Hospital Cover

To reduce the load on our public hospital system, the government offers a range of financial incentives to encourage us to take out hospital cover. Additionally, with private cover you’ll usually face shorter waiting times for elective surgery.
Male doctor with younger patient

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I need cover for…

What is hospital cover?

Offered by private health funds, hospital-only covers a share of your in-hospital bills for things like accommodation, theatre fees, medicine, and up to 100% of the Medicare benefit schedule or MBS. The MBS includes all inpatient charges from any doctor that may treat you in hospital including anesthetists  With this type of cover, you can be admitted to either private or public hospitals as a private patient.

Another type of health insurance is extras cover, which typically includes general treatment such as dental, optical, physiotherapy, and chiropractic.

What are the benefits of taking out hospital cover?

In Australia, we have a strong public healthcare system, but Medicare might not provide as much flexibility as you’d prefer. Private health care can help you and your family choose a preferred doctor, hospital and importantly avoid the public hospital elective surgery waiting lists. So with private hospital cover, you can rest a little easier knowing you have more control over your treatment options.

What level of private hospital insurance do I need?

This used to be a complex question. To simplify health insurance, the government has introduced a tiered system to show exactly what you're covered for with different policies. All hospital- inpatient treatments are now organised into 38 clinical categories, based around different body systems (such as 'Ear, nose and throat' and 'Bone, joint and muscle'). All hospital policies are now categorised as Gold, Silver, Bronze or Basic, each covering a specific number of categories.

These tiers are:

  • Basic: very little (if any) private hospital cover.
  • Bronze: 18 clinical categories of services.
  • Silver: 26 clinical categories of services.
  • Gold: All 38 clinical categories of services.

'Plus' policies (Basic Plus, Bronze Plus or Silver Plus) cover more than the minimum requirement for each level of cover. For example you may purchase a silver level of cover which will include all 26 silver categories plus 1 gold category as well. This policy type is called silver plus.

What do the different policy tiers cover?

Basic, Bronze, Silver and Gold policies each have a standard list of inclusions1. This will help give you a clear understanding of what level of cover could suit you. To check these inclusions, please refer to the table on this website.

It’s also worth noting that some funds offer Bronze “plus” and Silver “plus” policies. These policies feature all of the minimum standards of coverage required by law which are outlined above, however they can also include additional features from a higher clinical category

For example, some Silver “plus” policies can include coverage for rehabilitation, psychology, and palliative care, which are typically only found in Gold 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 premium of any hospital cover you later purchase. 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 when you take out cover.

How much Lifetime Health Cover loading will I need to pay?

For every year past your 31stbirthday that passes until you take out cover, you’ll pay 2% more on your health insurance premiums. 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.

What are excesses and co-payments?

To save on premiums, you can choose an excess or co-payment2. Generally, the higher the excess, the greater the saving on your  premium.

Most excesses are applied per person per year. But like most aspects of hospital cover, it pays to check how the excess is applied to your cover, because some policies don’t charge an excess for events like children’s admissions or treatment as a result of an accident. The highest excess you can choose without becoming liable for the Medicare Levy Surcharge is $750 per year for singles and $1,500 per year for couples and families.

A copayment is similar to an excess but rather than paying a lump sum, you typically pay a daily amount for your hospital stay. Some co-payments have a yearly cap such as $500 or only apply for a private room. Some co-payments only start after you've been in hospital for a certain number of days (after five days, for example). Again, be sure to check how many times the co-payment applies per year.

What are gap payments?

Hospital gap accommodation payments:

Before you go into hospital, you’ll need to check if your health fund has an agreement with that hospital, or you could end up with a very nasty surprise. Because if they don’t have an agreement, you won't just be liable for the excess and doctors charges above the MBS fee , you could face significant out of pocket expenses such as your bed, food and theatre fees. To avoid these costs you can check the hospital you are going to is a “participating” hospital.

Medical gap payments:

If you have private hospital insurance, the government pays 75% of the Medicare Benefits Schedule fee for each item your doctor charges for. Then your insurer pays the remaining 25% if you’re eligible for benefits for those items under your health insurance policy. But beware: doctors aren’t bound by the Medicare schedule fee and can choose to charge more for your treatment. The amount doctors charge above the Medicare schedule fee is known as the “medical gap”.

What are waiting periods?

Hospital cover waiting periods are the time periods you need to serve as a health fund member before you can claim on certain health insurance benefits.  Waiting periods for hospital treatments are generally two months unless the condition is pre-existing. If you have a pre-existing condition, a 12 month waiting period could apply.  

Do I have to pay the Medicare Levy Surcharge?

It depends. If you earn over $90,000 as a single or $180,000 for couples and families  and don’t have hospital cover, then you may have to pay the Medicare Levy Surcharge (MLS)3.  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 stay4.  

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?

If there’s one thing we all know, it’s that life changes all the time. That means your hospital cover needs are likely to change along with it. For this reason, the Private Health Insurance Ombudsman recommends that you review your policy at least once a year5. If your existing policy has restricted or excluded hospital services that you might be needing in the near future, you may want to increase your 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 make it easy. Start comparing health policies online, or call us on 13 19 20. Our friendly team is ready to help you explore a range of hospital cover options.


Last updated: 23/11/2020

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