Barefoot Investor Health Insurance

Barefoot Investor health insurance is Scott Pape’s tips and recommendations for obtaining health insurance in Australia. So, do you really need it? Does Captain Fi have health insurance? Read on to find out

Health insurance is pretty expensive worldwide, but especially so in Australia where health insurers have jacked up their premiums by over 54% in the past decade, with it pretty usual to see annual increases of around 5%.

The Barefoot investor Scott Pape is an Australian Personal finance legend and one of the best segments I think he did in the Barefoot Blueprint was on the Barefoot Investor Health Insurance – which is Scott Pape’s tips and recommendations for obtaining health insurance in Australia. Read on for all the details!

The Good

The Bad

  • Can be expensive

Whilst the Barefoot Investor health insurance recommendations aren’t cheap, they can provide good value for money and peace of mind for you and your family.

CaptainFI is not a Financial Advisor and the information below is not financial advice. This website is reader-supported, which means we may be paid when you visit links to partner or featured sites, or by advertising on the site. For more information please read my Privacy PolicyTerms of Use, and Financial Disclaimer.

barefoot investor, scott pape
Scott Pape’s Barefoot Investor book

Introduction to the Barefoot Investor health insurance

The Barefoot investor Scott Pape is an Australian Personal finance legend. His straightforward and no BS bestselling book ‘The Barefoot Investor’ has helped millions of Aussies to learn and work towards improving their finances and addressing the epidemic of poor financial literacy here in Australia.

One of my cherished sources of information was the Barefoot Investor Blueprint monthly segments that he and his team published, which covered everything A to Z of personal finance, from setting up your barefoot buckets and what banks have the best bank accounts, to family planning, to investing in your superannuation, right through to estate planning. One of the best segments he did in the Blueprint was on the Barefoot Investor Health Insurance – which is Scott Pape’s tips and recommendations for obtaining health insurance in Australia.

Health insurance is pretty expensive worldwide, but especially so in Australia where health insurers have jacked up their premiums by over 54% in the past decade, with it pretty usual to see annual increases of around 5%.

The Barefoot investor’s three rules for (any) insurance

Before getting into the nitty gritty, it’s important to go over the Barefoot Investors rules for insurance. The Barefoot investor has three pretty simple rules when it comes to choosing health insurance – which are actually just as applicable to any other type of insurance – including;

Barefoot investor insurance rule number One: “Only insure against things that can kill you financially

The Barefoot Investor is fairly pragmatic and this is a sensible rule. What he is getting at here is avoiding unnecessary insurance, which is often quite expensive – so you can go ahead and cancel that extended tiger protection insurance on your property. Whilst that bit was said in jest, consider the number of ridiculous junk insurance products which have been sold by slimy salespeople to naive people (ehhem wasn’t there a recent royal commission into banks doing just this?!1).

Types of insurance the Barefoot Investor recommends you drop are things like extended warranty insurance on your phone or other low value electronic devices – this is why you keep an emergency fund ‘Mojo’ in your Barefoot investor bank account bucket set up. Losing your phone or laptop might be frustrating, but it won’t kill you financially.

The types of insurance the Barefoot Investor recommends you keep (as they COULD kill you financially) are things like;

“Your house burning down, getting robbed, your car getting into a bingle, travelling overseas and getting sick, going to hospital, death or permanent disablement, and being unable to work.”

Scott Pape, The Barefoot Investor, Barefootinvestor.com2

private health insurance
Pape suggests only to insure against things that can kill you financially

Barefoot Investor insurance rule number two: “Choose a higher excess”

This one is pretty self-explanatory, and for example, is how I have managed to save heaps of money on my car insurance (given I am a great driver and have only had to make a claim once in my life!). By opting for a higher excess in the event that you do have to claim, you will be rewarded with lower ongoing premiums – this is savings you can put directly into your emergency fund Mojo account (or if that is already topped up, you can put this towards paying off your house, investing, or just enjoying the finer things in life!).

This is a form of self-insurance, or to be exact, partial self-insurance as you are opting to self-insure the higher portion of excess. Consider how frequently you may need to claim, and what size of an emergency fund3 you should keep. The general advice for a 6-month emergency fund should typically cover most households for this higher excess on most types of insurance.

Barefoot Investor insurance rule number three: “Don’t automatically pay your insurance premium each year”

I had a laugh when I read Scott’s bit about “Insurance companies behaving like cheating husbands” (that is, sweet-talking new customers with discounts and gifts whilst treating their faithful wives at home [aka you the loyal customer] like dirt). But it’s true, pretty much any service that you have which is on a yearly payment, will usually jack up the price and hope you just accept. Car insurance, health insurance, internet, phone providers… they all do it.

The Barefoot Investor advises you to wait for the renewal notice to come (via email, NOT snail mail) and then when it does, google the latest deals and get a feel for the market. Once you have a few valid options, give your current insurance company a call and run ‘The Script to ask for a better deal’ basically telling them you are thinking of switching for a better deal. I agree with Scott here – it is the easiest money you will make all year, and running the script has now saved me tens of thousands of dollars over my journey to FIRE.

