Below, we take a look at the different levels of private health insurance, what is covered, and whether it might be worth it for you.
What is private health insurance?
Private health insurance covers the cost of treatment in a private hospital. It also covers extras including dental, optical services, physiotherapy, and more. There are four types of private health insurance: ambulance cover, hospital cover, extras cover, or combined policy hospital and extras cover.
Hospital cover can be used to cover your costs as an inpatient in a private hospital. It is standardised by the Australian Government, meaning that no matter what health fund you are with, you will receive the same level of cover based on the tier you choose. Hospital cover can be helpful because:
- You can choose your own doctor and hospital;
- You can stay in your own private room;
- You can avoid the waiting period of a public hospital.
Medicare does not cover the cost of an ambulance ride. In Queensland and Tasmania, residents are covered by the state government. Whereas, in other Australians states and territories, you either need to purchase an ambulance subscription, private health insurance coverage, or pay for the ambulance cost outright.
Extras cover is designed for expenses that are not incurred in hospital or aren’t covered under Medicare, such as optical, dental or other physical treatments. Unlike hospital cover, there are different levels of extras cover you can choose. For example, a cheaper extras plan may cover teeth cleaning, whereas a more expensive one can include wisdom teeth extractions, crowns, or bridges. The services included in your plan will vary depending on the provider and prices will be influenced by the extras included and level of coverage selected.
Combined hospital and extras cover
As implied, combined 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 a surgery, dental, remedial massage etc.).
Advantages and disadvantages of private health cover
There are both benefits and drawbacks of private health insurance as outlined in the table below:
|Advantages of private health||Disadvantages of private health|
|You can skip the waiting line: Particularly if you are 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 there is one available, you will usually be given 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 cover: Dental work is not covered under Medicare. Private health insurance can either subsidise or entirely cover dental expenses.|
What is covered under Medicare?
Medicare, the universal healthcare system in Australia, helps cover the costs of seeing a doctor, some prescription medication, and access to mental health care services. Additionally, public hospitals are funded by Medicare, which means that if you are covered by the scheme, you don’t need to pay for treatment. Specifically:
- If your doctor bulk-bills, Medicare covers the entire cost of the appointment. Alternatively, 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, which will be developed by you and your GP.
- Public hospital healthcare is free to all Australian citizens and most permanent residents because of Medicare.
Medicare vs. private health insurance: what’s the difference?
When deciding whether private health insurance may be worth it for you, it can be helpful to clearly see the differences between what is covered by Medicare and what is covered by private health. So that you can clearly visualise this, we’ve put together the following table:
|Treatment||Medicare||Private health insurance|
|Hospitalisation||You will be covered for hospital treatment in a public hospital. 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 is 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).|
So, should I have private health insurance?
Private health insurance is essential for some people and not for others. For example, if you’re someone that often needs to be hospitalised, requires medication not covered by PBS, or want cover for dental, physiotherapy, or other physical treatments, private health insurance may be a worthwhile investment. However, if you are a person that doesn’t require any services covered by private health, it may not be worth it. At the end of the day, it is entirely up to you.
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.