Time to read : 4 Minutes

There's been a sharp increase in Australians over 50 years old taking out private health insurance for the first time in 2023, due to a blow out in public hospital waiting times. 

Not all health insurance policies are created equal:

"If you've never taken out hospital cover before, it can be confusing," says Kate Browne, Head of Research & Insights at Compare Club, the nation’s largest health cover comparison service.

"It's very easy to buy a lemon or overpay for cover that's  not actually a good fit for you."

Why we got here: Hospital waiting times are 🆙, up, UP

Wait times for elective surgeries have not returned to pre-pandemic levels. The most common procedures can have you waiting nearly a year. 

• You’ll wait around 293 days for your hip replacement, and 158 days for cataract surgery. 

• Almost 10% of Australians waiting for elective procedures such as cystoscopies and cataract surgery had to remain patient - and in pain - for over a year*.

With waiting times blowing out, It’s no wonder senior Aussies are opting for private health cover. 

If you’re in this age bracket and plan to take out private health insurance for the first time, it’s critical to find a hospital cover that includes the procedures you’re most likely to need now, and in your immediate future.

What You Need to Know if You’re Buying Health Cover for the First Time:

Below, we'll run you through a few essentials that you'll need to know, including additional costs like the Lifetime Health Cover loading, and how your tiers work, and - most importantly - how to avoid picking the wrong cover.

Most health problems become more complex as we age. This can mean a higher level of health cover for you. Good private health insurance taken out when you’re over 50 isn’t cheap, but there’s no need to pay for an expensive policy that doesn’t cover you for what you need. 

“You’ll want to look out for the best cover and avoid those public hospital waiting lists as much as possible,” says Kate.

If you’re going to pay, make it count:

Here's a few pitfalls to avoid, and Kate’s top tips for hunting up your health cover:

The Lifetime Health Cover Loading (LHCL):

The LHCL applies to all Australians over the age of 31 who don’t take out private health insurance. It’s applied to your premium as a 2% loading.

If you've not held health cover before, there's no escaping the LHCL but you can take steps to manage your health cover premium by comparing different levels of cover and adjusting your excess.

Many insurers prominently display their lowest policy rates, but only reveal your actual cost, including your LHCL, during the final stage of your purchasing process. This is definitely a pitfall you’ll want to avoid.

For younger Australians, Kate suggests taking out private health cover before you turn 31, to avoid incurring the LHCL.

“Often people in their early 30s can get really good value Bronze or Bronze Plus hospital cover, which covers a large number of common procedures and means that you won’t be hit with high loading fees in the future.” 

Know your hospital cover tiers:

Knowing which hospital tier covers the treatments and medical services you’re most likely to need helps you avoid overpaying. The 4 tiers of hospital cover are:

1. Basic: The cheapest cover (includes ambulance and emergency services).

2. Bronze: Includes 18 categories of surgery and treatments, e.g. joint reconstructions, and dental surgery.

3. Silver: Includes 26 categories of surgery and treatments, e.g. dental surgeries.

4. Gold: Covers you for all 38 categories of surgery and treatments, e.g. hip replacements and pregnancy.

If your health needs fall between tiers, ask an expert about ‘Plus’ policies# that cover items from higher tiers at a lower cost. 

For example, some health funds cover cataract surgery or joint replacements under their Silver Plus policy.

This means you can avoid paying a Gold premium, which includes care you may not need, such as pregnancy and IVF.

Kate’s Top Tips:

• Don't assume cheap = good. Basic cover is called junk for a reason.

• Gap fees: Find out how to mitigate them here.

• Live in regional or rural Australia? Check your local hospital has an agreement with your preferred fund.

• Compare, compare, compare. There's are HUGE price differences between the 38+ funds on the market.

• Waiting periods: Don't assume you'll be able to use your cover straight away.

• A higher excess can reduce your premium.

The bottom line:

It’s clear from the data that private health cover is becoming essential for Aussies who’ve never needed it before. Careful comparisons before you buy can save you from overpaying or ending up with a poor fit.

Private health for seniors can cost more if you’re taking your cover out for the first time - but there are still ways to save on the cost of your premium if you know what procedures you need covered.

And a reminder: if you don’t feel confident having a crack yourself, speak to one of Compare Club’s experts to chat through what could be a good fit. My colleagues don’t compare all policies or funds on market but they can help you avoid overpaying.

*Australia's Hospitals at a Glance