan” is sufficient for your needs. Cost can be mitigated somewhat by taking a larger than normal excess – say $1,000 instead of $250.
I would prefer to take a higher excess rather than an 80% plan – why? Consider a $20,000 operation on an 80% plan, the medical insurance company will pay $16,000 and you have to pay $4,000.
If you have a $20,000 operation with a $1,000 excess, you will only have to pay $1,000.
Don’t be quick to cancel.
Carefully consider if you have health issues, and will they pay or not ?
Consider your options, make a decision one way or another and stick with it.
If you do end up paying yourself, it was a decision you made. If that happens, just pay up and don’t look back.
Start saving early, and build up emergency funds so you can eventually carry the risk yourself.
Insurances cost plenty so don’t waste money - review them annually.
Supplied by Alan Clarke, financial & retirement adviser, & author. He also writes regular articles for the media & on line – see www.acfs.co.nz
His second book is due out in June 2014 & is entitled “The Great NZ Work, Money & Retirement Puzzle”.
Alan is an independent authorised financial adviser (AFA) FSP26532 & his disclosure statement is available on request and free of charge.