When you’re treated through the private health care system, you may still have to pay some of the medical costs out of pocket, even if your health insurance policy helps to cover your treatment.
When you’re admitted to hospital as a private patient for a treatment listed on the Medicare Benefits Schedule (MBS) and covered by your insurance policy, Medicare will typically pay for 75% of the MBS fee, and your health fund will pay 25%. However, because the hospital and doctors are allowed to charge above the MBS fee, you may have to pay the difference between the MBS fee and the total cost of your treatment; this difference is commonly referred to as ‘the gap’.
You may be able to avoid or minimise the gap through your health funds gap cover scheme. For more information on how the gap works, see our guide to gap payments here.
The excess is an amount you pay upfront when you’re treated as a private patient for a condition covered by your private health insurance. Depending on your policy, you will usually only have to pay the excess on your first hospital admission for the year.
When you take out a health insurance policy, you can typically elect to pay a higher premium in exchange for a lower excess. Or, if you think it’s unlikely that you’ll be admitted to hospital, you could choose a higher excess and pay less in premiums.
Unlike an excess, a co-payment is a fixed amount you pay for every day you’re in hospital. The amount payable is usually capped up to a maximum payable annually or per admission.
It’s vital that you’re aware of any excess and/or co-payments on your policy when you sign up for private health insurance to help you avoid unexpected expenses when you’re admitted to hospital. Talk to your health fund or refer to the relevant Product Disclosure Statement (PDS) for more information.
In simple terms, taking out a joint health insurance policy is the same as taking out two identical single policies, except that you only pay one premium. Because of this, the most significant benefit of couples’ health insurance is convenience, not cost.
While a couples policy might not lower your total base premiums, depending on the age and income of you and your partner, it is possible that a couples policy would affect your eligibility for the Australian Government rebate.
For example, the singles income threshold for the rebate is $140,000, and the family threshold is 280,000, so if you earn $150,000 annually you might not qualify for a rebate as a single. However, if your partner earns less than $130,000, you might qualify for a rebate on your combined family income.
1 IPSOS – Health Care and Insurance Australia Report. Published 2021
2 Private Health Ombudsman data. Released November 2022