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About private health insurance
What is private health insurance?
Private health insurance is a type of insurance policy that provides cover for a variety of healthcare options and medical expenses, including costs that Medicare may not cover.
Australians wanting to buy private health insurance can choose hospital cover, extras cover, or a combined policy that includes both.
Learn more about private health insurance and its benefits
Hospital cover allows a patient to be treated in a private hospital, or to be treated as a private patient in a public hospital, generally with their choice of doctor. It can also cover a portion of the medical expenses involved when you’re admitted to hospital. Hospital policies are offered under “tiers” based on the categories of treatments they cover. Read more about the main tiers Gold, Silver, Bronze and Basic.
Extras cover helps with the expenses of other health services that Medicare does not cover. This could include allied healthcare, such as physiotherapy, chiropractic treatment, dental treatment, glasses and contact lenses. Some policies may also cover lifestyle benefits, such as gym memberships. Read more about extras cover.
Dental cover can help cover general dental treatments such as check ups, cleaning and fillings. It can also cover major dental procedures such as root canals and dentures. Read more about dental cover.
Medicare Levy Surcharge
The Medicare Levy Surcharge is a charge of up to 1.5% that is levied on Australian taxpayers who don’t have hospital cover and earn above a certain income. Read more about the Medicare Levy Surcharge.
Lifetime Health Cover Loading
The Lifetime Health Cover loading is designed to encourage Australians to take out hospital cover when they are young. It charges you a premium loading if you take out cover after your 31st birthday. Read more about the Lifetime Health Cover loading.
Private Health Insurance rebate
The private health insurance rebate can help you save on your health insurance premiums, depending on your age and how much you earn. Read more about the private health insurance rebate.
Looking for the best health insurance? How to compare
So how can you find the best health insurance policy for you? A good place to start when comparing private health insurance could be to work out what types of cover or other policy factors are important to you.
Health insurance has different levels of cover suited to different life stages and needs. For example, you may need a hospital policy that covers a particular medical condition, or you may want to ensure you have help paying for your children’s dental work. When considering your health insurance needs, questions you may like to consider could include:
- What health insurance life stage are you at? (e.g. are you single, in a couple, or part of a family with children?)
- Do you want extras cover? If so, what services do you spend money on now? What might you need in the future?
- Do you or your family have any pre-existing conditions that need to be included in the cover?
- What is your budget for premiums and excess payments?
Once you know what policy inclusions are important to you, the excess you are comfortable with and the premium price you can afford, it’s time to compare your options. Canstar can help you compare health insurance providers and make a shortlist of policies that could suit your needs the best, based on features and price.
How does Canstar compare health insurance?
Canstar compares thousands of eligible health insurance products. Every year, we perform a detailed analysis to help you choose a health insurance policy that includes hospital cover, extras cover, or both hospital and extras cover, to suit your household needs and budget.
Whether you’re looking for singles health insurance, couples health insurance, student health insurance, family cover or overseas visitors health insurance, Canstar can help.
Looking for cheap health insurance?
If you want a cheap health insurance policy, a good first step may be to compare premium quotes from a range of providers based on the level of cover you need. It’s important to also factor in the inclusions and exclusions for each policy you’re considering when shopping around. A cheap health insurance policy might save you money each month, but it’s important to make sure you have the hospital or extras cover you might need to avoid any surprises in the future. Is there a trade-off when it comes to the number of conditions and treatments you’re covered for, compared to a more extensive policy that may cost more? For example, for a cheap health insurance option you might decide on a Basic level hospital policy, but this would likely offer less cover than a Bronze, Silver or Gold policy would. It’s important to check your policy’s cover limits and excess too, so you’re aware of what you might need to pay out-of-pocket if you have to make a claim. It can also be a great idea to read through the Private Health Information Statement and other key documentation for your policy, to help with your decision-making.
1. What is private health insurance?
Private health insurance is an optional type of insurance which allows the policyholder to be treated in the private hospital system and covers a variety of healthcare options and medical expenses, depending on the specific policy. Australians can choose between hospital and/or extras cover. Hospital policies generally include some financial cover for hospital expenses such as medical treatments, hospital accommodation bills and ambulance costs (depending on the state). Extras can include a benefit for services such as dental, optical, physiotherapy, chiropractic and a range of wider general treatments performed outside a hospital, such as pharmaceutical and psychology.
