Having health insurance is a highly personal choice. The benefits vary greatly between
individuals (and families), so it is a good idea to familiarise yourself with what is on offer and
how it will work for you. Here we aim to provide links to several resources which may assist you
when making your decision. Visit https://www.privatehealth.gov.au/ which is provided by the
government to help with understanding private health insurance.
From 1 April 2019, the government has imposed regulations on health insurance funds that they
must comply with a four tier system of coverage. All policies will be reclassified as Gold, Silver,
Bronze or Basic. This allows consumers to better compare like-for-like policies across different
providers.
The article What is Covered by Private Health Insurance explains the differences between
hospital, extras and ambulance cover.
It is possible to have hospital cover alone, extras cover alone, or both hospital and extras
together. We will explain what is included in each.
Hospital cover
-
- In-hospital treatments including emergencies, surgeries and procedures may be covered
under hospital cover - Hospital cover provides patients with more choice of doctor, location, timing and type of
treatment in comparison to treatment as a public patient - You can purchase hospital cover alone or as part of a package with extras cover
- See our article Choosing a Hospital to compare what is offered at public and private
hospitals - Different levels of hospital cover exist, this can impact several areas of your care
including;- Type of room you can stay in (single room vs. shared room)
-
- Note that even if your insurer promises a single room, there is no
guarantee that the hospital will have one available, so you may still find
yourself in a shared room.
- Note that even if your insurer promises a single room, there is no
- Some treatments
- Cheaper policies will exclude certain treatments, which may be beneficial
for you. For example, if you don’t plan on falling pregnant you can
exclude pregnancy care, potentially reducing the price of your premium.
However, often patients get caught out when they realise they require a
certain treatment that is excluded on their policy. - Some policies will restrict certain treatments, for example, psychiatric
care may have higher out-of-pocket costs on some policies.
- Cheaper policies will exclude certain treatments, which may be beneficial
- It is highly recommended that you read the Product Disclosure Statement (PDS) of any
policy that you are planning to purchase to avoid bill shock after treatment. - Remember that even if you have hospital cover, all Medicare Card Holders are entitled
to care that is considered necessary in Australian public hospitals. - An important point to understand is that you must be an inpatient to use hospital cover.
An inpatient is someone who has been admitted to a hospital and allocated a bed on a
ward. This means that;- Treatments and tests in an emergency department prior to being admitted to a
ward will not be covered. You are considered an outpatient unless you are
admitted to a ward. - Treatments and appointments as an outpatient (specialist clinics in a hospital)
won’t be covered. - If you have a Medicare card you can still attend the emergency department of
public hospitals free of charge.
- Treatments and tests in an emergency department prior to being admitted to a
- In-hospital treatments including emergencies, surgeries and procedures may be covered
Extras Cover
- Unlike hospital cover, extras cover does not reduce the Medicare Levy Surcharge.
However, the Private Health Insurance Rebate does apply to extras. - Extras cover is for out-of-hospital care and depending on your level of extras cover it can
cover some (very rarely all) of the costs of; - ○ Dental
○ Optical
○ Physiotherapy
○ Medical appliances
○ Chiropractic
○ Psychology
○ Pharmaceuticals that aren’t on the PBS (Pharmaceuticals Benefit Scheme)
○ Podiatry
● Choice’s Tips to Save on Extras Cover explains it very simply.
● Essentially, extras cover may be worthwhile to you, but a quick calculation of your
average yearly out-of-hospital spendings will help you decide if the premium is
worthwhile.
● Extras cover usually has a yearly limit which may apply to either the total cost or number
of visits.
○ For example, you may be limited to $200 per year on optical and anything over
that amount will need to be paid out of pocket. - Combining Hospital and Extras
● Most health funds will allow hospital and extras to be packaged together
● If you want both hospital and extras cover it may suit your circumstances better to chose
them separately rather than in a package
Tax Incentives
● Medicare levy surcharge
○ Almost all Australian taxpayers pay a 2% Medicare Levy
○ In addition to the Medicare Levy, if you earn over a certain amount ($90,000 for
singles, and $180,000 for couples) and do not have private hospital cover you
will be charged the Medicare Levy Surcharge. This is an additional 1-1.5% of
your income.
