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Do I Need Private Health Insurance?
Do I Need Private Health Insurance?
Written by
Madeline Pettet
Edited by
Ellie Garran
Reviewed by
Andres GutierrezCompare Health Insurance Policies
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What is private health insurance?
Long story short
Private health insurance can help cover your costs as a private patient
You can buy hospital cover, extras cover, or both.
Private health insurance can offer you more choice in your health care and a better experience
For instance, you could have a shorter hospital wait and get money back on allied health services that Medicare usually won’t cover.
Your health insurance costs might be less than you expect, thanks to government initiatives
Depending on your situation, you could get a reduced premium. Having health insurance could also be a savvy tax move.
What is private health insurance?
Private health insurance powers the private health system in Australia, including private hospitals. The private health system is a counterpart to the public health system (where Medicare is hard at work).
But the public and private health systems aren’t in competition with one another. By sharing the load of looking after all 27.5 million Australians,1Australian Bureau of Statistics – National, state and territory population the private health system helps stop the public health system from being overwhelmed.
The Australian government encourages people who can afford private health insurance to take it out and free up space for those who need to rely on the public system. In fact, the government uses a few different carrots and sticks to do this.
Government incentives for holding private health cover
Age-based discount
People under 30 who have their own hospital cover may enjoy a discount on their premiums. The earlier you take out cover, the bigger the discount (up to a maximum of 10%). Even better, that discount hangs around until you’re 41. And you don’t have to stick with the same policy for the next decade or two – health funds have the option of respecting your proactive choice and honouring that discount (just be sure to double-check before you sign the dotted line on a new policy).
Lifetime Health Cover (LHC) loading
The LHC loading and the age-based discount are a little like the Sith and the Jedi. Where the age-based discount is, well, a discount, the LHC loading is an additional charge if you don’t take out hospital cover when you’re young (technically from 1 July after you turn 31). Take out a hospital insurance policy after that cut-off date and you’ll have an extra 2% added to your premium for each year you’ve been uninsured. The loading can reach Death Star proportions of a maximum of 70% and sticks around for 10 years.
Medicare Levy Surcharge (MLS)
In 2024–25, Medicare covered $32.4 billion in health care costs.22 Department of Health, Disability and Ageing – Total Medicare Statistics, 2024-25, p1 A lot of that money comes from the Australian Government, but it also comes from taxes – specifically the Medicare Levy: a 2% tax most Aussies pay. The MLS is a further 1–1.5% tax for anyone who earns over a certain amount and doesn’t have appropriate private hospital cover. Essentially, it’s a nudge to move higher earners out of the public health system, freeing up space for those who earn less and can’t afford to go private.
Private health insurance rebate
Private health insurance isn’t just reserved for high earners; lots of people want to use the private health system. So, the Australian Government covers a percentage of their premiums. Like the MLS, it’s income tested. Those who earn less and older folk who might need to see the doctor more often get a higher rebate. The rebate ranges from about 8% to 33%. It can be a premium reduction, so you pay less up-front on private health insurance for hospital, extras, or ambulance cover. Alternatively, you can claim the rebate as a tax offset come July.
Do I need hospital cover?
If thinking about your health and what the future could bring leaves you feeling overwhelmed, you’re not alone. Deciding whether to get health insurance often goes straight into the too-hard basket. But it’s an important decision to make. So, let’s keep things simple and look at the pros and cons of hospital cover.
Pros
- You can choose your treating doctor in hospital. This can help you feel more confident and less worried about your upcoming procedure.
- Depending on availability, you could enjoy a private room in hospital. This can make it easier to rest after surgery, and you might feel more comfortable having visitors pop by.
- You’ll likely have a shorter wait for elective surgery (that’s surgery that you need to have but isn’t a life-threatening emergency). In 2023–24, 90% of private patients at public hospitals were admitted within 172 days. Meanwhile, 90% of public patients were seen within 330 days.3Australian Institute of Health and Welfare – Admitted patient care 2023–24: What procedures were performed? That’s almost twice as long.
- Some hospital cover comes with ambulance cover. If you live in a state or territory where you aren’t eligible for free emergency ambulance services, this could help cover any emergency ambulance transport you might need.
- Having appropriate hospital insurance can be handy at tax time. Depending on your situation, you could avoid the MLS, while also claiming the private health insurance rebate.
Cons
- You’ll need to pay premiums for your private health insurance. You’ll also likely need to pay an excess – an up-front fee when you’re admitted to hospital, before your insurance kicks in.
- Even with private health insurance, you might have out-of-pocket costs for your treatment. You can minimise these by choosing hospitals and doctors who have agreements with your health fund.
- You’ll need to serve any relevant waiting periods before you can claim on your policy. Generally, the maximum waiting period is only two months. Care for pregnancy or pre-existing conditions usually comes with a 12-month waiting period, though.
