Do I need health insurance?

If you’re not sure about private health insurance, this quick quiz will help you figure out what’s in it for you.

This health insurance checker is designed to give you broad guidance on some of the factors relevant to the purchase of health insurance. It is not designed to provide you with a determinative answer. Remember – one of the key benefits of private health insurance is to insure you against some of the costs associated with unforeseen accidents injuries or illnesses. You should form your own view about whether health insurance is appropriate for you. We would love to speak to you if you are not sure: call us on 13 32 32.

Have you ever wondered, ‘Do I really need private health insurance?’

Well, to help you figure it out, here’s the low-down on private health insurance or PHI – as it’s commonly referred to.

Public versus private healthcare system

Australia has a universal healthcare system called Medicare, which was officially implemented here in 1984.1

Medicare guarantees public patients access to free treatment in a public hospital. However, it doesn’t offer you a choice of doctor or surgeon, a private hospital room and you may not get to choose when you’re admitted to hospital. Private patients, on the other hand, can select a preferred doctor or surgeon and recover in a private room, subject to their availability.

If you decide to be treated in the private system, you have the choice of the hospital you’re admitted to. However, if you opt to be treated in the public hospital system, you will need to sit through public hospital waiting lists, adding delays to when you can be treated.

excited child with a puppy

What does Medicare cover?

Medicare makes it free to visit a general practitioner (if they bulk bill, which refers to healthcare services provided at no cost) and covers up to:

* The MBS is a list that outlines medical services and treatments that are subsidised by the Australian government. The government deems these schedule fees as fair amounts to charge. However, medical practitioners can charge more than the schedule fee.

Medicare also subsidises the cost of some prescription medicines under the Pharmaceutical Benefits Scheme (PBS), which means you can purchase certain medications at a cheaper cost.

Medicare doesn’t cover the following:

As you can see, Medicare doesn’t cover all the MBS fees for in- and out-of-hospital services and treatments, so you’ll need to foot the rest of the bill – unless you have the appropriate level of private health insurance.

You require a Medicare card to be eligible to hold private health insurance.

How does private health insurance work?

Hospital, extras and ambulance cover

There are two main types of private health insurance, as well as ambulance cover.

Hospital cover pays a benefit towards the cost of your treatment as a private patient in either a private or public hospital. Hospital cover pays benefits towards hospital accommodation, theatre and surgery fees, patient meals, prostheses, medical supplies, and nursing care for services and treatments provided in hospital that are included on your policy.

Hospital cover is categorized into four tiers (Basic, Bronze, Silver and Gold). There are also plus categories within each tier, e.g. Bronze plus. As the tiers get higher so does the level of cover.

Also known as ancillary cover, an extras policy helps cover the cost of out-of-hospital services (and products) like dental care, physiotherapy, prescription glasses, occupational therapy and many other services that Medicare doesn’t cover.

Ambulance cover is also included in most hospital or extras policies, but some insurers will offer it as a stand-alone (emergency or comprehensive) policy. Depending on your circumstances and where you live, you may be eligible for complimentary ambulance coverage through your state. For more information check out our ambulance cover page.

Out of pocket expenses: when will you have to pay them?

There are situations where doctors and specialists decide to charge more than what the Medicare Benefits Schedule (MBS) fee is for certain services and treatment. This means that while you do receive some cover from Medicare (75% of the MBS fee for in hospital treatment) and private health insurance (25% of the MBS fee for in hospital treatment), you may still have to pay a portion of the cost.

Depending on your health fund, there may be ‘gap cover’ arrangements to cover some or all the difference between the doctor’s fee for services and the combined Medicare and health insurance benefit.

Your health fund may also have a list of allied health professionals and agreement hospitals, where you’ll have lower out-of-pocket expenses. Before a surgery you can also get multiple quotes to find out which doctor is the most cost-effective (doesn’t charge more than what’s covered).

Waiting periods: how long until you can begin claiming?

When you take out hospital or extras cover for the first time, or if you upgrade your policy, you’ll most likely need to serve a waiting period to claim on specific benefits, or to be covered for benefits you didn’t previously have. Learn more about waiting periods.

What are the advantages of private health insurance?

  • avoid public hospital waiting lists (if you’re treated as a private patient);
  • stay in your own private hospital room (if available);
  • choose your doctor or surgeon if they’re available;
  • get cover for dental, physiotherapy and chiropractic treatments, speech and eye therapy, and more;
  • claim rebates on ancillary and out-of-hospital treatments, and products like eyeglasses; and
  • potentially save on tax (Medicare Levy Surcharge)

What might not be covered by private health insurance?

