Health insurance

Staying fit and well

If you get sick or need ongoing medical treatment, the last thing you want to 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 on getting better.

Why private health insurance is important

Private health insurance can help you pay hospital and medical costs not covered by Medicare. In some cases you can receive treatment sooner by electing to be treated as a private patient.

If you don't have private health insurance, it can cost you a lot of money if something goes wrong and you need prolonged medical treatment.

Choosing a private health insurance policy

Look for a policy that includes the health and medical services you want. To find out what each insurer offers, and read their Standard Information Statement. You can compare all private health insurers (or health funds) at the Private Health Insurance Ombudsman website.

As with all insurance policies, when comparing health funds, check the:

  • exclusions and inclusions. Private health cover often excludes claims that relate to pre-existing conditions and specific procedures, like plastic surgery.
  • restrictions on how much you can claim each year or over a lifetime for some services
  • waiting periods that may apply for some services.

There are generally three types of private health insurance:

  • Ambulance cover
  • Hospital cover
  • General treatment (extras) cover.

It's important to understand the details of these so you are covered for the services you need.

Ambulance cover

Ambulance cover reimburses you for the cost of being transported by ambulance after an emergency (such as a sudden collapse or severe chest pain, for example). Some state and territory governments cover the cost of ambulance services for some or all residents, without the need for private health insurance.

Smart tip

Different funds offer different inclusions in their ambulance cover. Read the PDS to find out what your policy does and doesn't cover.

The Private Health Insurance Ombudsman website has basic information on ambulance cover in each state and territory as well as links to state ambulance services websites.

Hospital cover

Hospital cover reimburses you for some or all of the costs of being admitted to hospital. This can include accommodation in a public or private room, theatre and intensive care costs. You may have to pay an excess when you claim on your hospital cover.

There are different levels of private hospital cover - from basic to top level cover. Each level covers the costs of different types of treatment, and most funds offer different policies across these levels. To find out more about the different levels visit the Private Health Insurance Ombudsman website.

Extras cover

Extras cover is for non-emergency medical treatments received outside a hospital or as an outpatient. This may include some or all of the costs of such services as physiotherapy, optical, dental and home nursing. The amount of cover you get will depend on the type of policy you choose. Expect to pay more for policies that cover a wider variety of services.

Comparison websites

Comparison websites are useful but they only include some health insurance policies, not the whole market. Visit different funds' websites to compare policy features and ensure you get the cover you need, at an affordable price.

Health insurance surcharges

Some people have to pay an additional surcharge for their health insurance if they meet certain age or income requirements.

Medicare levy surcharge

Most Australians pay the Medicare levy of 2% of their taxable income as part of their tax. If you earn more than a certain amount and don't have private health insurance, you may pay an extra surcharge of up to 1.5% of your income on top of this.

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, see the Australian Taxation Office's information on the Medicare levy.

Lifetime Health Cover (LHC) loading

The LHC loading is a Government initiative to encourage Australians to get health insurance before they turn 30, and maintain the cover as they get older. After age 30, you'll pay a 2% loading on top of your premium for every year you haven't had private health insurance, up to a maximum of 70%. You only need basic hospital cover to avoid the LHC loading.

For example, if you decide to get hospital cover for the first time at age 40, your loading will be 20% more than someone who took out health insurance before their 31st birthday (that is, 10 years x 2% per year). If you keep that hospital cover for 10 years without a break the LHC loading will be removed.

The Private Health Insurance Ombudsman has more information on lifetime health cover loading.

Private Health Insurance Rebate

To help cover the cost of private insurance, the Australian Government provides a rebate. The amount of your rebate will depend on your income level. Most people receive their rebate through a reduced premium, although you can choose to receive it through your tax return.

Visit the Private Health Insurance Ombudsman website for more information on the Private Health Insurance Rebate.

Why you need to be honest with your health insurer

You must be completely honest when you take out your health insurance policy, make a claim or if your circumstances change. If you are not honest, you may not be covered, as your insurer may not honour any claims if you mislead them.

Making a health insurance claim

Most health funds require you to make a claim within 2 years of incurring medical expenses following an accident or illness. Check what time limits your health fund applies to your level of cover and type of claim.

Case study: Andrew's wise decision

Young man covered by health insurance at the dentistAndrew's dentist told him he needed his wisdom teeth removed. Andrew rang his health fund to check whether his policy covered this, and he was happy 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 worth taking some time to investigate the potential benefits for you.

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Last updated: 06 Mar 2018