Explore Health Insurance

Joshua MalinWritten by Joshua Malin
Reviewed by Lana Hambilton
Last updated 20/11/2023

Key takeaways

If you’re having a surgical procedure that doesn’t require an overnight hospital stay, you should know how private hospital fees work for day surgeries and how private health insurance can help.

  • Some health funds have gap cover agreements with certain day surgery facilities where they will pay some or all of the gap.
  • When you go in for a day surgery, you may only have to pay a partial excess or none at all, depending on your health fund.
  • The day surgery medical services you’re covered for will depend on your policy inclusions, which vary based on the level of hospital cover you have.
  • Whether you’re covered or not will depend on if you’re a private inpatient or an outpatient.

Lana Hambilton, Head of Health Insurance

Expert tips for day surgery

Our health insurance expert, Lana Hambilton, has some expert tips for when you’re considering day surgery.

Some health funds have no-gap agreements with certain day surgeries

Some health funds offer no-gap for accommodation or doctors’ fees for services included in your policy at specific agreement day facilities (a hospital that partners with your fund); if this is something you think you’ll benefit from, compare policies and shop around until you find the one that suits you. Keep in mind that you’ll still need to pay your excess where applicable.

You may only need to pay one excess

In most instances, your excess is only payable once per year (per person), meaning if you need a follow-on procedure after day surgery, you won’t need to pay the excess again. For example, if you go for arthroscopy and find out you need an anterior cruciate ligament (ACL) reconstruction, you may not need to pay the excess again when you go in for that treatment provided that it happens in the same year (this could be based on calendar year or membership year depending on your health fund). If you only paid a half excess, or the excess was waived for your day procedure, you’ll be required to pay the remaining or full excess if you go in for treatment again that year.

Be prepared to pay your excess on admission

The excess is typically paid to the hospital on admission for treatment. The hospital won’t need your fund membership card but it’s beneficial to have your policy number if they ask for it.

The cost of day surgery in a private hospital

Patient recovers from successful day surgery

Out of pocket costs for day surgery

The cost of day surgery in private hospitals can differ widely, depending on the hospital treatment, where you’re being treated and who’s treating you. While you might receive the same quality of care, hospital costs can vary significantly across Australia.

Even if you have a private health insurance policy, you may have some out-of-pocket costs for your hospital admission in a private day hospital.

When you’re admitted to hospital, all procedures carry a government-assigned Medicare item number. Each item number has a cost under the Medicare Benefits Schedule (MBS) that the government deems reasonable. However, your surgeons and anaesthetists can charge more than the MBS if they choose. When you claim on your hospital policy, Medicare covers 75% of the MBS fee, while your private health insurance will cover the remaining 25%.

Example: The MBS fee for a grommet myringotomy (a surgery where a small cut is made in the eardrum to relieve pressure or to insert grommets) is $261.55.1 Medicare will pay 75% of the total ($196.20), meaning your insurance will cover the remaining 25% ($65.35). Your private health insurance policy may also cover the other costs of your hospital admission, such as theatre fees, medication, dressings and additional testing. For example, the average hospital fees for a grommet myringotomy are $1,200.2 Your hospital insurance will pay most or all these fees provided you hold an appropriate level of cover and are admitted as an inpatient. You may also need to pay an excess on admission.

There are cases where health professionals will charge more than the MBS fee. As such, you may need to pay what is known as the ‘gap’ to cover these fees.

Remember, you should always ask for an informed financial consent form before treatment so you’re aware of all costs and whether you can claim on your insurance for your day surgery.

Gap cover agreements

Health funds have agreements with different hospitals, healthcare facilities and doctors on agreed costs, known as a gap cover agreement. If your treating doctors have an agreement with your health fund and choose to use it for your admission, they’ll only charge up to an agreed amount or won’t charge you more than your policy will pay, eliminating or reducing your out-of-pocket costs.

Before you’re admitted to hospital, check if your health fund has an agreement with each health professional involved in your day surgery, such as your surgeons and anaesthetist. If there’s no agreement, you may need to pay each health professional’s individual costs above the MBS amount for their service – this is the ‘gap’. Failing to use a partner hospital could leave you with significant out-of-pocket expenses, even with private health insurance.

Are there health funds with no excess for day surgery?

Whether you need to pay an excess for your private hospital day surgery depends on your fund and chosen policy. In some cases, the excess may be halved or waived for day surgeries, but these waivers vary between insurance policies and funds.

The excess is a set amount you agree to pay when you’re admitted to hospital and make a claim on your hospital cover. When you take out your policy, you can typically choose your excess rate, but remember; the lower your excess, the higher your premiums are likely to be.

A co-payment is slightly different from an excess in that you agree to pay a set amount for each day you’re admitted as a private patient at a private or public hospital, usually capped at a yearly limit.


Day surgery and private health insurance

Is day surgery covered by health insurance?

