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What is Hospital Cover?
Private Hospital Cover is pretty self-explanatory. It helps cover the costs when you get treated as a private patient in a hospital. This includes some (or all!) of the in-hospital costs for essentials like medicine, theatre fees and accommodation.
Why should I consider Hospital Cover?
With Hospital Cover, you’ll get more choice over the doctor who’ll treat you and the hospital where you’ll stay.1Department of Health & Aged Care – Benefits of private health insurance Plus, you’ll usually face shorter wait times for elective surgery.2Health Direct – The public and private hospital systems If you’re a higher income earner, then holding eligible Hospital Cover could also mean you’ll pay less tax.3As above.
What level of Private Hospital Insurance do I need?
This really depends on your personal needs and preferences. You’ll need to think about the kind of treatments you want covered and how much you’re willing to pay. There’s often a trade-off between price and coverage: a policy that covers many treatments will usually cost more than a policy that only covers a few.4PrivateHealth – Managing your policy
To help with this decision, the government introduced a tiered system designed to make Hospital Cover easier to understand. Hospital policies are now categorised as Basic, Bronze, Silver or Gold, with each tier covering a specific number of clinical categories.5Australian Government | Department of Health and Aged Care – Private health insurance reforms: Gold, Silver, Bronze, Basic product tiers – campaign fact sheet (Page 1) These clinical categories describe different hospital treatments, such as ‘dental surgery’ or treatments for the ‘back, neck and spine’.
Frequently Asked Questions
What are gap payments?
Medical gap payments:
In Australia, all in-hospital medical treatments have a standard fee attached to it, called the Medicare Benefits Schedule (MBS) fee. When you get treated as a private patient, the government (via Medicare) pays 75% of your MBS fees.1healthdirect – What is Medicare? Your insurer then pays the remaining 25% — so long as your policy also covers these treatments.2Australian Government | Department of Health and Aged Care – Out of pocket costs But beware: doctors aren’t bound by the MBS and can charge more than 100% for your treatment cost. The amount doctors charge above the MBS is called the medical “gap”.3As above.
Avoiding the gap:
A medical gap means that you’ll need to pay for any charges above the MBS fee—even if you have Private Health Insurance. You can avoid or reduce your gap fee by selecting a doctor and hospital that has a gap agreement with your insurer.4As above.
A gap agreement is when participating either charge zero or “no gap” or a “known gap” where there is a limit to how much they charge above the MBS fee.5As above. Always check whether your insurer has a gap agreement with your preferred doctor and hospital.
What do these different policy tiers cover?
As mentioned, the tiers progress from Basic (which covers the smallest number of treatments) to Gold (which all of them). Each tier has to provide the following cover levels6Australian Government | Department of Health – Private Health Insurance Reforms fact sheet, page 2. as a minimum:
- Basic: Restricted cover for 3 specific clinical categories.
- Bronze: Unrestricted cover for 18 specific clinical categories.
- Silver: Unrestricted cover for 26 specific clinical categories.
- Gold: Unrestricted cover for all 38 clinical categories.
Each tier also builds on the previous one. Bronze includes all the coverage that Basic provides, Silver covers all the clinical categories that Bronze does, and so on. We also provide a detailed breakdown of the different clinical categories each policy covers on our page about Hospital Cover tiers.
What are plus policies?
I’ve just turned 30. Do I have to get Hospital Cover?
The short answer is “’no’, but there’s a pretty strong incentive to take cover at this time in your life.
Whilst buying Hospital Cover isn’t mandatory, if you don’t purchase it by July 1 following your 31st birthday, you’ll likely have to pay the Lifetime Health Cover (LHC) loading on top of the base premium of any Hospital Cover you later purchase.8PrivateHealth.gov.au – Lifetime Health Cover
In short, the longer you go without Hospital Cover after your 31st birthday, the higher the loading you might have to pay on top of your monthly premiums if you take out cover later in life.
How much Lifetime Health Cover loading will I need to pay?
For every year past your 31st birthday that passes until you take out cover, you’ll pay 2% more on your health insurance premiums (based on your age on the 1 July prior to joining).9As Above. For example, if you purchase health cover at the age of 40, you’ll pay 20% more on your premiums. The maximum LHC loading that can be applied is 70%. Once you have paid LHC loading for 10 years of continuous cover, you will no longer have to pay this loading.10As Above.
What are excesses and co-payments?
What are waiting periods?
All Hospital Cover policies have waiting periods. This means you’ll usually need to hold the policy for a few months before you can claim on certain health insurance benefits. For most pre-existing conditions, pregnancy and obstetrics, a 12-month waiting period may apply.14Privatehealth.gov.au – Waiting periods For all other conditions, the waiting period can only be a maximum of two months.15As above. Palliative care, rehabilitation and psychiatric care also can’t exceed two months—even if it’s for a pre-existing condition.16As above. And some fund even offer accident-only cover with only a one-day waiting period.17GMHBA Accident Only Hospital (Basic)
Do I have to pay the Medicare Levy Surcharge?
It depends. From 1 July 2023, if you earn over $93,000 as a single or $186,000 for as a couple (or family!) and don’t have Hospital Cover, then you may have to pay the Medicare Levy Surcharge (MLS).18Australian Government | Australian Taxation Office – Medicare levy surcharge income, thresholds and rates To be exempt from the surcharge, you’re required to have Hospital Cover with a registered health insurer and it needs to cover at least some of the fees for any hospital stay.19PrivateHealth.gov.au – Medicare Levy Surcharge
What is the Private Health Insurance Rebate?
Most Australians with private health insurance currently receive a rebate from the Australian Government to help cover your premiums. The rebate is known as the Australian Government Private Health Insurance Rebate. Based on your age and your income, the rebate is available for people with Medicare eligibility. If you’re eligible for the rebate, you can choose to have it automatically deducted from your premiums or claim it back in your tax return.
How often should I review my Hospital Cover?
So how do I find Hospital Cover that suits me?
As you’ve probably gathered from all of the questions above, there’s a lot to think about when choosing Hospital Cover. The good news is that iSelect is here to try make it easy. Start comparing health policies online*, or call us on 1800 784 772. Our friendly team is ready to help you explore Hospital Cover from a range of policies and providers.
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Health Insurance & Tax
Tax Implications on Health Insurance
How to save on Health Insurance
About the Medicare Levy Surcharge
About the Life Time Health Cover Loading
Government Rebate & Means Testing