Overview

Pretty much anyone in Australia is eligible to access great healthcare through our public healthcare system, Medicare.

However, sometimes the public healthcare system just can’t give you what you need, for example when it comes to timely specialist treatment, ambulance services, or elective procedures – which can get expensive.

That’s when private health insurance can make all the difference.

There’s no denying that in Australia, we’re pretty lucky to have a fantastic public healthcare system. However, this basic program isn’t designed to cover all your individual specific healthcare needs, and that’s where private health insurance comes in.

For many of us, we need to take out private health insurance to get the coverage we need for our lifestyle.

Comparing different policies makes it easy to see what each provider covers and find one that caters to your needs. It is an easy way to see the benefits of private health insurance, and then switch to a provider that meets your individual needs.

This guide covers the A to Z of private health insurance and its benefits, so you know what to look for when scouting a new policy. We can help get you started on your private health insurance journey.

Key Points

  • Some of the main advantages of private health insurance include getting access to private hospital rooms, shorter wait times and the freedom to choose your preferred doctor.

  • Medicare doesn’t cover things like pregnancy and obstetrics in private hospitals, dental, physiotherapy and much more – so you will need private health insurance to reduce your costs.

  • When you have private health insurance, you can claim a handy rebate at tax time to help cover the costs of your premiums.

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What is private health insurance?

Unlike Medicare, which is the public healthcare scheme funded by the Australian Government, private health insurance is offered by registered private health insurers. Private health insurance provides funding assistance for additional health services depending on the level of healthcare you need.

Whether it’s basic hospital cover, extras (general treatment cover) or both, private health insurance gives you a variety of benefits that you simply can’t access if you are only using the public health system.

What are the main benefits of having private health insurance? 

The benefits of your private health insurance policy can differ depending on a range of factors: 

  • the insurer you choose to purchase a policy from; 

  • your current healthcare needs; and 

  • the tier you wish to purchase (these come in Basic, Bronze, Silver, and Gold, with Gold being the most comprehensive and therefore the most expensive option).

On top of that, you can get additional benefits when adding an ‘extras cover’ to your policy. Depending on your individual needs, this could include optical, physio, natural therapies or dental cover.

Generally, Australians with appropriate private health insurance can also enjoy benefits such as:

  • Access to private hospitals and private rooms.

  • Shorter wait times on elective surgeries through private hospitals.

  • Freedom to choose your preferred doctor or surgeon for hospital care.

  • The ability to claim back money from non-Medicare services like dental and physio..

  • Additional hospital choices on medical treatments and services.

  • Exemption from the Medicare Levy Surcharge.

What is not covered by Medicare?

The Medicare Benefits Schedule (MBS) is a regularly updated document that includes all the medical services that are currently subsidised by the public health scheme. 

If you want to know whether a specific procedure is covered under Medicare, then it’s important to search the latest MBS.

While Medicare covers the medical services listed as eligible services in the MBSMedicare does not cover the following:

  • The costs associated with being a private patient in hospital (e.g. accommodation expenses, theatre fees etc).

  • Any medical fees or hospital costs that you incur while overseas.

  • Ambulance services.

  • Most Dental treatments.

  • A variety of specialist therapies (e.g. physio, occupational, speech, eye, podiatry, chiropractic, and psychology services).

  • Optical (e.g. glasses and contact lenses).

  • In-home nursing.

  • Hearing aids.

What is not covered by private health insurance?

Private health insurance often does not cover medical services delivered outside of a hospital, such as GP visits and specialist consultations. In many cases, these are covered by Medicare instead.

Also, depending on your doctor or specialist, insurance from a private health insurer may not cover the full amount of the medical services you receive while a hospital private patient. This becomes an out-of-pocket expense that you need to cover yourself, also known as a gap fee.

The product information documents of your insurance policy should detail what is and isn’t covered under your policy. If you’re still unsure, your health insurer should be able to provide further clarification. If you are unsure what your private health insurance doesn’t cover, it’s recommended that you read the information documents in full and speak to your insurer.

Is it worth getting private health insurance for things like pregnancy or dental care?

