Explore Health Insurance

Joshua MalinWritten by Joshua Malin
Reviewed by Lana Hambilton
Last updated 18/12/2023

Key takeaways

Choosing private health insurance can feel like a complicated process, but with some research and planning, you’ll usually be able to find a health insurance policy that works for you. Here are some tips to help you find insurance that suits your needs.

  • If you’re taking out cover for the first time or upgrading to a higher level of cover, you’ll need to take your waiting periods into account.
  • There are not only discounts and rebates that apply to your private health insurance if eligible; taking out cover could also have tax implications.
  • There are multiple ways you can potentially customise your private health insurance cover to make it more affordable or better suit your needs.

1. Find coverage for services you’ll actually use

There’s no one-size-fits-all product when it comes to private health insurance, so it’s essential to find a policy that offers medical services you’ll use or think you might need.

With the introduction of hospital insurance tiers, Australia‘s private health insurance reforms have made it easier than ever to understand the inclusions and exclusions of your private hospital insurance policy. You may find that the services you need are included on a Bronze level of cover, which could have significantly lower premiums than higher-tiered products.

The lowest level of hospital cover available is called Basic cover. While this may be the cheapest, be careful, as it also only covers a few services, typically on a restricted basis.

Gold and Silver products are more comprehensive private hospital cover options that you could consider if you want peace of mind knowing you‘ll be covered for a broader range of medical treatments as a private patient.

You may also like to consider the level of extras cover (sometimes called ancillary cover) you need. While extras can be beneficial if you use them, you could be wasting money if you’re paying for services you don’t use. It might be worth making a list of the health services you think would be the most beneficial to you (e.g. dental check-ups, physiotherapy consultations, orthodontics) and the services you don’t think you’ll need (e.g. podiatry). Then, look for a policy that includes the services you will use, excluding most (if not all) of the ones you won’t.

You also have the option of a combined policy, which includes both hospital and extras cover.

An excellent place to start is to talk with your doctor to discuss what type of private health insurance you should consider for your healthcare needs.


2. Learn how much you can claim and when

If you’re taking out private health insurance for the first time or upgrading to a higher level of cover, you’ll be subject to waiting periods. This is to stop people from claiming on their policies immediately after signing up, and then cancelling before they pay any premiums (which would drive up premiums for everyone).

Both extras and hospital policies are subject to waiting periods, so consider this when choosing a health insurance product. These are:

  • Between 2 and 12 months for most hospital and extras products however, some extras waiting periods can be longer,
  • 12 months for most hospital related pre-existing conditions,
  • 12 months for inpatient pregnancy and birth-related services,
  • 2 months for palliative care, rehabilitation and psychiatric care.

You’ll also need to enquire about any limits your extras policy may be subject to. For example, items subject to an annual limit means that for each service you can only claim up to a certain amount which resets every 12 months.


3. Seek out discounts and rebates

The Australian Government wants you to take out hospital insurance because it eases the burden on the public healthcare system if you’re being treated in a private hospital. Because of this, there are incentives to entice you to sign up for private cover:

  • Private health insurance rebates. Many Australians who take out a hospital, extras or combined policy are entitled to a Government rebate to help pay for premiums. The rebate is income-tested and can either be deducted from your premium or claimed at tax time when filing your tax return.
  • Aged-based discounts. Australians aged between 18 and 29 can receive discounts on eligible hospital policy premiums for merely taking out cover while they’re younger.


4. Learn how private health insurance can impact tax and your long term costs

Conversely, there are also levies imposed on people who don’t have appropriate levels of cover:

  • Lifetime Health Cover loading (LHC). People who don’t take out and maintain private hospital insurance by 1 July after their 31st birthday will pay more for hospital cover when they do take it out. The LHC loading is 2% of your hospital insurance premium for each year you didn’t hold cover from the age of 30 (e.g. 35-year-olds pay a 10% loading).
  • Medicare Levy Surcharge (MLS). High-income earners are subject to a surcharge of up to 1.5% of their taxable income (depending on the income threshold they are in) on top of their income tax if they don’t hold valid hospital cover. This is separate from the Medicare levy, which most taxpayers pay regardless of whether they have insurance or not.


5. Think about what life stage you’re at when choosing health insurance

Where you are in life can have a big impact on the type of cover that will best meet your needs.

Here are some questions to ask yourself which could help you determine which policy you choose:

  • Do you have any pre-existing conditions that may require treatment in the near future?
  • Are there any hereditary health conditions in your family that could impact you?
  • Are you planning on starting a family and will you require access to obstetrics cover? Remember, this cover is subject to the 12-month waiting period.
  • Do you also need to take out health insurance for partners or children?
  • What kinds of out-of-hospital services do you regularly use that may be included on an extras policy?
  • How will your health needs change as you age, and which services will you need access to?

Private health insurance is all about giving yourself more options for treatment when you need them. As such, you’ll need to ask yourself these questions again in the future to make sure your cover still works for you.


6. Adjust your private health to make it more affordable

You can usually tweak aspects of your private health insurance to make your insurance premium more affordable. Consider the following:

  • Customise your excess. If you choose a higher excess (what you agree to pay if you make a claim and are treated in hospital), it’ll usually reduce your premiums. Because your excess is a fixed amount, it won’t change whether you require treatment for one week or one month.
  • Choose a co-payment. A co-payment is a fee you agree to pay for every day you’re admitted as a patient in a hospital. If your co-payment is less than what the excess would be and you know how long you’ll be staying at the hospital, it could be the more affordable option. Some co-payments will be capped at a maximum charge per person, despite the length of your stay.

In some cases, a policy may have an excess and a co-payment. It is therefore important to consider the different options available when joining or switching your private hospital insurance.


7. Are you covered if you need an ambulance?

Did you know that ambulances aren’t free in all Australian states and territories? While the Queensland and Tasmanian state governments cover residents in these states, Australians elsewhere will require specific ambulance cover to avoid footing the whole bill.

This means you could be left with significant out-of-pocket expenses if you require an ambulance but don’t have ambulance cover. This is another thing to think about when choosing health insurance. Keep in mind though that ambulance cover may also be taken out separately to private health cover, which may be more comprehensive.


8. Reassess your insurance regularly

Whether it’s an industry-wide premium rate rise or you’ve been with your health fund for a while and aren’t sure if it’s still the best option for you, it’s always a good idea to reassess your cover. In addition to making sure you still require the services your health insurance covers, it’s an opportunity to assess whether you could pay less for the same or similar products elsewhere.

This can be achieved through research or using useful tools like our health insurance comparison service. It allows you to compare policies, extras, benefits and costs from a variety of health insurance providers in one convenient location. It’s simple to use, free and takes just minutes to reach a result.

Curious how private health insurance compares to Medicare? Learn more about the difference between the public and private health system with our guide.

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