A gap payment is your out-of-pocket cost for health care treatments, including when you go to hospital, and is the difference between what your doctor charges, and any rebates you receive from Medicare and/or your private health insurer.

In Australia, all in-hospital medical treatments have a standard fee, called the Medicare Benefits Schedule (MBS) fee. When you’re treated as a private patient, Medicare pays 75% of your MBS fees and your insurer pays at least 25% if the treatment is included in your policy. But doctors don’t have to stick to the MBS fee. They can charge more and when this happens, you’ll have a gap to pay.

Sometimes insurers and doctors have gap agreements, like agreeing on a set fee for a treatment so patients have no out-of-pocket expenses. Known gap agreements are when there’s a gap to pay but doctors limit how much extra they charge.

Hospital ‘Plus’ policies, like basic plus or bronze plus, offer the minimum standard coverage of that tier plus additional cover from higher tiers. This could be a good option if you’re generally happy with the cover at one tier but want a particular treatment or health service that’s on the next tier, like opting for silver plus with pregnancy cover if you don’t feel like you need all the cover gold hospital policies come with.

No, but if you don’t have appropriate hospital cover by 1 July following your 31st birthday and decide to get it later on in life, you’ll have to pay a Lifetime Health Cover (LHC) loading.

A LHC loading is an additional percentage amount added to your premium for each year after you turn 31 that you don’t have hospital cover. While it starts off small at 2%, it can grow to be as much as 70% and takes 10 years of consistent coverage to get rid of.

Avoiding LHC loading is one reason many Australians choose to get at least basic hospital cover.

For every year past your 31st birthday that you didn’t have hospital cover, your premiums will increase by a 2% LHC loading. For example, if you wait until you’re 40 to take out hospital, you’ll pay 20% more on your premiums. The maximum LHC loading that can be applied is 70%. But after 10 years of continuous cover, you won’t have to pay this loading fee anymore.

Taking out and keeping even basic hospital cover by July 1 after you turn 31 helps you to avoid LHC loading.

Excesses and co-payments are out-of-pocket costs listed on your hospital policy that you’ll need to pay if you’re admitted to hospital.

Both excesses and co-payments can help lower your health insurance premiums. For instance, the higher your excess, the lower your premium will be. However, keep in mind that you’ll need to be comfortable paying this out-of-pocket expense if you do need hospital treatment if it’s part of your policy.

Most excesses are charged per person per year, but not all policies are the same, so it’s worth checking the fine print. The highest excess you can choose without paying the Medicare Levy Surcharge is $750 per year for singles and $1,500 per year for couples and families.

Co-payments work in a slightly different way. Rather than paying a lump sum, you typically pay a daily fee for your hospital stay. Some co-payments have a yearly cap or might have a limit on the number of days they apply. Just make sure to check how many times the co-payment applies per year.

For instance, you might choose a $500 excess and $50 co-payment on your singles hospital cover. So, if you were admitted to hospital as an in-patient for a total of 3 nights, you might pay $650 out of pocket towards your hospital stay.

A waiting period is the time from when you take out your hospital cover policy to when you can make a claim on it. Typically, you’ll see a maximum 2-month waiting period for most hospital treatments. However, pre-existing conditions and pregnancy and obstetrics usually have a 12-month waiting period.

Once you’ve served your waiting periods with one insurer, you won’t have to start from scratch if you swap over to an equal or lower level of hospital cover as any waiting periods you have served will transfer over to your new policy or fund.

Yes, if you are a higher-income earner and don’t have appropriate hospital insurance, you’ll need to pay the MLS.

From 1 July 2026, the income threshold for singles is $105,000 and $210,000 for families (with an increase of $1,500 for every child after the first).

To avoid the MLS, you need to have hospital cover with a registered Australian health insurer. You also need a maximum excess of $750 for singles and $1,500 for families or couples for the exemption.

The private health insurance rebate is an Australian Government rebate on private health insurance (hospital and/or extras cover) which helps to make health insurance more affordable. If you qualify, you can have the rebate automatically taken off your premiums or claim it when you do your tax return.

Your eligibility and private health insurance rebate percentage is based on your income and age.

You should review your hospital cover regularly, like once a year or whenever there’s a big change in your life, like changing jobs, getting married or having kids. Doing so helps you check if your policy is still a good fit, as well as to see if there’s another policy other there that offers you more value.