Yes, many Australians who plan to start a family or want to reduce the cost of their dental needs may purchase private health insurance policies. It can make private hospital care affordable… as well as cover additional services such as professional teeth whitening, checkups and fillings.

Just be aware that all health funds have a minimum 12-month waiting period for obstetric services. So in this scenario, it would be important to purchase this type of private health insurance well before you fall pregnant.

How does private health insurance cover reduce tax?

Having private health insurance can also give you an edge come tax time. If you have a private policy you may be eligible for a rebate towards your premiums. 

You can also reduce your tax at the end of the financial year by avoiding the Medicare Levy Surcharge, depending on your income. This is achieved by taking out appropriate hospital cover The Medicare Levy Surcharge payable by those without appropriate hospital cover is a percentage of taxable income:

  • 0% surcharge: Singles earning under $90,000; Families earning under $180,000 (Base Tier)

  • 1% surcharge: Singles earning $90,001 – $105,000; Families earning $180,001 – $210,000 (Tier 1)

  • 1.25% surcharge: Singles earning $105,001 – $140,000; Families earning $210,001 – $280,000 (Tier 2)

  • 1.5% surcharge: Singles earning over $140,001; Families earning over $280,001 (Tier 3)

How do you claim the private health insurance rebate?

Most Australians with private health insurance can automatically receive the rebate as a tax offset at the end of the financial year, or as a premium reduction through their health insurer. To claim yours you must:

  • Hold an eligible private health insurance policy

  • Be eligible for Medicare

  • Have an income lower than the Tier 3 income threshold.

The rebate isn’t universal for all Australians. Instead, it is determined by your age, your taxable income, and whether you are single or a family. There are four ‘tiers’.

  1. Base Tier (Singles earning $90,000 or less; Families earning $180,000 or less)

  2. Tier 1 (Singles earning between $90,001 and $105,000; Families earning between $180,001 and $210,000)

  3. Tier 2 (Singles earning between $105,001 and $140,000; Families earning between $210,001 and $280,000)

  4. Tier 3 (Singles earning $140,001 or more; Families earning $280,001 or more).

As of 1 April 2022, the rebate levels are:

  • Aged under 65: Base Tier – 24.608%; Tier 1 – 16.405%; Tier 2 – 8.202%; Tier 3 – 0%

  • Aged 65 to 69: Base Tier – 28.710%; Tier 1 – 20.507%; Tier 2 – 12.303%; Tier 3 – 0%

  • Aged 70 or over: Base Tier – 32.812%; Tier 1 – 24.608%; Tier 2 – 16.405%; Tier 3 – 0%

These are adjusted annually.

What is the average cost of private health insurance in Australia?

The cost of private health insurance differs depending on the type of cover and extras you choose. Individuals usually pay monthly premiums for their private health insurance.

If you are looking to calculate the costs of different policies, a quick comparison service can come in handy. Compare Club’s experts can help you vet your options and find a great deal for you in no time*. We can help you find a great insurer and policy for your needs in the shortest amount of time.

For general purposes, you can work out the average cost of private hospital cover according to the tier. For a single person living in Sydney, the average cost would be around:

  • Basic: $79.86

  • Bronze: $90.87

  • Silver: $126.81

  • Gold: $170.90

Where can I find the best private health insurance?

Unfortunately, there’s no one-size-fits-all insurance policy that works for everyone. Instead, you need to consider your current and future healthcare needs as well as how much you are willing to spend on monthly premiums to find a cover that works for you.

Once you’ve found the right policy for you, our team can help you make the switch too. We will help you find a policy suited to your needs from our panel of high-quality insurers. In fact, in recent years, we’ve helped Australians save $312, on average, when they compare and switch with us.

Ready to take advantage of all the benefits that come with a private health cover? Start comparing health funds today with Compare Club*.

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This guide is opinion only and should not be taken as medical or financial advice. Check with a financial professional before making any decisions.

*We compare products from a panel of trusted insurers. We do not compare all products in the market. Not all products available from our panel of insurers are compared and not all products are available to all customers.