Why did our fictional friends get health insurance?
Paula, 27
Riding coach and aspiring Olympic equestrian
‘If you see me without hay in my hair or mud on my boots, it’s time to buy a lottery ticket. I do a lot of physical work, like moving heavy bags of feed, mucking out stalls, and getting on the horses my students are too scared to ride!’
Health concerns
Sometimes my back and shoulders hurt, but I’m generally in good health. There’s not much that some stretching, a good night’s sleep, and staying hydrated can’t take care of – at least for now, anyway.
What health insurance did I get?
Bronze hospital cover with ambulance cover
Why did I get health insurance?
- I chose a bronze hospital policy since I’m most worried about ongoing damage to my joints and bronze is the lowest tier that includes unrestricted cover for bones, joints, and muscles.
- I’ve seen lots of horse riders go home via the emergency department, so ambulance cover makes sense to me.
- If I take out hospital insurance now and keep it, I get a 6% age-based discount and will be ready to skip LHC loading when I turn 31.
Viktor, 62
Recently retired accountant, local competitive quilter
‘I’ve always loved a hobby, and right now, my newfound talent for quilting has made me the talk of the local Country Women’s Association. I know I make it look easy, but it took some serious blood, sweat, and tears to make the quilt that ended up winning at the Easter Show.’
Health concerns
My shoulders didn’t bother me so much when I was working on the computer, but sewing seems to have stirred things up. My vision has been getting a bit worse lately, too.
What health insurance did I get?
Gold hospital cover, particularly for joint replacements and cataract surgery
Why did I get health insurance?
- I’m a numbers man, so I want to pick my doctor based on their track record.
- I’ve got big plans for my retirement, so the possibility of shorter wait times really speaks to me.
- I know waiting periods apply, so I wanted to get those out of the way sooner – hopefully before I need surgery or my conditions make everyday tasks too hard.
Helpful tip
No one likes to be stuck in a queue. However, a longer wait for elective surgery can be more than a nuisance. It could seriously impact your life.
Depending on your condition, you might have limited mobility, so everyday tasks could be harder or simply beyond your capabilities. Similarly, if you’re in a lot of pain, it’s hard to say you’re living your best life.
Long surgery waiting times can also affect your health, like your overall outcome after surgery. Delays could mean a relatively minor issue progresses into something more serious, even needing multiple surgeries or treatments.
Although hospitals aim to see all patients in a timely manner, it’s okay if you want to have a little more control – particularly at a time when you’re feeling vulnerable, scared, or helpless. It’s your right to make decisions about your health care, including using private health insurance for a chance at a shorter wait.
Andres Gutierrez
General Manager – Health
Do I need private health insurance extras?
Private health insurance can cover more than just going to hospital. An extras policy can cover some out-of-hospital healthcare costs, like dental, optical, and physio. Often, these costs aren’t covered by Medicare.
Like deciding whether you should get a hospital policy, it’s a good idea to think about the pros and cons of an extras policy.
Pros
- Depending on your policy, you can see allied health professionals and get money back without needing a GP referral. Visits to the physio, for instance, are usually only covered by Medicare as part of a GP chronic condition management plan. However, with an eligible extras policy, you could skip going to the GP and go straight to the physio, claiming some of the appointment costs back through your extras.
- An extras policy can make it easier to be proactive about your health. Getting money back on preventative and routine health services that aren’t covered by Medicare can be that extra nudge you need to look after your health. For instance, Australian adults with dental health insurance in 2021 were more likely to see the dentist regularly for check-ups, rather just than because of a dental problem.44 4 Australian Institute of Health and Welfare – Oral Health and dental care in Australia
- Preventative health care – and using your private health insurance to access it – can help you save money down the track. For instance, roughly 88,600 dental-related hospitalisations in 2023–24 might have been avoided with earlier treatment, like dental cleans.55 5 Australian Institute of Health and Welfare – Oral Health and dental care in Australia
Cons
- Depending on the policy, you might have out-of-pocket costs. For instance, in July–September 2025, on average, Australians claimed $62.24 and had to pay $63.52 out of pocket per extras service.6Australian Prudential Regulation Authority – Private health insurance benefits trends Sep-25 As with hospital cover, you might be able to minimise your out-of-pocket costs by checking which providers have agreements with your health insurer.
- Extras policies come with limits that can mean you might not get money back on every appointment. However, these limits typically reset each year. If you’re regularly reaching an extras limit before the 12-month mark – or, alternatively, you’re way off hitting that limit – it could mean you need to tweak your extras policy.
- Some extras policies won’t cover services unless you see the health fund’s preferred provider. Checking whether a health insurer has preferred providers, and if any are local to you, can be a good idea before signing up to a policy.
