Options for paying for out-of-pocket expenses

There are a number of ways that patients cover their out-of-pocket medical expenses. The options listed below are not exhaustive and are intended to cover general topics, rather than give advice on which option will be best for a particular individual^*. For patients wishing to limit costs, some options that seem convenient (using superannuation, unsecured loans or credit cards) are often the most expensive.

Money in the bank

Many patients having elective surgery decide on treatment many months before having the procedure (the average time spent thinking about weight loss surgery, for example, is about two years). During this time, setting up a direct debit facility to take money directly out of their weekly pay is the least intrusive and most cost-effective method of payment. Many of us are used to booking and paying for a holiday six months or more in advance, so the principle is familiar to us. In some cases, family members are able to help cover expenses, especially for those who are asset rich but cashflow poor.

Secured bank loans^*

Taking out a mortgage, line of credit or overdraft with a bank or major financial institution can be one of the more affordable ways for those without ready access to funds to borrow money. These types of loans can sometimes be piggybacked onto an existing loan, and usually offer the lowest interest rates and most flexible payment options.

Unsecured loans^*

These include credit cards and other finance options such as Mediplan (www.mediplan.com.au). The interest and other charges are usually much higher than those offered for secured loans. While these are often simple options to get into, they may not be so easy to pay off fully. In general, patients considering using such unsecured loans are best advised to limit their debts to the smallest amount possible, by starting a direct debit facility before surgery to build up money in the bank.

Early access to superannuation

This allows patients with a chronic painful condition, life-threatening illness or cancer to obtain access to funds to cover treatment that isn’t readily available in a public hospital. This is probably the most expensive of all the options, as the money taken from superannuation is pre-tax and this can sometimes push people into a higher tax bracket^*.

For more information, see the Australian Government Department of Human Services website: www.humanservices.gov.au

Medical expense tax offset^*

A tax rebate of 20 per cent ($200 for each $1000 spent over $1500) is available for medical expenses for you or your dependents. Someone spending $15,000 on medical expenses will therefore receive $2700 back at tax time, regardless of their income.

This does not constitute financial advice; patients are advised to consult a qualified professional before making decisions about credit and taxation. We have no relationship with any credit providers.