Explore Health Insurance

Joshua MalinWritten by Joshua Malin
Reviewed by Lana Hambilton
Last updated 10/01/2024

Key takeaways

Private hospital cover is a type of health insurance policy that helps you pay for the cost of treatment as a private patient in an Australian hospital. We’ll take you through everything you need to know about hospital cover and how it works.

  • With private hospital cover, you can have your choice of doctor and stay in a private room (both depending on availability), as well as avoid long public waiting lists.
  • Taking out hospital cover can help you save on tax, avoid the lifetime health cover loading and take advantage of the private health insurance rebate.
  • Depending on the treatment you require and when you took out your policy, you may need to serve policy waiting periods before you can begin claiming.

Why take out hospital cover?

If you’re still unsure if a hospital policy is the right product for you, here are some of the common reasons Australians choose to take out this type of private health insurance cover.

  • When you have an elective surgery in the public system you will have to join a waiting list which, depending on your condition, could have you waiting more than a year for treatment.
  • While you could go to a private hospital without hospital insurance, the cost of hospital accommodation, theatre fees and doctors’ fees can be prohibitively expensive.
  • Depending on your health fund and policy, you could have access to a range of additional features like cover for in-hospital family accommodation/meals, or even travel expenses for essential treatment not available close to home.

 

Choosing your hospital cover policy

Once you’ve decided that a hospital policy is the right type of private health insurance cover for you, all that’s left to do is compare your options and find a policy that suits your personal circumstances.

Here are a few things you might like to consider while you browse:

  • If you’re under the age of 29, you might be eligible for an age-based discount, which is a discount that applies to your policy depending on the age you were when you first took out cover.
  • Hospital insurance isn’t the only type of private health cover in Australia, you might also want to consider extras cover. If you want the benefits of both hospital and extras, you can look into a combined policy.
  • Just because hospital insurance tiers are standardised in Australia, doesn’t mean all policies are the same. Health funds can still differ in their gap cover schemes, additional benefits/inclusions and whether they’re a for-profit or not-for-profit fund.

Executive General Manager of Health Life and Energy

Expert tips for hospital cover

Our health insurance expert, Steven Spicer, has some tips on how to find a hospital insurance policy that works for you.

Don’t skimp on cover

It can be tempting to get just ‘the basics’ when taking out health cover for yourself. To ensure you don’t find yourself underinsured, consider any previous hospital admissions you’ve had and your family’s medical history when looking at different levels of cover. Instead of sacrificing inclusions on your cover, consider increasing your excess to lower premium costs.

Compare your options

Shop around and do your research. Prices vary from fund to fund, and there are plenty of options to choose from. If you need assistance, speak to an expert, they are there to help!

Look for ambulance and accident cover

Many health funds cover hospital treatment as the result of an accident, along with ambulance cover with a zero or one-day waiting period after starting your hospital policy. It’s always a good idea to check the fund’s policy brochure for more details on their coverage and waiting periods.

Hospital cover

Woman in hospital with private hospital insurance

How does hospital cover work?

Hospital insurance products are divided into four private health insurance tiers: Basic, Bronze, Silver and Gold. Each tier has a set number of clinical categories it must cover regardless of which health fund you’re with. That said, insurance providers have the choice of adding ‘plus’ or ‘+’ to Basic, Bronze and Silver hospital policies, which include coverage from the above tiers without covering enough to be in that tier. For example, a Silver Plus policy might cover pregnancy and birth-related services but not weight loss surgery.

What does hospital cover include?

The treatments included on your hospital insurance will depend on what tier policy you have. For example, Basic policies only include restricted cover for 3 of the 38 clinical categories, while Gold includes them all on an unrestricted basis.

Here’s a glimpse of what treatments are included on each hospital insurance tier:

TreatmentsTier
BasicBronzeSilverGold
RehabilitationRRR
Hospital psychiatric servicesRRR
Palliative careRRR
Brain and nervous system
Ear, nose and throat
Joint reconstructions
Heart and vascular system
Back, neck and spine
Dental surgery
Cataracts
Joint replacements
Pregnancy and birth
Weight loss surgery
– indicates that the category is a minimum requirement of the tier

R – indicates that the category is included on a very restricted basis

You can find the full list of hospital treatments included on the health insurance tiers on our health insurance categories page.