2. What does private health insurance cover that Medicare doesn’t?
In Australia, the taxpayer-funded Medicare system covers most residents for health care and is paid for largely by the Medicare levy, which most Australians pay on their annual tax returns. However, Medicare does not cover everything. You may wish to consider a private health insurance policy to give yourself a wider range of health care options and more comprehensive cover.
Private health insurance lets you receive treatment as a private patient in a hospital and generally allows you to choose your hospital, doctor and specialist. You can also take out a health insurance policy that covers out-of-hospital services (extras) not covered by Medicare, such as general dental, physiotherapy and chiropractic, and some prescription medicines not covered by the Pharmaceutical Benefits Scheme (PBS).
3. Is private health insurance worth it?
There are a number of potential benefits of having private health insurance. For example, you can get a wider range of cover, choose your own doctor and avoid paying the Medicare Levy Surcharge and Lifetime Health Cover loading, if applicable.
That being said, there are also some potential drawbacks to be aware of. For example, private health insurance can be expensive and it can also come with various limits and exclusions. Read more about private health insurance and whether it is right for you and whether to seek treatment through the public or private healthcare systems.
4. How can I save money on my health insurance?
You can compare health insurance providers with Canstar to see if you can get yourself a better deal for your specific needs and requirements. General tips to potentially save money on your health insurance premiums include mixing and matching your hospital and extras policies, ‘consciously uncoupling’ a couples policy if it leads to better value, ‘turning off’ certain items in your policy if you think you won’t need them in the immediate future, paying upfront before 1 April to ‘lock in’ a lower premium, evaluating the merits of choosing a higher excess, and taking out insurance by 1 July following your 31st birthday at the latest, to avoid Lifetime Health Cover loading. You might even try negotiating a better deal with your provider directly. Find out about some of the latest deals and offers available for health insurance.
5. How can I choose health insurance?
After deciding whether to go public or private, you can identify policies that may suit you personally by comparing private health insurance. When choosing, some questions to ask yourself could include:
- What level or ‘tier’ of hospital cover do you want (Gold, Silver, Bronze or Basic)?
- What health insurance life stage (e.g. young person, senior, single, couples, families) are you in?
- Do you want extras cover?
- Do you or your family have any pre-existing conditions that you need cover for?
- What is your budget for premiums and excesses? Understanding the Medicare Levy Surcharge and Lifetime Health Cover benefits and loading, and finding out if you are eligible for any health insurance rebates may be helpful. You may like to find out which fund is keeping its customers the happiest, and see the winners of Canstar’s Private Health Insurance Star Ratings and Awards.
6. Does Medicare cover ambulances?
Medicare does not cover the cost of ambulances or other emergency transport. Ambulance costs are different depending on your state or territory. For example, in Queensland and Tasmania, ambulance fees are covered by the state government. In other states and territories, you can organise ambulance cover through a private health insurer or, in some places, the state ambulance authority.
7. What is an ‘excess’ in health insurance?
An excess is the amount of money you have to pay if you make a claim on your hospital policy. You can apply an excess to your health insurance policy to make your premiums cheaper. Typically, the higher your excess is, the lower your premiums and vice versa.
You have to pay the excess to the hospital when you are admitted for treatment as a private patient. The remaining costs will be paid by Medicare and your health insurer (depending on your cover). You may need to pay out-of-pocket costs in some circumstances.
No excess applies to extras cover, but annual and sub-limits usually apply.
8. What does ‘no gap’ mean in health insurance?
‘No gap’ means you don’t need to pay any out-of-pocket costs. A gap refers to the difference between your doctor or hospital fees and the amount that Medicare and/or your health insurance provider will pay.
If you are admitted to hospital as a private patient, Medicare typically pays 75% of the Medicare Benefits Schedule (MBS) fee and your health fund will pay the remaining 25%. However, a doctor or specialist may charge more than the MBS fee, and in this case you would have to pay an out-of-pocket fee.
Some health insurance providers have gap cover agreements with health care services, meaning all or some of the gap will be covered by the insurance provider.
