What is hospital cover?

What is hospital cover?

Hospital cover is designed to help with the cost of treatment if you’re a private patient in hospital. As a general rule, when you have private hospital cover in place, you can choose to be treated as a private patient in either a private or public hospital.

Having hospital cover can offer more choice around when you’re admitted to hospital, which doctor provides your treatment, and can help minimise waiting periods for elective surgeries.

That being said, it’s important to check what services are included in your cover and if they meet your specific needs. You’ll also need to serve the waiting periods set out by your health fund—the length of time you need to pay premiums for before you can make a claim.

What’s the benefit of hospital cover?

The benefits of private hospital cover will depend on the policy you choose, but here are a few general benefits to taking out hospital cover:

• More choice of where you’re treated and the specialists who treat you

• Potentially avoid lengthy public waiting periods

• High income earners could avoid paying the Medicare Levy Surcharge

• Avoid or reduce future Lifetime Health Cover loading.

Depending on the type of policy, you may also get access to additional features like rewards programs, health & wellbeing programs, telehealth services and pre-admission and recovery support.

What’s the difference between hospital cover and extras cover?

General cover, also known as ‘extras’, is not the same as hospital cover. It can help you meet the cost of extra health services such as optical, dental, physiotherapy or chiropractic treatment. With some health cover funds, extras cover can also help with the cost of healthy lifestyle programs such as gym memberships.

What’s the difference between Medicare and private health insurance?

Medicare is Australia’s public health care system. It helps cover the cost of many essential medical services, so Australians can access health care for free or at a lower cost. This includes seeing doctors, specialists and other health professionals, as well as being treated as a public patient in a public hospital, usually by a doctor appointed by the hospital.

Private health insurance, on the other hand, allows policy holders to be treated as private patients at both public and private hospitals. This allows policy holders to choose their preferred hospital and doctor, and in some cases, avoid long public health waiting lists. Depending on the policy, private health insurance can also include extras like physiotherapy, dental care, ambulance and other emergency transport usage.

How can hospital cover help you save on the Medicare Levy Surcharge?

Hospital cover can also offer tax benefits. Without hospital cover in place, you could be charged the Medicare Levy Surcharge (MLS). It’s a tax surcharge that applies if you earn over $97,000 as a single or $194,000 as a family (plus $1,500 for each dependent child after your first one) and don’t have an appropriate private health insurance policy in place.

The MLS can be levied between 1% and 1.5% of your taxable income depending on your personal situation. It comes on top of the 2% Medicare levy, and it doesn’t buy you any extra health services. The Australian Taxation Office (ATO) even goes as far as saying the MLS is designed to “encourage people to take out private patient hospital cover and use the private hospital system to reduce demand on the public system.”

The ATO states that if you want to avoid paying the MLS, you should consider taking out the appropriate level of private hospital cover for yourself, your spouse and your dependents.

Is hospital cover worth getting?

Taking out insurance is always a personal choice. The question of whether hospital cover is worth getting often comes down to weighing up the costs against the benefits for you and/or your family.

Taking out hospital cover often gives you greater choice over your healthcare. In particular, if you go to a private hospital, you should be able to choose your specialist, and be treated as soon as you and your specialists are ready (assuming you’ve served your hospital cover waiting periods). If you’re interested in taking out health insurance, it’s often worth comparing your options to help find the best hospital cover for your needs.