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Private health insurance is an umbrella term for two products: hospital insurance and extras cover. Hospital insurance helps pay for private patient treatment when you’re admitted to hospital (e.g. having kids), while extras helps pay for services outside of hospital (e.g. dental check-ups).

Let’s take a closer look at each.

Hospital cover

Private hospital cover is designed to cover your treatment as an inpatient in a hospital; it doesn’t cover treatment outside a hospital (e.g. GP check-ups, specialist clinic appointments).

The services it covers while in the hospital may vary based on your level of cover as well, but not who your health fund is (as is sometimes the case with other types of insurance). This is because the Federal Government standardised hospital cover with the use of categories, or ‘tiers’.

Tell me about the hospital insurance tiers

Hospital cover is now divided into tiered categories – Basic, Bronze, Silver and Gold – with each category including a broader range of services than the one beneath it.

Gold offers the most comprehensive cover of the lot. As for all the other tiers, though, health funds can cover services and treatments beyond what’s mandated. If they do, the policy is given a ‘plus’ or ‘+’ to denote it offers additional cover.

For example, if a silver policy offers cover to help pay towards the cost of having a baby as a private patient, the policy will be classified as silver plus.

There are plenty of benefits to hospital cover too, such as a choice of doctor and hospital (depending on the availability of both), you may be able to stay in your own private room, and – most importantly – it helps you avoid public waiting lists for important procedures.

Extras cover

Also known as general treatment or ancillary cover, extras cover looks after medical treatment costs not undertaken in a hospital for items that Medicare doesn’t pay a benefit towards. Your extras policy may include things like prescription glasses and contact lens, dental checkups, physiotherapy and more.

Different policies will offer different levels of cover, though. While extras policies aren’t categorised like hospital insurance, there are ‘basic’ policies that offer cover for less expensive procedures (e.g. scale and cleans for your teeth). More ‘comprehensive’ policies will cover a larger set of procedures (e.g. wisdom teeth extraction, crowns and bridges), but may cost more as a result.

The key differences

Besides the key difference being that each product covers different treatments and services (detailed above), hospital and extras cover differ in several other ways.

  1. Waiting periods for health insurance differ between providers and policies (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.
  2. 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 for large procedures that carry lengthy public waits – justifying the expense.
  3. 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 (MLS), a tax levy on people earning more than $90,000 per annum as a single (or $180,000 as a couple/family). Taking out extras cover 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 1 July 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 which packages up hospital and extras under one health fund. You can also mix and match – getting an extras policy from one fund, and hospital from another.

inpatient receiving rehabilitation therapy

FAQs

What’s the difference between private health insurance and Medicare?

Medicare is the public health system which covers the cost of a range of medical, hospital and pharmaceutical treatments. Inside the hospital as an inpatient Medicare must deem the procedure medically necessary for your private health insurance to be able to pay a benefit.

Outside of the hospital, what treatments Medicare doesn’t pay for may be covered towards, by your private health insurance policy, these treatments can include things like dentistry, physiotherapy and podiatry.

Private health insurance also allows you to choose your own doctor, stay in a private room in a private hospital (provided one is available) and avoid the public waiting lists for treatment.

Any person with a Medicare card is entitled to public treatment, whereas only those who have health insurance will receive a benefit towards their private treatment from their fund; if you were to seek private treatment without insurance, you’ll have to pay the entire cost out of your own pocket.

Is ambulance cover different to hospital or extras cover?

Yes, there is a difference; extras policies only cover treatment provided in a non-hospital setting and while hospital policies will cover your treatment in hospital, it won’t cover your journey there in the first place. This is what ambulance cover is for.

Unless you live in Queensland or Tasmania, the cost of treatment and transport in an ambulance is not covered by the state and territory governments, meaning you’ll have to pay for these costs yourself – unless you have ambulance cover.

Ambulance cover can be purchased through a registered health fund or ambulance authority, although some funds may include it in their hospital or extras health insurance policies.

So, what are you waiting for?

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