9. Should I buy private health insurance for pregnancy?
If you are considering private health insurance for pregnancy, and looking to have your baby in a private hospital or as a private patient in a public hospital, it is a good idea to plan ahead and be aware of waiting periods. All health funds have a 12-month waiting period for pregnancy-related expenses, according to the Private Health Insurance Ombudsman, so you’ll need to have the policy for a year before you can make a pregnancy-related claim.
It’s also important to ensure the health cover you choose suits your needs and your budget during pregnancy, as well as the delivery and post-delivery stages. You can compare family or single health insurance policies that include pregnancy services and look for a policy that best suits your needs. You may consider keeping your partner’s insurance separate until after the delivery if you want to avoid an unnecessary higher level of obstetrics cover for them, as well as for you.
10. How can I avoid health insurance waiting periods?
You may not need to re-serve waiting periods if you switch from one health insurance provider to another, unless you add or upgrade your hospital cover, according to the Ombudsman. While providers sometimes waive two- to six-month periods on extras, it’s generally less common for longer waiting periods to be waived on pre-existing conditions, obstetrics or major dental. Insurance providers often advertise special offers for waived waiting periods in March and April, as premiums typically increase on 1 April and customers are seen as more likely to be shopping around for better value around that time.
11. What is the private health insurance rebate?
The private health insurance rebate is money the government may contribute towards the cost of your private health insurance premiums if you earn below a maximum threshold each year. As the rebate is income-tested, your entitlement will reduce as your income increases. According to the Australian Taxation Office (ATO), you will be eligible for a rebate if you (1) hold a Medicare card; (2) have a complying private health insurance policy; and (3) have an annual income that’s $140,000 or less as a single, or $280,000 or less as a family, and meet related specific requirements.
12. Who is eligible for the private health insurance rebate?
Many Australians are eligible for the private health insurance rebate, but just how much you’ll get back depends on factors such as your income, age, and whether you are single or have a family, according to the ATO.
Your family size can make a difference too – the family income threshold increases by $1,500 for each Medicare levy surcharge-dependent child after the first child. The private health insurance rebate tiers are grouped by ages, as under 65s, 65 to 69-year olds and 70-year-olds and above. Generally, the older you are and the less you earn, the higher your rebate will be.
13. How much is the private health insurance rebate?
At the time of writing, according to the Australian Government:
- Single Australians earning up to $90,000 or families earning up to $180,000 may be eligible for a Base Tier rebate that varies from 24.608% to 32.812%.
- Single Australians earning $90,001 to $105,000 or families earning $180,001 to $210,000 may be eligible for a Tier 1 rebate from 16.405% to 24.608%.
- Single Australians earning $105,001 to $140,000, or families earning $210,001 to $280,000 for the tax year could get a rebate of 8.202% to 16.405%
- If you earn upwards of these amounts, you are grouped in Tier 3, which doesn’t offer a rebate.
These income thresholds are indexed and will remain the same until 30 June, 2023.
Health Insurance Articles & Guides
Canstar has a variety of articles that might be of interest to you if you are considering taking out private health insurance. Here are some links to further reading:
About health insurance
Health insurance coverage
Other health information
Health insurance providers
Below is a list of the winning health insurance providers from Canstar’s 2021 Health Insurance Awards (national and state winners):
You can compare health insurance providers using the comparison selector tool at the top of this page.
Author: Nina Tovey
As Canstar’s Editor-in-Chief, Nina heads up a team of talented journalists committed to helping empower consumers to take greater control of their finances. Previously Nina founded her own agency where she provided content and communications support to clients around Australia for eight years. She also spent four years as the PR Manager for American Express Australia, and has worked at a Brisbane communications agency where she supported dozens of clients, including Sunsuper and Suncorp.
Nina has ghostwritten dozens of opinion pieces for publications including The Australian and has been interviewed on finance topics by the Herald Sun and the Sydney Morning Herald. When she’s not dreaming up ways to put a fresh spin on finance, she’s taking her own advice by trying to pay her house off as quickly as possible and raising two money-savvy kids.
Nina has a Bachelor of Journalism and a Bachelor of Arts with a double major in English Literature from the University of Queensland. She’s also an experienced presenter, and has hosted numerous events and YouTube series.
This content was reviewed by our Deputy Editor Sean Callery and Sub Editor Tom Letts before it was published as part of our fact-checking process. You can also read more about Canstar’s editorial team.