When should my children be removed from my health insurance?
The private health funds offer hospital cover and extras cover products which can be purchased by singles (individuals), couples, and families. A family cover is defined as 1 or 2 adults with any number of dependants.
A dependant must not have a partner (i.e., not married or in a de facto relationship) and must be under a certain age threshold, often ranging from 18 to 21 for most funds. Certain funds will cover the children until they are older (up to 25) provided they are single and are either earning less than a certain income threshold or designated as full-time students. Once they become of age, they will automatically be taken off the policy. Even if they haven’t reached the age threshold, they can be booted off the insurance plans if they enter full-time employment.
If you want to make sure your kids are covered by your policy as long as possible, you should speak to the health funds early on to understand their policies and how they define qualifying dependants.
What should they do once they are removed? - Medicare or Private Health Fund?
Once they are ‘kicked off’ the policy, they have two months to arrange their own insurance plan of similar or lower cover in order to avoid serving waiting periods. Given they are young adults, they wouldn’t necessarily need the extent of coverage they had under your family plan. So they can get on cheaper plans with less coverage once they are on their own.
At the age of 18, every Australian citizen or permanent resident could access their own Medicare. Some young adults might think this might be a tempting option since it’s free and they don’t have a lot of health issues. However, young adults, especially if they are active or play sports, may need access to physio or emergency services, which could result in much higher out-of-pocket costs. Young age is when they should be investing in preventive health such as dental checkup which is not covered by Medicare. Keep in mind that the waiting period is reset if you switch to Medicare.
Many insurance providers offer affordable policies with special discounts for young adults. Finding a policy that would waive the waiting period and provide decent coverage at a reasonable rate could be your best bet. Since the Australian Government wants to encourage young adults to get private health insurance earlier in life, there are penalties such as the Lifetime Health Cover if your child doesn’t get their own health insurance before the age of 30. If they are earning income higher than a threshold, they may also get charged the Medicare Levy Surcharge.
So talk with your provider and children to find the best policy for them to transition to. You can start by exploring the options available using Compare Health Insurance.