What are the benefits of having private health insurance?

Read about the benefits of private health insurance including faster medical care, avoiding the Medicare Levy Surcharge and broader treatment coverage.

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by Gary Andrews

Last update 15 Apr 2021


Australian residents and some visitors on student or work visas have Medicare coverage to provide payment for their hospital treatment expenses.

If you already have Medicare coverage, you may be uncertain of why you would also need to purchase private health insurance cover.

The reality, however, is that there are many important benefits of obtaining private health insurance for yourself and for any dependants that you are responsible for.


What are the Benefits of Private Health Insurance?

A few of the many benefits of private health insurance include the following:

  • You can avoid being hit with Lifetime Health Cover loading.
  • You can avoid a Medicare Levy Surcharge if you are a higher earner with Hospital cover.
  • You can get medical care quicker and not have to endure a long wait for treatments that you need.
  • You have a broader choice of providers.
  • You can have coverage for other types of treatment besides hospital care.

Once you understand the benefits associated with buying private health insurance, it becomes clear that this is a purchase that makes a lot of sense.

Avoiding Lifetime Health Cover Loading

In order to encourage the purchase of health insurance at a young age, you pay more if you wait too long.

If you do not purchase private hospital insurance by the 1st of July following your 31st birthday, Lifetime Health Cover loading will apply when you do buy a policy.

Lifetime Health Cover loading means you pay two percent more in premiums for each year over the age of 30.

If you are 40 when you finally buy coverage, you will have 10 years of a two percent penalty so will pay 20 percent more for insurance coverage than you would have had you been covered the entire time.

This guide to lifetime health cover loading explains more about what LHC is and why you want to avoid it by buying private insurance early.

Avoiding the Medicare Levy Surcharge

If your individual or family income exceeds a certain level and you do not buy hospital coverage, the Medicare Levy Surcharge applies.

For individuals with incomes between $90,001 and $105,000, there is a one percent Medicare Levy Surcharge, which means that you end up paying an additional one percent of your income in taxes because you opted not to buy private health cover for hospital treatment.

Families with income between $180,001 and $210,000 are also hit with this one percent surcharge.

The surcharge only goes up from there, with those in the highest income brackets assessed a tax of 1.5 percent of income.

Because of the costs associated with not having coverage, it makes a lot of financial sense to buy a policy.

You Can Avoid A Long Wait for Care

If you do not have private insurance coverage, you may need to wait a long time for elective treatments.

For things like knee replacements, cataract treatment, hip replacements, tonsillectomies and varicose vein treatments, you could potentially wait hundreds of days.

You may be in pain and your activities will be restricted as you wait to get treatment.

If you want to ensure this doesn't happen to you, you should have a private policy that will provide you with coverage for prompt treatment.

Many private health insurers impose a waiting period of up to 12 months before certain services are covered, so you should get private health insurance before you need treatment so you can get help immediately when a medical problem develops.


You Can See More Providers

Medicare doesn't cover everything and if you are not able to get treatment through Medicare or if you want to go to a private hospital, you need a private health insurance policy.

You don't want to be restricted in the types or quality of treatments you get, especially if you have a serious medical issue.

Having a private policy gives you much more choice about where you get treatment and who provides it.

You Can Get More Coverage

There are two types of private insurance: private hospital coverage and Extras coverage.

Extras are things like chiropractic care, occupational and physiotherapy, and dental coverage.

You may need some of these "extra" treatments in order to stay healthy and live a comfortable life.

Get Private Coverage Today

The many benefits of private health insurance coverage should convince everyone to buy.

Compare today for the right policy for your needs.


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