Generally, your private hospital policy may not cover or will have limitations on:

Private health insurance policies come with various exclusions and restrictions on benefits for certain treatments and services. As such, you should always read your policy’s Product Disclosure Statement (PDS) to find out exactly what you’re covered or not covered for.

Why do I need private health insurance?

Besides offering peace of mind that you’ll be covered against unforeseen health or medical problems, private health insurance offers unparalleled security, flexibility and greater control over your health care. That’s why just under half of our population has some type of private health insurance.3

Private health insurance (hospital cover) offers you the possibility to be treated in a private hospital and to choose your own doctor and surgeon if they’re available. Waiting times for elective surgery are also typically shorter as a private patient in a private hospital compared to the public hospital system. With hospital cover, you may even get your own private room if there’s one available.

Extras insurance also provides rebates towards general treatments outside of a hospital, which aren’t covered by Medicare such as dental, optical and physiotherapy.

women in an exercise class

High-income earners can avoid paying the Medicare Levy Surcharge (MLS) by holding a suitable level of private hospital cover with a registered health fund. The MLS an additional tax between 1% and 1.5% of your income, payable once you’re earning over $90,000 a year as an individual or $180,000 as a couple or family.

Health insurance is not compulsory in Australia. However, if you’re pondering whether you need private health insurance or not, you should first contemplate what’s important to you and your family, now and in the future. Our quiz is a great place to start.

Frequently asked questions

When do I need health insurance?

It’s difficult to know when you’ll need health insurance, because often you never know when you’ll have to go to hospital. When you’re young and healthy, it may not seem like a necessity, but nobody is immune to accidents or certain ailments. As such, purchasing health insurance sooner, rather than later, is important and could save you money in the long term.

It can actually pay to take out hospital cover early in life as some health funds offer discounts on hospital cover of up to 10% to Aussies aged between 18 and 29. This discount lasts until you hit your 40s – if you hold and maintain your hospital policy or ensure you only switch to a policy that includes a retained age-based discount. This ensures that the discount you were eligible for with your previous policy continues.

Taking out hospital cover before 1 July following your 31st birthday could also save you from paying the Lifetime Health Cover (LHC) loading. LHC is a two per cent loading that is added to your hospital cover premiums for each year you’re over 31 and don’t have appropriate hospital cover.

So, if you were to take out hospital cover at 40 and hadn’t held this cover at any point since 1 July following your 31st birthday, you’d need to pay an additional 20% on your hospital premiums.

Is private health insurance affordable?

The cost of private health insurance varies between health funds and levels of coverage, along with where you live in Australia. The government offers income-tested rebates on private health insurance to help Aussies pay for their private health cover. For example, the standard rebate for singles (under 65) earning under $90,000 a year and families on a combined income of $180,000 is 24.608%.4 Your total rebate entitlements will depend on your taxable income, age, and relationship/parental status.

If you’re tossing up whether health insurance is worth the cost, you should first ask yourself if you can really afford not to have it. Remember that the possible out-of-pocket expenses linked to private treatment without private health insurance coverage could end up costing you more than the premiums you pay.

Do I need health insurance for my child?

Children, like adults, can access free healthcare and hospital treatment through the public system. However, Medicare won’t pay for all the medical expenses your ankle biters will incur in childhood, like if they need braces or physio for broken bones.

So, adding your little ones onto your private health insurance policy might help you save on out-of-pocket expenses and give you greater say over their healthcare too. You can also choose their doctor or specialist (if they’re available) and avoid public hospital waiting lists.

The good news is that most health funds will cover your children at little or no extra cost when you upgrade your couples cover to a family policy. In fact, most health funds will cover them under your family plan until they turn 21, or 25 if they’re studying.

Compare private health insurance today!

What would you rather? Compare multiple quotes in one place in minutes or drudge through multiple websites one by one for hours?

Our free online comparison tool helps you compare hospital and extras policies, so you can look for the right policy for you. Plus, if you want to buy, we’ll handle the transaction and paperwork at no extra cost. Simples!


  1. Australian Government Department of Health: Medicare (2019).
  2. What is covered by Medicare? (2019).
  3. The Australian Prudential Regulation Authority: Quarterly Private Health Insurance Statistics. Membership and benefit statistics (June 2021).
  4. Australian Government Private Health Insurance Rebate. Accessed October 2021.

So, what are you waiting for?

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