To be covered for day surgeries, you’ll need to be formally admitted to the hospital or facility for a treatment covered by your hospital insurance policy. You may still be required to pay additional costs like an excess, co-payment or fee gap when you’re admitted.

Based on your health fund, chosen policy and gap cover agreement, you may be covered for:

  • Pathology and radiology tests (e.g. x-rays)
  • Dressings used in surgery
  • Operating theatre fees
  • Meals
  • Medications costing more than the approved value of the Pharmaceutical Benefits Scheme (PBS)
  • Allied health services, such as physiotherapy, hydrotherapy and occupational therapy

Are certain day surgeries excluded from private hospital policies?

There are four tiers of health insurance in Australia, each with minimum requirements that need to be covered. The difference between a Basic (lowest tier) and Gold hospital product (highest) is the services they include, so it’s important to know your level of cover. According to the Commonwealth Ombudsman, Australia’s most commonly excluded or restricted services* are:3

There are also surgeries the MBS doesn’t cover at all, such as cosmetic surgery that’s not medically necessary.

What’s more, your policy may have other exclusions and restrictions on what you can claim. As such, do your research, check your policy documents and talk to your health fund so you’re aware of what’s covered before undergoing surgery.

*Restricted services are services your insurer covers if you’re a private patient in a public hospital. If you seek treatment as a private patient in a private hospital for a restricted service, your health fund won’t cover your theatre fees – though they may pay a small amount towards your accommodation fee. This means you could face considerable out-of-pocket costs.

Are there waiting periods for day surgery under private health insurance?

If you haven’t already signed up for a policy, you’ll need to wait a certain amount of time before you can claim on your hospital policy. Thankfully, you won’t ever need to wait longer than a year before you can claim.

The government has set the following guidelines that health insurers must follow:

ServiceWaiting period
Pre-existing health conditions12 months
Birth-related services and pregnancy12 months
Rehabilitation, palliative care and psychiatric care (even for a pre-existing condition)2 months
All other conditions2 months

What is the difference between inpatient and outpatient services?

While both inpatient and outpatient procedures can be performed on the same day, they are treated differently when it comes to private health insurance. These procedures may also incur different private hospital day surgery fees.

Outpatient surgery doesn’t require a formal admission into hospital and is therefore not usually covered by your health fund except in special circumstances. For example, treatments like the removal of an infected toenail by a general practitioner, meeting a specialist or blood tests without being admitted as a patient aren’t covered by your policy.

Outpatient treatment can include treatment in an emergency room, specialist doctor consultations before treatment (such as a doctor examining a skin cancer) and most assisted reproductive services or treatments.

Inpatient treatment means you’ve been admitted to hospital by a health professional and undergone a procedure. Depending on the procedure and your private health cover, you could be covered by your policy up to the MBS limit.

When you’re admitted to a day hospital as an inpatient, you may have to undergo a pre-admission assessment to evaluate any risk factors that could affect your eligibility to be treated and go home on the same day.

As always, you should read your policy documents carefully for information specific to your health fund and the individual policy.

Other benefits of private health insurance

On top of providing cover for day surgery, a health insurance policy can also help you avoid public waiting lists, recover from treatment in a private room (if available), choose your own available doctor and much more.

Our health insurance comparison tool is an easy way to compare policies and the features they offer. In addition to the day surgery procedures that may be covered, you’ll also be able to assess their exclusions, benefits, extras and more.

The best part is it takes just minutes to use our service and it’s completely free to use.


Examples of common day surgeries in Australia

  • Cataract surgery and ophthalmology
  • Endoscopy (an internal examination that doesn’t require major surgery)
  • Wisdom teeth removal
  • Arthroscopy (examination and/or treatment of damage to the interior of a joint)
  • Cystoscopy (examination and/or treatment of the bladder and urethra)
  • Dilation and curettage (light scraping of the womb)
  • Ear grommets (plastic ventilation tubes that treat ear infections).

Day procedures may be available for health specialty areas, including orthopaedic, paediatric, gynaecology or urology services. This depends on the type of healthcare required and the surgical services used.

Lana Hambilton, Head of Health Insurance

Meet our health insurance expert, Lana Hambilton

As Head of Health, Life, and Income Protection Insurance at Compare the Market, Lana Hambilton is passionate about simplifying the comparison process and educating Australians about the value and benefits private health insurance can offer and the critical role it plays in our medical system. She firmly believes that health insurance provides choice in one of the most important aspects of life – our health – and has experienced countless cases over the years where peace of mind comes through the ability to choose when, where, and who will treat you.

Lana has 15 years’ experience in the health insurance and insurance comparison industries. She’s also a Board Member of the Private Health Insurance Intermediaries Association.


Australian Government Department of Health, MBS Online: Medicare Benefits Schedule. Accessed January 2023

2 Australian Government, Medical Cost Finder – Grommets/myringotomy. Accessed July 2023

3 Commonwealth Ombudsman, Policy Exclusions and Restrictions. Accessed January 2023

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