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If you get sick or need ongoing medical treatment, the last thing you should worry about is how to pay the bills. Private health insurance can help reduce the cost of hospital fees and other expenses, so you can focus all your energies on getting better.

Why private health insurance is important

Private health insurance can help you pay hospital and medical costs not covered by Medicare. If you don't have private health insurance, it can cost you a lot of money if something goes wrong and you have to undergo prolonged medical treatment.

Choosing a private health insurance policy

Look for a policy that includes the health and medical services that you want. Most insurers provide a range of policies. To find out what different insurers offer, read the Standard Information Statement. You can compare all registered private health insurers (or health funds) at

As with all insurance, always look out for the exclusions when comparing health funds. Private health cover often excludes claims that relate to pre-existing conditions and specific things like plastic surgery. There will also be restrictions about how much you can claim and waiting periods may apply for specific types of claims including obstetrics and major dental work.

Avoiding the Medicare Levy Surcharge

Generally, all Australians pay the Medicare levy of 2% of their income as part of their tax. If you earn over a certain amount and don't have private health insurance, you may pay an additional Medicare levy surcharge of 1%, 1.25% or 1.5%. That's up to 3.5% of your total income.

If you're on a high income it may be cheaper to buy the insurance than pay the surcharge. For the latest figures and rules around the Medicare levy surcharge and other tax issues relating to health funds, see the Australian Taxation Office's information on the Medicare levy.

Be honest with your insurer

You must be completely honest if you make a claim or if your circumstances change. Failing to 'tell it like it is' means you may not be covered as your insurer may not honour any claims if they find out you misled them.

Making a claim

Most health funds require you to make a claim within 2 years of an accident or illness. Be sure to check what time limits apply to your level of cover and for different types of claims.

Case study: Andrew's wise decision

""Andrew was told by his dentist that he needed his wisdom teeth removed. He rang his health fund and was pleasantly surprised when they told him most of the cost was covered by his insurance. That meant he could get the work done straight away and not put it on his credit card.

Like all types of insurance, deciding whether to buy private health insurance depends on your personal circumstances. It's worthwhile taking some time to investigate the potential benefits for you.

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Last updated: 12 Oct 2016