‘The Script’ – as listed HERE on Herald Sun4:


You: Hello, my account number is ______. I’ve been with you for ___ years, but I’ve applied to refinance with X Bank. Their rate is ____ per cent, which is a full ___ per cent cheaper than you’re charging me. Given our longstanding relationship, I’d like you to match the offer — or send me the forms I need to switch to X Bank.

Bank rep: One moment, please.

(You’re bluffing, of course. However, the bank’s sales team have strict targets, backed by incentives, that they have to meet — one of which is giving profitable customers discounts to stop them leaving.)

Bank rep: We can’t match the rate you have quoted. However, we understand you are a valuable customer, so we would like to offer you a 0.15 per cent discount.

You: That’s not good enough. I’ve already got conditional approval … so in order to stay I need at least a 0.5 per cent discount. Could you please speak to your supervisor? I’m happy to wait.

Bank rep (a full six minutes later): On reviewing your case, we can offer you that 0.5 per cent discount on your current rate.

You: Brilliant! Please send me an email confirming the new rate and confirming that it will be applied as of start of business tomorrow.

The Barefoot Investor’s Golden Rules for Private Health Insurance

The Barefoot investor has three more rules for when it comes to private health insurance specifically. These are;

Barefoot investor health insurance rule number One – Get the best you can afford

The Barefoot investor opts to purchase top-level comprehensive private hospital insurance policies, with the best hospital cover he can for his budget.

Barefoot investor health insurance rule number Two – stay away from ‘extras’

The Barefoot investor does not purchase extras or combined healthcare cover. These are policies that include things like Chiro, Dental and Optical. These optional extras can cost hundreds to thousands of dollars extra per year whether you make a claim to use any of these benefits or not. The Barefoot investor even suggests if you do have a current policy with extras, to phone your insurer and ask what the cost savings would be should you switch to a comparable ‘hospital only’ policy. You might be surprised!

Barefoot investor health insurance rule number Three – avoid internet comparison sites

The Barefoot investor provides some sage advice when it comes to online marketing – internet comparison sites are motivated by affiliate commissions and hence may only suggest health insurance companies that provide the greatest kickback or advertising spend, not necessarily the best option.

“Show me the incentive and I will show you the outcome”

Charlie Munger, Berkshire Hathaway

Instead, Scott Pape directs us to the Australian government’s public health insurance search and comparison tool, which gives digital access to every health fund provider in Australia. – the Australian Government’s private health insurance search and comparison tool.

Barefoot investor health insurance rule number four – pre-pay and save

The barefoot investor suggests if you are able to pre-pay your yearly premium, you may be able to lock in your current premium for potentially up to 18 months. However, you do need to balance out any prospective savings against your cashflow requirements and the opportunity cost of not investing that money (or paying down your mortgage).

What health insurance does the Barefoot Investor recommend?

So, after considering all of the Barefoot Investors insurance and health insurance rules above, what health insurance does the Barefoot Investor recommend?

You might not be surprised to hear, that the Barefoot investor doesn’t actually recommend one particular fund for anyone. In fact, Scott goes so far as to counsel people to whether they actually even need private health insurance in Australia at all – after all, in Australia we have Medicare – one of the best public health systems in the world.

barefoot investor health insurance
The decision to get health insurance will be a personal one and depends on your individual circumstances.

“Australia has one of the best public health systems on the planet. Seriously. Get sick, or have an accident, and you’ll get five-star treatment in a public hospital, free of charge.” 

Scott Pape

I have included below some more information on Medicare I originally published in my article on private versus public health insurance;

What does Medicare cover

  • Treatment and accommodation in a public hospital with no out-of-pocket cost
  • Free or low gap healthcare treatment through the public system including Doctors, Nurses, Medics, Obstetricians and Midwives
  • a 75% discount of the Medicare schedule free as a private patient in either a public or a private hospital (However may not cover certain fees such as medicines, accommodation or surgery theater fees)
  • 85% of the cost of specialist appointments referred to by your GP
  • Heavily subsidized medication and pharmacy subscriptions supplied under the pharmaceutical benefits scheme (PBS)
  • Public Patient Transfer, including the Royal Flying Doctor Service6, as well as most aeromedical evacuations.
  • Some general costs such as eye and hearing tests.
  • Mental health services and treatments, covering up to 10 sessions per year (registered health professionals can extend this by a further 10 group sessions per year). The full list of services can be found on the Medicare mental health services page7. If the service bulk bills it is free, however many don’t, leaving you with a gap fee after your rebate.

What doesn’t Medicare cover?

  • Certain elective surgeries such as cosmetic surgeries
  • Dental surgeries such as wisdom teeth or molar removal
  • Ambulance call-outs and transportation
  • Optical costs like glasses (spectacles) and laser eye corrective surgery
  • Overseas medical repatriation or Medivacs8 in non-healthcare agreement member states or countries.
hospital cover
You might not be surprised to hear, that the Barefoot investor doesn’t actually recommend one particular fund for anyone.

Who is eligible for Medicare?

If you are an Australian citizen or resident, then you are eligible to get a Medicare card9. Even certain visitors to Australia can get one, so check your eligibility for Medicare here9.