What is not covered by private health insurance?

Your hospital cover only includes medically necessary treatment that you receive as an inpatient, which usually requires you to be admitted to a hospital. It typically excludes non-hospital outpatient health services, including but not limited to:

The above treatments are subsidised by extras cover policies, which are sometimes called ancillary policies.

The treatments you can claim on will also depend on your level of cover or ‘tier’. For example, with a Silver policy, weight loss surgery and pregnancy and birth are exclusions as they aren’t a minimum requirement of the Silver product tier.

 

Types of cover

Doctor explaining the different types of cover

What is the top hospital cover tier?

The highest level of hospital cover is Gold, which includes all 38 clinical treatments available under private hospital insurance. With this level of cover you’ll be able to claim a benefit for any medically necessary treatment performed in a hospital with a corresponding MBS item number.

While this is the maximum amount of hospital cover available, you can also take out a combined gold hospital and extras policy which will not only include all 38 clinical categories but will also pay towards select out-of-hospital services which Medicare doesn’t subsidise.

What is basic hospital cover?

Basic hospital cover is the lowest level of private hospital insurance and is an option for those seeking a policy to avoid the Medicare Levy Surcharge (MLS). It includes restricted coverage for hospital psychiatric services, rehabilitation for patients recovering from surgery or illness and palliative care. If you choose to be treated as a private patient in a public hospital, you may be subject to public waiting lists for these services.

In addition to this, when claiming on a restricted benefit you will only be covered to a very limited extent. If you choose to go into a private hospital, the health fund will not pay any benefits towards the theatre fees and only a small benefit towards the accommodation fee. This means that you will have considerable out-of-pocket costs.

These policies don’t offer much in the way of coverage. However, some insurance providers may offer Basic Plus policies that come with additional benefits. These plus policies will likely come with a higher premium, so it might be worth going all the way up to the next tier with a Bronze hospital policy, or even a Bronze Plus policy if you want coverage for more clinical categories.

Is ambulance covered by private health insurance?

Depending on your state or territory of residence, ambulance services may be covered by your private health insurance. Residents in all states and territories except for QLD and TAS (where ambulance services are free), can take out ambulance cover through their private health insurer or their state’s ambulance authority.

People who hold a Department of Veterans’ Affairs Gold Card are entitled to free ambulance services across Australia, while residents of QLD and TAS have their ambulance costs covered by their state governments.

NSWThe NSW state government subsidises 49% of the cost of ambulance services for people who don’t have ambulance cover. However, this can still be costly, which is why ambulance cover is widely available through registered Australian health funds in NSW.

NSW residents with a Health Care Card, Pensioner Concession Card, Commonwealth Seniors Health Care Card and who otherwise meet NSW’s exemption criteria can access ambulance services at no cost.

VICResidents of VIC can take out ambulance cover through a registered Australian health fund or a subscription from the state ambulance service.

VIC residents who hold a Pensioner Concession Card or Healthcare Card are entitled to free ambulance cover.

QLDThe QLD state government covers ambulance services for their residents in both QLD and around Australia.

If you receive a bill for ambulance services in another state or territory, you can forward it, along with proof of QLD residency, to the Queensland Ambulance Service.

WAResidents of WA can take out ambulance cover through a registered Australian health fund or a subscription from the state ambulance service. WA residents who are aged Pensioner concession holders may be entitled to free ambulance transport services.

Western Australians over 65, and in receipt of an Australian Government pension, are entitled to free ambulance services.

Western Australians over 65, who do not receive an Australian Government pension, are entitled to a 50% discount off the cost of ambulance service.

SAResidents of SA can take out ambulance cover through a registered Australian health fund or a subscription from the state ambulance service.
TASAmbulance services in TAS are free to residents, except for motor vehicle or workplace accidents which are covered by insurance. Unlike QLD, Tasmanians can only receive free ambulance cover in their state.
ACTResidents of ACT can take out ambulance cover through a registered Australian health fund.

