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Private Health Insurance provides financial cover for all or part of the costs of various health-related treatments and services. Depending on the policy, it can provide cover for treatment as a private patient in a public or private hospital, often allowing you to choose both your doctor and hospital, at a time that suits you. It can also provide cover for health services not covered by Medicare (such as physiotherapy, optical, and dental). 

It functions like other types of insurance, such as Home and Contents or Car Insurance, although rather than being risk based, it’s community based. Community based means that everyone is eligible to receive the same base price for the same policy from any single provider, rather than being rated on their individual health circumstances.  

There are two main types of policies you can take out: Hospital Cover and Extras Cover. These can be purchased separately or combined into a single policy with your health provider. One of the biggest benefits of Private Health Insurance is choice and flexibility. 

For example, as a private patient you’re generally given choice of doctor and choice of agreement hospital (hospitals that have agreements with your insurer to either charge you no out-of-pocket expenses or to specify what they’ll be).  You also have flexibility over the time of your appointments. In comparison, when you’re treated as a patient in the public system, the appointment times, doctors, and hospitals are typically inflexible, determined by your location and your health concern. Private Health Insurance can also help you avoid the long waiting lists for treatments (provided you’ve served the necessary waiting periods) that can exist in the public system.  

Private Health Insurance is divided into two categories: Hospital Cover and General Treatment cover, usually known as Extras Cover. These covers can be purchased separately or as combined policies by most Health Funds, depending on your individual requirements. In some states, a third category known as Ambulance Cover is also available, although this is sometimes included in Hospital Cover or Extras Cover depending on your policy. 

As Private Health Insurance is not risk rated, providers can’t refuse to insure any eligible person. They must also charge everyone the same base premium for the same level of cover. Therefore, to help mitigate some of the risk for Health Funds, most treatments incur a waiting period. Waiting periods must be served when you take out a new Private Health Insurance policy, or when you upgrade your policy to include services and treatments not previously covered. 

The government sets the maximum waiting periods that Health Funds can impose for hospital treatment. They are: 

• 12 months for pre-existing conditions 
• 12 months for obstetrics and IVF 
• 2 months for psychiatric care, rehabilitation or palliative care, even for a pre-existing condition 
• 2 months in all other circumstances. 

For Extras Cover, waiting periods are determined by your individual Health Fund, and the length can vary depending on the treatment and your level of cover. If you’ve already served a waiting period for a specific service and switch to a different provider with the same level of cover, the waiting period you’ve served will most likely carry over. 

To receive benefits, you must have a policy that covers the treatment you’re receiving and have served your waiting period. Some clinics and hospitals will be able to automatically apply your benefit by scanning your Health Fund membership card during the payment transaction. In some cases, you may need to make the benefit claim after paying up front, which you can do by contacting your Health Fund directly. How much you have to pay towards your treatment ultimately depends upon your policy and level of cover. 

Private Health Insurance can cover a range of health treatments depending on your individual policy and provider. It can also depend upon whether you’re claiming a benefit for Hospital or Extras Cover. 

On 1 April 2019, the Australian Government made changes to how Hospital Insurance was classified to help policyholders better understand their cover. These classifications are divided into the following tiers: 

• Basic: A Basic Policy will allow you to be treated as a private patient in a public hospital for the following treatments: 
  • rehabilitation 
  • hospital psychiatric services 
  • palliative care 
• Bronze: A Bronze Policy will allow access to the above, as well as treatment as a private patient in a private hospital for: 
  • brain and nervous system 
  • eye (excluding cataracts) 
  • ear, nose, and throat 
  • tonsils, adenoids, and grommets 
  • bone, joint, and muscle 
  • joint reconstructions 
  • kidney and bladder 
  • male reproductive system 
  • digestive system 
  • hernia and appendix 
  • gastrointestinal endoscopy 
  • gynaecology 
  • miscarriage and termination of pregnancy 
  • chemotherapy, radiotherapy, and immunotherapy for cancer 
  • pain management 
  • skin 
  • breast surgery (medically necessary only) 
  • diabetes management (excluding insulin pumps)
• Silver: A Silver Policy will cover you for all of the above, plus treatment as a private patient in a private hospital for: 
  • heart and vascular system 
  • lung and chest 
  • blood 
  • back, neck, and spine 
  • plastic and reconstructive surgery (medically necessary only) 
  • dental surgery 
  • podiatric surgery (provided by a registered podiatric surgeon) 
  • implantation of hearing devices
• Gold: A Gold Policy will offer unrestricted cover for all treatments above, as well as for treatment as a private patient in a private hospital for: 
  • cataracts 
  • joint replacement 
  • dialysis for chronic kidney failure 
  • pregnancy and birth 
  • assisted reproductive services 
  • weight loss surgery 
  • insulin pumps 
  • pain management with device 
  • sleep studies 

