Do I Need Private Health Insurance?

In Australia, we're fortunate to have a healthcare system that subsidises certain medical costs through the public system, aka Medicare. However, some medical procedures are not covered under Medicare. Instead, you might need a private health insurance policy to ensure your health needs are met.

While our dual-private and public healthcare system is generally quite efficient - it ranks third globally among other leading countries - it isn’t perfect, and there’s a growing debate about the merits of having private health insurance at all.  If you’re considering joining or ditching a private health fund, there are some factors to keep in mind. Our article will examine the different levels of private health insurance, what is covered, and whether it might be worth having.

On this page:

• What is private health insurance?
• How much does health insurance cost?
• Advantages and disadvantages of private health cover
• What is covered under Medicare?
• Medicare vs. private health insurance: what’s the difference?
• Should I get private health insurance?

The information on this website is for general information only. It should not be taken as constituting professional advice from the website owner - Jacaranda Finance. Jacaranda Finance is not a financial adviser, and the content on this page does not take into account your objectives, financial situation or needs.

You should consider seeking independent legal, financial, taxation or other advice to check how the website information relates to your unique circumstances. Jacaranda Finance is not liable for any loss caused, whether due to negligence or otherwise arising from the use of, or reliance on, the information provided directly or indirectly by use of this website.

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What is private health insurance?

Private health insurance covers the cost of treatment as a private patient in either a private or public hospital, as well as extras not usually covered by Medicare, such as dental, optical services, physiotherapy, and more.

To gain access to cover for these treatments, you must buy a policy from a registered health insurer and pay regular fees (known as premiums). Different policies will offer different levels of coverage for different things, and the more comprehensive policies will usually come with higher premiums as a result.

There are four main types of private health insurance: ambulance cover, hospital cover, extras cover, or combined policy hospital and extras cover.

Hospital cover

Hospital insurance can cover your costs as an inpatient in a private or public hospital. Hospital cover is ‘standardised’ by the Australian Government, meaning that no matter what health fund you’re with, you’ll receive the same level of coverage based on the tier you choose: Basic, Bronze, Silver and Gold.

Hospital cover can be beneficial for the following reasons:

• You can choose your doctor and hospital;
• You can stay in your private room;
• Your health insurer covers some or all of the hospital costs (such as accommodation, surgery fees, medical supplies, nursing care etc.).

According to APRA figures, 45.2% of Australians (11.67 million people) reported having private hospital cover as of June 2022.

Ambulance cover

Medicare does not cover the cost of an ambulance ride. The State Government covers Queensland and Tasmanian (only within Tasmania) residents for ambulance trips; all other Australians (with the exception of pensioners) will either need to purchase an ambulance subscription, private health insurance coverage or pay for the ambulance cost outright.

Most private health insurers offer ambulance cover within hospital cover. However, you may not need ambulance cover depending on where you live.

Extras cover

Extras cover is designed for expenses not incurred in a hospital nor covered under Medicare, such as optical, dental or other physical treatments. Unlike hospital cover, you can choose different levels of extras cover depending on your specific needs and not four set tiers.

For example, a less expensive extras plan may cover teeth cleaning, whereas a more expensive one may include wisdom teeth extractions, crowns or bridges. The services included in your plan will vary depending on the provider; prices will be influenced by the extras included and the level of coverage selected.

APRA figures show that 55.2% of Australians (14.26 million people) have private extras cover as of June 2022.

Combined hospital and extras cover

Hospital and extras cover is a combined policy of these two types of insurance. This type of cover is usually pre-packaged by a healthcare provider to suit different lifestyles and budgets. A combined plan can be helpful to:

• Get a better fit for your individual needs;
• Claim on out-of-hospital services (e.g. physiotherapy after surgery, dental, remedial massage etc.).
• Have a higher level of cover and peace of mind
• Cover multiple people (such as a family)

Combined hospital and extras cover tends to be more expensive as a result.

How much does health insurance cost?

Numerous factors influence the cost of health insurance, such as the level of coverage chosen, the number of people covered by the policy, the type of policy and the location.

There’s no definitive figure for how much health insurance costs, but thanks to some data from Comparing Expert, we can get a rough idea.

For separate extras and hospital policies, here’s the average monthly cost of health insurance by state:

State	Hospital premium	Extras premium
ACT	$101.35	$16.00
NSW	$101.35	$16.00
NT	$53.55	$9.45
QLD	$103.85	$16.00
SA	$100.70	$16.00
TAS	$103.19	$11.95
VIC	$104.90	$16.00
WA	$78.75	$13.35

Source: Privatehealth.gov.au (October 2022, Hospital policy premium estimates based on a single basic Hospital policy, Extras premium estimates based on a Basic Extras policy with no surcharges or rebates applied).