○ For further details see PrivateHealth.gov.au – Medicare Levy Surcharge
○ Be aware that “junk policies” exist, these are aimed at consumers wishing to
avoid the Medicare Levy Surcharge, but only offer a very low level of cover.
Choice has released this article explaining the problems with these policies.
○ See Choice’s survey Do I Need Health Insurance? to see if the levy will apply to
you.
● Lifetime Health Cover loading
○ If you don’t have private hospital cover from the 1st of July after your 31st
birthday you will be charged the Lifetime Health Cover loading in addition to the
premium on any future hospital cover you purchase. This does not include extras
cover.
○ The cost is 2% of your premium per year that you are over 30 years of age
without hospital cover. For example, if you first take out hospital cover at 35
years of age, you will pay 10% more for the same cover than someone who had
hospital cover from 30 years of age
○ Once you have held hospital cover for 10 consecutive years, the Lifetime Health
Cover loading will be removed
○ Lifetime health Cover loading does not apply to those born on or before the 1st of
July 1934
○ For further details see PrivateHealth.gov.au – Lifetime Health Cover
● Private health insurance rebate
○ Depending on your age and income, the Australian government will help to cover
some of your health insurance premium. For example, if you are 40 years of age,
single and earn less than $90,000, the government will pay 25.415% of your
premium
■ For exact figures see PrivateHealth.gov.au – Australian Government
Private Health Insurance Rebate
○ Unlike the Lifetime Health Cover Loading, this does apply to extras cover.
Waiting periods
● Privatehealth.gov.au explains why waiting periods are important.
● The main points are;
○ After joining a fund you will need to wait a maximum of 12 months for in-hospital
treatment of a pre-existing condition and obstetrics
○ This waiting period is reduced to a maximum of 2 months for palliative care,
psychiatric care and rehabilitation
○ There is no government regulation on waiting periods for extras cover
○ Waiting periods usually do not apply for accidents that occur after you join the
fund
● You may want to keep an eye out for special offers from insurers that offer reduced
waiting periods.
● When changing from one health fund or policy to another, check with your new insurer
whether any waiting periods apply. This is of particular importance if your new level of
cover is different from your previous.
Excess and Co-Payment
● An excess is the amount you agree to pay should you need to use your health insurance
if you go to hospital. You can save money on your premium by increasing your excess
amount.
● A Co-Payment may also lower your premium. It is an amount you agree to pay per day
that you are in hospital. This is usually capped at an agreed amount.
● Canstar explains these in detail here.
Families vs Singles
● Dependants under 18 years of age, or 25 years of age if they are full time students may
be covered on your joint policy at no additional cost.
● See Are there any advantages to buying a couple’s policy rather than two single
policies?
● See also When do you move from singles to couples cover? and Should You and Your
Spouse Have Separate Health Insurance Plans?
Using comparison sites
There are many comparison sites available to assist you with choosing the health fund and
policy that suits you. They have many similarities, and the prices that are quoted are usually
consistent with other comparison sites, however we still recommend looking at more than one
comparison site, and directly at the website of the insurer that you are considering.
https://www.privatehealth.gov.au/dynamic/search
● Doesn’t require contact details
● Government resource
● The quoted premium is before the private health insurance rebate, so factor this in when
using other comparison sites
https://www.iselect.com.au/health-insurance/
● Contact details required so prepare for promotional phone calls
● Has a price promise
https://www.comparethemarket.com.au/health-insurance/
● Again, your contact details required
● Best price promise
https://www.canstar.com.au/health-insurance/
● Doesn’t require contact details
https://www.finder.com.au/health-insurance
● Will take you direct to the insurer to purchase product
https://healthinsurancecomparison.com.au/
● Contact details required
https://www.choice.com.au/money/insurance/health/compare
● You are required to be a paid member of Choice to use this service, but has the added
benefit of Choice not taking commision from insurers so this could reduce bias.
Registered health insurers are listed here.
To make a complaint about your health insurance contact the Commonwealth Ombudsman
here.
Authorised by Stephen Mason, CEO, APA.