These are the minimum categories a provider has to cover under each tier, however they can choose to include additional services if they wish. These are often referred to as ‘Plus’ policies, which offer the required services, but also some extra services that set them apart. For example, a Silver Plus policy will include all of the services in a Silver policy but may also include cover for joint replacements or cataracts. They can be viewed as ‘in-between’ policies for when you want a bit of extra cover, without jumping up to the next tier. 

Under some policies, certain services may be ‘restricted’, meaning you can only be covered as a private patient in a public hospital. For restricted patients, you can usually choose your doctor, but not necessarily your hospital, and you may still be subject to waiting lists. 

In regards to Extras Insurance, what you’re covered for and how much benefit you receive can vary significantly depending on your provider and the policy you’ve selected. Depending on the policy, this may include services like: 

• dental treatment 
• optical, including glasses and contact lenses 
• physiotherapy and osteopathy 
• chiropractic treatment 
• occupational, speech, and eye therapy 
• hearing aids and audiology 
• diet and nutrition 
• psychology 

Excess charges in Health Insurance work similarly to other forms of insurance. It’s an amount that, when taking out your policy, you agree to pay towards your hospital treatment in the event of an in-hospital admission. And, similarly to some types of Car Insurance Policies, you may have the option to increase the cost of your Excess in order to reduce the overall cost of your premium. Depending on your policy, you may be required to pay an Excess every time you are admitted to hospital, or just once per year. 

To further clarify, when you are admitted to hospital, Medicare will cover 75% of the Medicare Benefits Schedule (MBS) fee for the treatment you’re receiving. Provided you have the appropriate Private Health Insurance Policy and have served your waiting period, your Health Fund will cover the remaining 25%. 

While the Australian Government determines the fees for the MBS, they do not set the costs doctors choose to charge for their services, which can lead to additional expenses if your doctor charges above the MBS. This is often referred to as ‘the gap’. Depending on the extent of your hospital stay, further charges may also apply to cover the costs of drugs and pharmaceuticals, dressings and diagnostic tests. 

To avoid a large bill for private health patients, some Health Funds offer what is known as ‘Gap Cover’. This means they have agreements with particular doctors which can reduce your gap or potentially avoid it altogether.

When retirement age rolls around, most Australians start to consider lowering their expenses. This could include downsizing their homes, reducing the amount of cars they own – and even reducing or cancelling their Private Health Insurance. This is especially true for pensioners who have lived a healthy lifestyle and seldom needed to take advantage of their insurance. 

That said, reaching your senior years may be the time you need your private health insurance the most. Getting older leaves you more susceptible to a range of health issues, and while a healthy diet and exercise will certainly help reduce your risk, there are no guarantees. Health Insurance could provide you invaluable peace of mind. 

Whether for an injury, an illness or another health ailment, typically the older you are, the more likely you are to need medical treatment. While you’ll have access to the public healthcare system, this could potentially lead to substantial waiting times for treatment depending on the severity of your health concern and where you are located. 

If you choose to attend a private hospital without Private Health Insurance, Medicare will still cover 75% of the Medicare Benefits Schedule (MBS) fee for the treatment you’re receiving. However, you’d need to foot the other 25%, along with a myriad of other potential charges depending on the length of your stay and the type of treatment you’re receiving. 