Why did our fictional friends get private health insurance extras?
Don, 34
CSIRO scientist and workaholic
‘My dream is to create the perfect sunscreen: a high multi-UV protection rating, gentle on all skin types, and never looking greasy in any candid beach snaps. Chalk it all up to one bad sunburn as a kid!‘
Health concerns
I’m pretty lucky as I’ve not had any big health scares. But I’ve read the research and know my health habits leave a lot wanting. My teeth always feel fuzzy because I forget to brush them, I’m a known regular at four different takeaway joints, and I’m always hunched in my desk chair.
What health insurance did I get?
A mid-tier extras policy with cover for general dental, physiotherapy, and dietetics
Why did I get health insurance?
- I know my luck is going to run out at the dentist, so I want to catch any issues as soon as possible. And maybe regular cleans will get me addicted to that clean mouth feeling so I brush more!
- I’m pretty busy, so skipping seeing my GP and going straight to the physio works better for me. With my extras cover, I can do just that and claim money back on my policy.
- I want to see a dietitian so I can start making better takeaway choices. While old habits die hard, the extra support might mean I finally learn some healthy bulk recipes and can save some cash.
Lucia, 45
Textile designer and single parent to three boys
‘My place is loud and messy, and I love it. Lately, it’s even been a huge inspiration in my work. All the chaos also makes me really appreciate my family’s hospital insurance policy. The boys have already used it for appendicitis, grommets, and a particularly nasty fracture resulting from mixing red cordial and BMX bikes.’
Health concerns
I thought hospital cover was all I needed until one nightmare weekend when I learned two of the boys would need orthodontics before starting high school and another was short-sighted. It left me feeling so wrung out and just wanting someone to talk to.
What health insurance did I get?
I went with a top-level family extras policy that includes cover for orthodontics, optical, psychology, and lots more!
Why did I get health insurance?
- Braces are expensive, and paying for two sets in a short space of time would be more than I could handle.
- I went to my local optometrist and checked they had an agreement with the health insurer I was considering; they confirmed the fund would cover most of the costs for new glasses.
- Since I see a psychologist regularly, I tend to exceed the limit for claiming Medicare psychology rebates. An extras policy means I don’t have to skip seeing my psychologist and can still get some money back, this time from my health fund.
How do I choose the right private health insurance policy for me?
Unless you really hate making decisions, you probably aren’t going to let anyone else decide what’s right for you to eat and wear. Just like you have your own unique taste in food and fashion, everyone wants something different from their health insurance.
While we can’t tell you what health insurance policy you should get, we can tell you what you should probably give some thought to when picking a policy.
Be serious about your age
They’re not lying when they say age is just a number, but it’s no secret that getting older can do a number on your body.
For younger folk, health insurance’s appeal might be in reducing your chance at a whole host of serious health conditions later on life.
If you’re a little older and have some regrets, like powering through the pain or always cancelling your dentist appointments, it might be too late for some types of preventative action. But it’s never too late to get proactive and look out for your even-older self.
And while we’re all different, we tend to hit the same milestones at the roughly the same age. These could be exciting milestones, like starting a family, or ones that probably won’t come with a party, like needing a joint replacement. Being serious about what health concerns and issues are common for your age group can give you a good place to start from when choosing health insurance. You might also want to think about what different family members’ health looked like when they were your age, as some conditions can be genetic.
Think about your income and budget
The right health insurance policy gets you bang for your buck. This could be some money back on your tax return, more money claimed on health services, and/or less money spent on health care in your future.
Of course, it’s important to be realistic about what you can afford. While health insurance should give you value for money, you’ll need to have the funds to pay those premiums and any out-of-pocket costs. Hopefully you’re eligible for some help paying that premium, though!
Go over your health needs
Life would be pretty boring if nothing much changed. This fundamental truth means your health insurance policy will likely need to change over time, too.
For instance, if you’re looking to start a family, your main health concerns might change from preventative extras and lower-tier hospital surgeries to higher hospital cover.
Who you want your policy to cover could change, too. Maybe your first health insurance policy covers just yourself, but in a few years’ time you might want to share a policy with your partner.
FYI, if you’re thinking about having multiple people under the one policy, it’s often easier if everyone’s health needs align. Sharing extras limits with someone with lots of health needs can feel a little unfair.
Where can I find and compare health insurance?
Congratulations on finishing your crash course on private health insurance in Australia! But there’s one last bit of homework: finding a health insurance policy (particularly now you know what your needs are). Luckily, we can help you with that, too. Compare a range of health insurance options from different providers, using our online comparison tool or by speaking with a friendly comparison expert on 1800 784 772.
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Health Insurance & Tax
Tax Implications on Health Insurance
The Medicare Levy Surcharge
About the Life Time Health Cover Loading
The Private Health Insurance Benefit Codes
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