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‘Private health insurance’ is an umbrella term for two very different products. Let’s look at both of these products, and how they differ.

Hospital cover

Private hospital cover is for when you’re admitted into a hospital. It doesn’t cover treatment outside a hospital. Which services it covers inside the hospital vary based on cover.

There are plenty of benefits to hospital cover too, such as choosing your own doctor and hospital, or skipping the public waiting lists for procedures.

Extras cover

Also known as general treatment or ancillary cover, this cover looks after medical treatment costs not undertaken in a hospital. Things like eye exams (and potentially free glasses), dental checkups, physiotherapy and more may be covered by your extras policy.

Key differences

  • Waiting periods for health insurance differ from fund to fund and policy to policy (although the government does set maximum waiting periods that funds can impose for hospital treatment). Health funds set their own waiting periods for extras policies.
  • Cost wise, these two products differ substantially. Hospital cover is (generally speaking) more expensive than extras. It is an important product, as you would typically use this cover in medical emergencies – justifying the expense.
  • Government levies and rebates apply for hospital cover, but not extras. For example, you’ll need a hospital policy to avoid the Medicare Levy Surcharge – a tax levy directed at anyone earning more than $90,000 per annum as a single (or $180,000 as a couple/family). Taking out extras will not be sufficient to avoid the MLS, although you can qualify for the private health insurance rebate with it. Similarly, to avoid Lifetime Health Cover loading, you’ll need to take out private hospital cover by July 1 following your 31st Otherwise, you’ll pay more for health insurance when/if you eventually decide to take out cover.

If you want the best of both worlds though, you can get a combined policy (both hospital and extras) with a health insurance fund. You can also mix and match – getting an extras policy from one fund, and hospital from another.

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