You need to specifically apply for a Medicare card, which you can do once you are above 15 years old. You can apply online, and if you get stuck, call Medicare on 13 20 11.

Remember though, not everyone is eligible for Medicare. There are a number of reciprocal healthcare schemes arranged with many other partnering countries which allow treatment for visitors under Medicare and vice versa for Australians abroad.

Students coming to Australia to study must have Overseas Student Health Cover10. This is a form of private health insurance policy specifically to cover medical expenses such as visits to the doctor, hospital treatment, ambulance cover and limited medical prescriptions. It must be valid for the duration of your study visa.

What does Medicare cost?

“Medical services and benefits, comprised primarily of Medicare and Private Health Insurance Rebate expenses, will account for $33.7 billion, or 41.2 per cent of total health funding in 2019–20. Growth in Medicare expenses is the major driver of growth”

Australian Parliamentary Hearing Library, 202011.

If you think that is a lot, Universal healthcare in America is estimated somehow to cost twice the per capita expenditure in Australia! In Australia, our Medicare is paid for using consolidated government revenue and special Medicare taxes, called;

  • The Medicare Levy
  • The Medicare Levy surcharge (MLS)
  • Lifetime Health Cover Loading (LHC)

Keep in mind that universal healthcare and taxes is a major politically charged topic, and is constantly being debated and revised. It seems there are changes every year to the system so don’t rely on this as gospel.

Get an accurate estimation for what your Medicare contributions are from the ATOs Income Tax Calculator here12.

The Medicare levy

The baseline cost of Medicare is 2% of your income, a tax called the Medicare levy. This is treated similar to income tax, but rather than a marginal ‘tiered’ system it is a flat rate of 2%. Certain people are exempt from paying this levy, or pay a reduced rate such as;

  • Disabled people meeting certain medical requirements such as the Disability Support Payment (DSP)
  • Low income families who meet minimum thresholds and receive certain welfare benefits and exemptions. Currently, if you earn below $21,600 ($34,200 for seniors) you are exempt, and below $27,000 ($42,800 for seniors) you pay a reduced amount.
  • Some migrants or visa workers who aren’t covered by Medicare at all shouldn’t be paying the levy – Note – if this is you, investigate whether you are currently paying it and stop doing so!
  • Workers of the Australian Military and some Australian Public Service positions, as well as some Not-for-profit or charity workers

You can read more about the Medicare Levy straight from the horse’s mouth at the Australian Tax Office website here13.

The Medicare Levy Surcharge

There is also an additional tax called the Medicare Levy Surcharge which is charged to high income earners. The Medicare Levy Surcharge scales between 1%, 1.25% and 1.5% of your income depending on how much you earn, which is assessed both as an individual and as a family unit.

You can read more about this on the Australian Taxation Office MLS article here14, but the threshold to start paying the surcharge is $90,000 for singles and $180,000 for families.

Lifetime Health Cover Loading (LHCL)

The Lifetime Health Cover loading is designed to encourage people to take out their own private health insurance to reduce the load on the public healthcare system, and generate revenue to fund Medicare.

The LHC loading makes private health insurance progressively more expensive above the age of 30. The government charges a fee of 2% extra on your policy for every year past 30 that you don’t obtain private health insurance. This then applies for the first ten years that you hold your policy.

This can add up to significant costs later in life, which essentially ‘back-pays’ Medicare for some of the public healthcare benefits you have received.

Why might you choose private health insurance?

  • If you earn over $90K as a single or $180K as a couple, the Medicare Levy Surcharge costs basically the same as private health insurance
  • If you want you or your family to be able to skip to the front of the queue or choose your own healthcare professionals
  • To cover you for Optical, Dental or Mental Healthcare policies
barefoot investor health insurance, dentist, dental visits
The Barefoot investor does not purchase extras or combined healthcare cover. These are policies that include things like Chiro, Dental and Optical.

Private Health insurers in Australia

There are over 40 private health insurers in Australia, with the biggest ones including;

  • HBF
  • Bupa
  • NIB
  • HCF
  • Medibank
  • Health Partners

Your best bet when finding a private health insurer is to jump onto to begin your search.

Does CaptainFI have Private Health Insurance?

Nup! I don’t have private health insurance and haven’t needed it – Medicare has got me covered.

Previously, I was provided private health insurance by my employer and I was required to meet very strict medical and health requirements as a pilot to maintain a class 1 aviation medical with yearly comprehensive physicals. This was handy when I had to have some minor medical procedures (such as having my wisdom teeth removed) but wasn’t the be all and end all.

Going forward, I will remain on Medicare, however my partner currently has private health insurance as required by her Visa. Once she gets approved for her citizenship (soon, fingers crossed) we will make a choice regarding keeping the private health for her pregnancies (we probably will just for the pregnancies aspect and then drop it once we have finished having kids).


The decision to get health insurance will be a personal one and depends on your individual circumstances. I know there are many people out there who pay for policies and never make any claims, so it’s worth doing your own research on health insurance companies, and analyzing just how much you think it’s worth it for you and your family or not.

Do you have a good health insurance policy? Feel free to share why you have decided on/not decided on health insurance, in the comments below.

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