How to choose health insurance

 What should you look for when choosing health insurance?

When choosing health insurance, it’s important to consider your current healthcare needs, as well as any future needs you may have. It can also be important to think about the current and future needs of anyone else who may be covered by your policy, such as your partner (if you have a couples policy) or your children (if you have a family policy).

Ultimately, whether or not you take out health insurance is a personal decision based on your needs and circumstances, but there are some specific questions you might ask to help you decide. You may ask what inclusions does the private hospital cover have, what claim excess will you have to pay, do you want extras cover, and whether you want to avoid the Medicare Levy Surcharge (MLS).

What inclusions does the private hospital cover have?

Private health insurance providers in Australia are required by law to categorise their hospital cover into one of four product tiers—Gold, Silver, Bronze and Basic. These four categories are standardised across all health insurance providers. The Basic tier is the most limited in terms of the medical treatments and services it covers, while the Gold tier is the most comprehensive and covers all 38 clinical categories. Privatehealth.gov.au also lists what’s covered by each product tier.

If you’re young, single and healthy and don’t plan on starting a family soon, then you may opt for one of the lower tiers, such as Basic or Bronze, when choosing private hospital insurance. It’s worth bearing in mind that the Basic tier tends to be limited in terms of its inclusions, being more suited for hospital stays relating to accidents and emergencies rather than more specific medical procedures. Providers may also only offer a limited amount towards treatments in the Basic tier.

If you and your partner plan on starting a family and want to be covered for pregnancy and birth-related services, you may like to consider taking out a Gold tier hospital policy. Limited Silver tier policies, referred to as ‘Silver Plus’, may also provide cover for pregnancy and birth-related services. Gold tier health insurance policies may also include cover for joint replacements and kidney dialysis, which may be priorities for some older people.

It’s worth keeping in mind that, whichever level of hospital cover you choose, you will need to serve the relevant waiting periods before being covered for the services. For example, if you and your partner are on a Bronze tier policy and wish to be covered for pregnancy and birth, you might switch to a higher tier, but you will also need to serve out the relevant waiting period (generally 12 months).

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What excess will you have to pay?

If you take out private hospital cover, you will also need to choose an excess—this is an amount that will be payable on your first hospital admission per calendar year, and it can be up to $750 per person per year (up to a maximum of $1,500 for couples or a family).

When selecting hospital cover, the excess you choose will have an effect on the premiums you end up paying. A higher excess will mean you’ll pay less in premiums but more upfront if you’re admitted to hospital, while a lower excess will mean the reverse.

When choosing private hospital cover, you might consider a higher excess if you’re young and healthy and don’t foresee yourself needing any hospital visits in the near future, or if you’re happy to pay the upfront cost of a high excess should you need hospital admission.

Conversely, if you have a history of health concerns, have had multiple hospital admissions in the past and foresee that you may need more in the immediate future, then you might choose a lower excess.

Do you want extras cover?

The extras component of private health insurance can cover you for things that Medicare does not. This can include optometry services and products such as  new glasses, general and major dental treatments, physiotherapy and complementary therapies and services. Extras cover can be taken out in addition to hospital cover, or you can take out an extras insurance policy on its own.

Whether you choose to take out extras cover will come down to your individual needs, and those of your partner and/or dependants if they’ll also be on your policy. For example, if you’re young and active and feel you may wish to claim for physio visits, or if you have a family and you can foresee numerous optometrist and dentist visits each year, then you may find extras insurance to be cost-effective and represent good value for money.

It’s important to note that, like hospital cover, there are different levels of extras cover. Some policies may cover you for major dental treatments such as crowns and root canals, while other policies from the same provider might only include coverage for basic dental procedures like checkups and cleanings. As a general rule, the more comprehensive the cover, the more expensive it’s likely to be.

If you feel you would pay more in insurance premiums than you would actually claim in a calendar year, then you may decide that extras insurance is not cost-effective, and decide to forego it when choosing health insurance.

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Do you want to avoid the Medicare Levy Surcharge?

If you don’t foresee any major health issues arising in the future, you may still wish to take out private health cover to help avoid paying the Medicare Levy Surcharge (MLS) at tax time. At the time of writing, if you earn more than $101,000 a year as a single or $202,000 a year as a couple, you’ll be required to pay a percentage of your taxable income if you don’t have an appropriate level of private hospital cover.

The MLS is one strategy employed by the Federal Government to encourage young, healthy people to take out private hospital cover in order to reduce the strain on the public health system. Another strategy is Lifetime Health Cover (LHC) loading. LHC loading means that, for every year after you turn 31 that you do not have private hospital cover, a 2% loading will be put onto your private health insurance premiums, up to a maximum of 70%.

In a bid to encourage young, healthy people to sign up, some health insurance providers may offer discounts to people aged 18–29. Similarly, the Federal Government offers a private health insurance rebate to eligible Australians to contribute towards the cost of their health insurance premiums.

Compare your private health insurance options

Once you’ve decided on what kind of private health insurance policy you want, you can compare your options with Canstar. Canstar’s comparison tables allow you to filter for things like the type of cover you need, hospital cover tier, hospital admission excess and the approximate monthly premiums you’ll pay. If you’d like to discuss your health insurance needs, you can also book a call with a private health insurance professional.

You may also be interested in Canstar’s Health Insurance Awards, which recognise the insurers offering outstanding value to Australian consumers, both nationally and by state or territory. Canstar also awards the health insurer with the highest level of customer satisfaction as calculated by our expert researchers with the Most Satisfied Customers Award: Health Insurer.

Benefits of private health insurance

Private health insurance can help you avoid paying the MLS and potentially give you coverage for non-Medicare subsidised services via extras cover, but there are numerous other potential benefits.

Shorter wait times for surgery

Waiting lists in the public hospital system can be long, especially for elective surgeries, which are those that are planned ahead of time. One of the key benefits of private hospital insurance is that it may allow you to ‘skip the queue’ and enjoy a shorter waiting period for elective surgery.

Lock in a date for your surgery

In the public hospital system, priority patient order means that even if you’re booked in for a procedure, it might be pushed back if your surgeon needs to operate on a patient who is in more urgent need of care. By contrast, private health insurance can allow you to lock in a date for your procedure, giving you more peace of mind that it will go ahead as planned—especially if you’ve had to take time off work.

Choose your doctor or other medical professional

In the public hospital system, your doctor or specialist will be the one who is on duty at the time of your operation. Many private health funds, however, will give members the opportunity to choose their own doctor or specialist as a component of their hospital cover. This may be beneficial to you, especially if you’re being treated over a longer period of time, say for pregnancy or a chronic medical condition.

You can stay in a private room

In the public hospital system, you can find yourself sharing a room with other patients, which may not be ideal if you wish to have privacy. With private health insurance that includes hospital cover, you can request a private room. Bear in mind that rooms are always subject to availability, so you’re not guaranteed one.

You can have ambulance cover

In most states, Medicare does not cover the cost of transport in an ambulance—Queensland and Tasmania are exceptions to this. Call-out fees in other states and territories can be over $1,000, so taking out ambulance cover as part of your private health insurance means that you could avoid a potential financial burden if you need an ambulance trip to hospital.

Am I eligible for the private health insurance rebate?

Whether or not you’re eligible for the private health insurance rebate will depend on your annual income or the combined income of you and your spouse. From 1 July 2025, if you have a taxable income of under $158,000 as a single, or $316,000 as a couple or family, then you could be eligible for a rebate. The level of rebate you’ll get at tax time will also depend on your income.