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

Public versus private healthcare system

Australia has a universal healthcare system called Medicare, which was officially implemented by the federal government in 1984.1

Medicare guarantees access for public patients to medically necessary health services at no cost in a public hospital. However, it doesn’t offer you a choice of doctor or a private hospital room, and you may not get to choose when you’re admitted to hospital. On the other hand, private patients covered by  private hospital insurance can select a preferred doctor or surgeon, recover in a private room (if available) and avoid the public waiting list.

If you decide to be treated in the private system, you can choose 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, delaying when you can be treated.

Family with private health insurance visit the doctor

What does Medicare cover?

An important feature of Medicare is bulk billing, which is when the health services provided by a general practitioner come at no cost to the patient. Bulk billing covers up to:

The MBS is a list of medical services and treatments that the Australian Government subsidises. The government deems these schedule fees as fair amounts to charge; however, medical practitioners can charge more than the schedule fee.

Since Medicare doesn’t cover the total MBS fee for all health services and private in-hospital treatments, your health fund will cover the remaining 25% of the MBS fee, provided you have the appropriate level of private health insurance cover and have served the relevant waiting periods. If the medical practitioner is charging more than the schedule fee, you may have an out-of-pocket cost.

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:2

For more information on what Medicare does and doesn’t cover, check out our page here.

How does private health insurance work?

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

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

Hospital cover is categorised into four tiers (Basic, Bronze, Silver and Gold). 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 usually included in most hospital or extras policies, but some insurers will offer it as a stand-alone (emergency or comprehensive) policy. Standalone ambulance policies can be more comprehensive than the ambulance cover that may be included on your hospital or extras policy. Depending on your circumstances and where you live, you may be eligible for free ambulance coverage through your state government. 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 the MBS fee for certain services and treatment. This means that while you may receive some reimbursement from Medicare and private health insurance, you may still have to pay a portion of the cost yourself.

However, depending on your health fund, they may have ‘gap cover’ arrangements for some or all the difference between the doctor’s fee 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 costs. Before surgery, you can also get multiple quotes to determine which doctor is the most cost-effective.

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 before you can claim on your new benefits. Learn more about waiting periods.

What are the advantages of private health insurance?

There are several advantages to taking out a private health insurance policy, such as being able to:

  • 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 dentalphysiotherapy and chiropractic treatments, speech and eye therapy and more
  • Claim rebates on out-of-hospital treatments like remedial massage, and products like eyeglasses

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 brochure to find out exactly what you’re 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 over half of Australia’s population has some type of private health insurance.3

Private hospital cover allows you to receive medical treatment in a private hospital and choose your own doctor and surgeon if they’re available. Waiting times for elective surgery are also typically shorter for private patients 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.

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 is an additional tax between 1% and 1.5% of your income, payable once you earn over $93,000 a year as an individual or $186,000 as a couple or family.

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

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Frequently asked questions

When do I need health insurance?

It’s difficult to know when you’ll need health insurance because you often don’t know when you’ll have to go to hospital until it happens. When you’re young and healthy, it may not seem necessary, but nobody is immune to accidents or illness. As such, purchasing health insurance sooner rather than later could be beneficial and save you money in the long term.

It might actually pay to take out hospital insurance early in life; some health funds offer discounts on hospital cover of up to 10% to Australians aged between 18 and 29 as an incentive to take out cover sooner. This discount lasts until you’re 41, provided you maintain your hospital insurance policy or only switch to policies that retain your age-based discount.

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 government initiative that adds a 2% loading 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, levels of coverage and where you live in Australia. The government offers income-tested rebates on private health insurance to help Australians pay for their private health cover. For example, the standard rebate for singles under 65 earning less than $93,000 a year is 24.608%.4 Your total rebate entitlements will depend on your taxable income, age and relationship/parental status.

It’s also important to consider the LHC which will increase your premiums by 2% for each year that you don’t hold hospital cover after the age of 30. The LHC loading comes into effect on the 1st of July following your 31st birthday if you don’t hold hospital cover. While private health insurance might seem expensive right now, if you plan to take out cover eventually, it may be beneficial to start a policy now.

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

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 healthcare costs your children will incur as they grow up, like physio for broken bones, prescription glasses, remedial massage for sport injuries and much more.

So, adding your little ones to 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 upgrading your couples cover to a family policy. In fact, most health funds will cover them under your family plan until they turn 21 or even 25+.

Compare private health insurance today!

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 Parliament House: Medicare – Background Brief. Accessed June 2022.

2 What is covered by Medicare? Accessed June 2022.

3 The Australian Prudential Regulation Authority: Quarterly Private Health Insurance Statistics. Membership and benefit statistics. March 2022.

4 Australian Government Private Health Insurance Rebate. Accessed March 2022.

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