People who meet the ACT Ambulance Service’s exemption criteria are entitled to free ambulance services. ACT residents who hold a Pensioner Concession Card or Healthcare Card are entitled to free ambulance cover.

NTResidents of NT can take out ambulance cover through a registered Australian health fund or a subscription from the state ambulance service. NT residents who are Pensioner Concession Card or Health Care Card holders are entitled to free ambulance cover.

 

Hospital insurance costs

Doctor takes payment after explaining hospital insurance costs

Are there out-of-pocket costs with hospital insurance?

Generally when you have a private hospital insurance policy, your insurer will pay 25% of the Medicare Benefit Schedule fee (MBS), while Medicare will pay the remaining 75%. Your health fund could also pay towards other hospital expenses like your theatre fees, accommodation and food.

The MBS fee is the amount that the government has deemed fair to charge for medical treatments and services. Because private hospitals and doctors are allowed to charge above the MBS, you might have to pay the gap (the difference between the MBS and what you’re charged) as an out-of-pocket expense. Some hospitals might have a known gap or a no gap agreement in place with your health fund, meaning you may only have to pay a reduced gap or none at all. To determine if you’ll have to pay the gap, check with your health fund and doctors before receiving treatment.

What is hospital cover excess?

Hospital cover excess is the lump sum you pay when you get admitted to hospital. Sometimes you can choose a higher excess in exchange for a lower premium, and vice versa. You will only be required to pay the excess if you are admitted to hospital. This payment is often limited to once per person per year. In addition to this, many providers won’t charge an excess for any dependent children on your policy. This will depend on who your provider is and the specific policy that you are on.

What are hospital cover co-payments?

Similar to excess, co-payments are an amount you pay when you’re admitted to hospital. However, these are paid for each day you’re in the hospital. For example, you may choose a co-payment of $100 per day in hospital, which would result in a $500 payment if you’re admitted for five days.

Co-payments can also be capped per admission, per year of membership or both.

Is private hospital cover worth it?

Whether private hospital cover is worth it to you will depend on your individual circumstances. However, here are some of the main factors you’ll want to consider when deciding if you should take out cover.

You could be eligible for a rebate

You could receive an Australian Government rebate (sometimes called the private health insurance offset) on the cost of your hospital cover. You can choose to receive this with your tax return or as a discounted premium. Your eligibility for the rebate will depend on your age and income.

Avoid extra tax

The MLS is a tax levied on higher-income earners ($93,001+ for singles and $186,001+ for families) who don’t have hospital cover for everyday of the financial year. If you earn over the income threshold and want to avoid it, get covered – simple as that! You will not pay the MLS for each day that you hold an eligible hospital policy.

Avoid Lifetime Health Cover loading

By taking out hospital cover before 1 July following your 31st birthday, you will not be subject to the Lifetime Health Cover (LHC) loading for as long as you hold the cover, even if you switch between health funds. Conversely, purchasing private hospital insurance after this age may subject you to a 2% loading on your premiums for every year after the age of 30 that you don’t have hospital cover as part of the government’s LHC regulations. LHC loading caps out at 70% and is removed once you’ve held continuous cover for 10 years.

After you take out hospital insurance before 1 July following your 31st birthday, you’re able to let the policy lapse for up to 1,094 days in your lifetime without incurring the loading. Keep in mind, that to become eligible to use the 1,094 days you must still hold an active hospital policy on 1 July following your 31st birthday, so if your policy lapses prior to this date you may incur an LHC.

Peace of mind

Above all, hospital cover gives you the confidence of knowing that when a medical event arises, you and your family have access to high-quality private care. The most important thing in life is your health. Regardless of what stage of life you’re in, everyone can benefit from private hospital cover.


Executive General Manager of Health Life and Energy

Meet our health insurance expert, Steven Spicer

As the Executive General Manager of Health, Life and Energy, Steven Spicer is a strong believer in the benefits of private cover and knows just how valuable the peace of mind that comes with cover can be. He is passionate about demystifying the health insurance industry and advocates for the benefits of comparison when it comes to saving money on your premiums.

Steven has 20 years of experience as a people-first business leader, with a focus on creating services that put customers first.


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