Private health insurance helps provide you with more choice in your healthcare. Private hospital cover lets you avoid public waiting lists, choose your own doctor and have your own private room (on availability). Extras cover pays toward many out-of-hospital medical treatments like physiotherapy or dental care. For the benefits of both types of cover you can take out a combined cover policy.
With so many health insurance providers and policies available, it can be hard to know which one is right for you. At Compare the Market, we can help you on your journey to find the best health insurance for you. You can get a quote in minutes through our online comparison tool, or if you prefer a more personal approach, you can talk to someone at our expert run call centre to discuss your options.
You can purchase private health cover in a few different forms. Private hospital cover gives you the option of being treated as a private patient, so you can choose your doctor, stay in a private room (when available) and avoid public waiting lists, among other perks. Extras cover helps pay for the treatment you receive out of hospital that Medicare doesn’t cover.
When you receive treatment as a private patient, Medicare and your private hospital insurance will cover you for 100% of the Medicare Benefit Schedule (MBS) fee. You may still have a gap payment, which is the difference between the MBS fee and what your medical treatment costs.
For out-of-hospital treatments listed on your extras policy, your insurance provider will pay either a percentage of the total costs or a set dollar amount. The amount you can claim may be subject to lifetime, annual or sub limits.
Always check your Product Disclosure Statement (PDS) before claiming as limits, exclusions and waiting periods will apply.
Private health insurance in Australia is community rated, meaning that you’ll never be charged more than someone else for the same policy based on risk factors such as race, gender, pre-existing conditions or any other reason. However, there are several factors that can still affect how much you pay in premiums, such as your level of cover, state of residence, rebates, discounts and Lifetime Health Cover (LHC) loading.
For hospital cover, policies are divided into four tiers (Basic, Bronze, Silver and Gold) which are priced accordingly. Extras cover is also usually divided into tiers; however, these levels are decided by the insurer and aren’t regulated by the government like hospital cover is. Taking out a higher level of cover will naturally cost you more, although you can often reduce your premiums by agreeing to a higher excess instead.
Your premiums will also be influenced by your eligibility for an age-based discount, the Australian Government’s rebate and LHC loading.
The best fund for you will depend on your unique circumstances. Thanks to our handy private health insurance comparison service, we make it even easier to find health insurance. With our free tool, it takes only minutes to compare policies side-by-side to find great-value cover that suits your family’s needs.
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The information provided is current as of April 2022 and sourced from the Private Health Insurance Ombudsman. This list is subject to change.
Since Medicare doesn’t cover ambulance transport and treatment costs, many health funds across the country offer ambulance cover that you can add to your health insurance policy or take out as a standalone policy. Some ambulance services also offer membership through which you can be covered for transport and treatment costs.
In Queensland and Tasmania, the state governments cover ambulance costs instead.
The public and private healthcare systems are designed to complement each other.
When you’re admitted to a private hospital as a private patient, Medicare will pay up to 75% of your treatment’s schedule fee. Your private health insurance contributes the additional 25% as well as covering your accommodation costs and theatre fees for the procedure. In some cases, your insurer will also provide additional gap cover when your doctor charges more than the scheduled fee.
Extras coverage is designed to contribute towards those services where Medicare does not pay a benefit, like dentist treatments or physiotherapy sessions. Optical treatment is a great example of how Medicare and private health insurance extras products can work together: Medicare pays for the eye check and consultation with the optometrist and your private health insurer provides coverage towards the prescription glasses or contact lenses.
Whilst not tax deductible, private health insurance can still have an impact on your tax.
Firstly, the private health insurance rebate is available to anyone with a hospital, extras or combined health insurance policy, and it can be claimed each year via your tax return. Alternatively, you can also choose to claim the rebate as a discount on your premiums instead.
Also, if you earn more than $90,000 as a single or $180,000 as a couple or family and don’t hold sufficient private hospital insurance, you could incur the Medicare Levy Surcharge (MLS). This is applied as a percentage of your annual income (e.g. 1.5%), which you’ll need to pay for the number of days in the financial year that you didn’t hold the coverage.
Each hospital treatment has a Medicare Benefits Schedule (MBS) fee, a price the government believes is fair. Medicare pays 75% of this fee, while your health insurer pays the remaining 25%. If your specialist charges this exact schedule fee, you won’t incur any out-of-pocket expenses, or ‘no gap’.
If your specialist charges above this fee, you’ll have to pay the extra amount not covered by Medicare and your private health insurance.
For extras services, no gap simply means that the health care provider doesn’t charge above your extras benefits limit which results in no out-of-pocket costs. Your insurer may have agreements with certain providers to eliminate out of pocket expenses. Be sure to check with your insurer before seeking treatment to understand what costs you may incur.
For more information check out our page explaining gap payments.
When you’re admitted to hospital as a private patient, you may have to pay a lump sum of money to your private health insurer, which is known as the excess. This could be in the form of a payment per hospital admission but may only be for the first admission of the calendar, financial or membership year depending on your insurance provider. Choosing a higher excess may allow you to pay lower premiums.
Depending on your level of cover, hospital insurance can take care of your treatment costs as a private patient for birth-related services. These can include pregnancy, labour, post-natal care, C-sections, in-patient obstetrician care and private room accommodation (should it be available). However, you must hold health cover for 12 months before you can claim on these services.
Importantly, not all private hospital insurance policies cover birth-related services. Gold policies, as well as some lower tiers with a ‘plus’ designation (e.g. Silver Plus), can include this coverage.
A private hospital policy may also cover assisted reproduction services to a limited degree when you’re treated as an in-patient (i.e. you must be admitted to a hospital) or admitted for day surgeries. This could include infertility tests, IVF and GIFT (e.g. egg collection or embryo transfer).
As some health issues tend to show up later in life, pensioners can get enormous value from health insurance.
However, it’s not as simple as saying ‘all pensioners need cover’, so much as they should consider cover. For anyone thinking about taking out private health insurance, ask yourself the following questions:
Whether pensioners need private cover or not, their base premiums will never be increased because of their age. The only price difference between customers come from the choice of policy, state of residency and whether a government rebate, loading or discount applies (in addition to the base premiums).
Whether you should take out private health insurance will depend on your circumstances. However, you might want to consider it if you value having more choice when it comes to your healthcare. Avoiding public waiting lists for elective surgeries, choosing your own doctor, and staying in a private room are great reasons to consider private hospital cover. If you prefer to maintain your health through regular out-of-hospital treatments, you might want to consider an extras policy instead.