For a combined hospital and extras policy meanwhile, you can expect to pay anywhere between $125 and $291 per month depending on your circumstances.

What is covered under Medicare?

Medicare is the universal healthcare system in Australia and helps cover the costs of seeing a doctor, getting some medicines and accessing mental healthcare services.

Additionally, public hospitals are funded by Medicare, which means that if the scheme covers you, you don’t need to pay for treatment. Specifically:

• If your doctor bulk-bills, Medicare covers the entire cost of the appointment. If your doctor doesn’t bulk bill, Medicare covers part of the cost.
• Medicare makes some medicines more affordable under the Pharmaceutical Benefits Scheme (PBS).
• You can access low-cost or free mental health services with a Mental Health Treatment Program.
• Public hospital healthcare is free to all Australian citizens and most permanent residents because of Medicare.

Medicare is funded by Australian taxpayers who pay 2% of their taxable income, known as the Medicare Levy.

Medicare vs. private health insurance: what’s the difference?

When deciding if private health insurance is worth it for you, it can be helpful to clearly see the differences between what's covered by Medicare and private health.

We've compiled the key differences between the two in the table below. For more information, visit the Australian Government Department of Health.

Treatment	Medicare	Private health insurance
Hospitalisation	You will be covered for hospital treatment in a public. However, you cannot choose your doctor, hospital or specialist (if required).	You can choose your hospital, doctor and specialist. You can attend a private or public hospital. Medicare covers part of your costs, your health provider will cover some costs, and you may be required to pay a gap payment (depending on your insurer).
GP or specialist appointments	Medicare covers all or part of your GP and specialist visits. Additionally, x-rays and pathology tests are typically covered.	Private health insurance legally cannot cover GP costs, specialist costs or diagnostic imaging or tests.
Other out-of-hospital services	Some costs are covered under Medicare. For example, eye checks and some dental care for children are covered under Medicare.	You can choose to have dental, physiotherapy, occupational therapy, optical and psychological treatments included in your extras or combined plan. Your private health insurance may cover the total cost or charge a lower amount depending on your level of cover.
Pharmaceuticals	PBS covers some prescription medication.	You may be covered for some medications not covered by PBS (depending on your policy).
Ambulance	Medicare doesn't cover ambulance costs. However, depending on your state or territory of residence, you may be covered by the government.	You can opt for ambulance cover for some policies (if not covered by your government).

Advantages and disadvantages of private health cover

Advantages of private health	Disadvantages of private health
You can skip the waiting line. Particularly if you're going to be getting an elective surgery, which can often involve long waiting times, private health allows you to 'lock in' a date.	It can be expensive. While it will depend on your policy and level of coverage, private health insurance can be thousands of dollars.
Choose your doctor. Instead of being treated by whoever is on call at the time of your admission, you can choose your preferred doctor or surgeon.	You might still be out of pocket. Sometimes you may still need to make a gap payment for the cost of a procedure or treatment, depending on your policy.
Private room. Provided one is available, you will usually be provided with a private room.	Excluded treatments. Some treatments may not be covered under your insurance.
Don't need to pay the Medicare Levy Surcharge (MLS). People with a sufficient level of private health insurance cover are exempt from paying the MLS.	It can be complex. With the number of private health insurance plans available, it can be confusing to choose the right plan for you.
Dental covered under extras. Dental work is not covered under Medicare for most people. Private health insurance can either subsidise or entirely cover dental expenses.

Should I get private health insurance?

Whether you should have private health insurance depends on your health situation. For example, if you’re a person that often needs to be hospitalised, needs medication not covered under PBS, or wants to be covered for dental, physiotherapy, or other physical treatments, private health insurance may be a worthwhile investment.

However, if you’re a person that doesn’t require any services covered by private health, it may not be worth taking out a policy. At the end of the day, it’s entirely up to you.

While you might not think you’re likely to need private health cover, you never really know. Health insurance is designed to provide peace of mind against unexpected ailments.

If you wish to further investigate private health insurance, the different levels and what may best suit you, you can compare policies for free using the Australian Government’s compare health insurance policies tool.

According to Jacaranda Finance data, ‘Dental Expenses’ and ‘Emergency Medical Costs’ were the 9th and 10th most common reasons for taking out a personal loan in 2022, with ‘Specialist Expenses’ sitting just outside the top 10 as well.

Jacaranda Finance Medical Loans

If you run into medical trouble and don’t have the funds to cover it, you could consider applying for a medical loan with Jacaranda Finance. Our same-day² loan outcomes and 60-second³ bank transfers could help you out of a sticky situation.