There are other benefits to maintaining your Health Insurance as a pensioner as well. If you do require medical treatment, you can skip the waiting lists of the public healthcare system and choose which doctor you want to see. Depending on your level and type of cover, you’ll also have access to a variety of preventative treatment options. 

Best of all, Australians over the age of 65 receive a higher rebate percentage from the government than their younger counterparts, and it increases again once you turn 70.

Ambulance services are not covered by Medicare. Instead, cover varies from state to state. 

• ACT: People who live in the ACT and hold a Health Care Concession Card or Full Aged Pensioner Concession Card are entitled to free emergency ambulance services. If you’re not eligible for a concession, you can purchase insurance from a Private Health Fund. 
• NSW: If you live in NSW and you hold a Health Care Concession Card, Pensioner Concession Card, or Commonwealth Seniors Health Care Card you’re entitled to some free ambulance transport services.  
• NT: If you hold a Health Care Card or NT Centrelink Pensioner Concession Card, you are entitled to free ambulance transport services. Otherwise, you can purchase Ambulance Cover from a Private Health Fund or through the state ambulance service 
• QLD: If you’re a Queensland resident, ambulance costs are covered by the state government.  
• SA: If you’re an SA resident, you can purchase ambulance cover from a Private Health Fund or through the state ambulance service.  
• TAS: Ambulance costs for Tasmanian residents are usually covered by the state government.  
• VIC: If you’re a VIC resident and you hold a Pensioner Concession Card or a Health Care Card, you’re entitled to clinically necessary free ambulance transport services. Otherwise, you can purchase insurance from a Private Health Fund or through the state ambulance service. 
• WA: If you’re a WA resident and you hold a Pensioner Concession Card, you’re entitled to free medically necessary ambulance transport services. If you’re ineligible, you can purchase insurance from a Private Health Fund or through the state ambulance service. 
• All of Australia: People who hold a Veteran Gold Card or a Veteran White Card might be eligible for free emergency ambulance services to their nearest clinical facility and certain non-emergency services might also be covered.  

It’s important to note that if you’re travelling interstate, your cover may vary. For example, residents of Queensland and Tasmania who have free Ambulance Cover in their state may not be covered when in Victoria or another state. So it’s recommended you check with your state ambulance service, concession card provider or Health Fund prior to travelling. 

The differences between what Medicare covers and what Private Health Insurance covers varies depending on the type of service you’re reviewing. 

Hospital Cover: Medicare covers 75% of the Medicare Benefits Schedule (MBS) for associated medical costs. The remaining medical costs may be covered by your Health Insurance Provider depending on your level of cover. This can include: 

• the remaining 25% of the MBS fee 
• hospital accommodation 
• theatre fees 
• intensive care 
• drugs, dressings, and other consumables 
• protheses (surgically implanted) 
• diagnostic tests 
• pharmaceuticals 
• any additional doctors’ fees above the MBS fee (if doctor has agreed to Gap Cover). 

Extras Cover: When it comes to services outside of your GP’s scope, Medicare benefits are extremely limited: For example, Medicare doesn’t provide benefits for the following:  

• most dental services 
• glasses and contact lenses 
• hearing aids and other appliances 
• ambulance services 
• services provided through the private health system 
• services not on the MBS. 

When it comes to pharmaceuticals, if your prescription medication is not listed on the Pharmaceutical Benefit Scheme, Medicare does not contribute to any of the cost. In this case, you may be able to arrange for your Private Health Insurance to cover part of the cost, depending on your level of cover and the medication required. 

Ambulance Cover is another service not covered by Medicare. It can be purchased as part of your Private Health Insurance fund depending on your location or through a state based subscription service. 

Shopping around is a good strategy here. Comparing policies from different providers can give you a clear overview of which one has the lowest premiums. 

However, keep in mind that a policy with cheaper premiums may not always be cheaper in the long term. A policy with a higher excess might cost you less each month, but when it comes time to claim on that policy you may end up paying much more out of pocket. 

Price is also just one consideration among many. It’s also worth thinking about the level of cover you’ll need – whether you want a basic policy or something more comprehensive. This is why it’s important to compare policies with the same level of cover, excesses and benefits. This can give you a better picture of which one offers more value.