Last Updated on 13 February 2020

Private Health Insurance in Australia: Know The Essentials

Medicare, the Government health insurance system in Australia, provides universal health care for all its citizens. Funded partly by way of the Medicare Levy Surcharge on the majority of income earning individuals through taxation, Medicare provides Australians and Australian permanent residents with basic healthcare needs in the form of free or low-cost medical, dental and optometry treatment and public hospital care. The Medicare system also means Australians overseas can access healthcare in countries where Australia has a reciprocal health agreement – for example, the United Kingdom.

However, cover under Medicare is limited. This leaves Australians and Australian permanent residents to choose their own private health services.

What does private health insurance cover?

Patients with private insurance get a number of benefits added to their Medicare entitlements such as those listed below:

Choice of hospital

Private insurance holders have a choice between two or three hospitals to be treated.

Choice of doctor

People with private insurance can be admitted to hospital as a private patient, giving them the right to choose their own doctor or specialist and have more discretion over when they enter hospital as opposed to a Medicare patient who is treated by a doctor or specialist nominated by the hospital.

Elective surgery

Private health insurance allows the patient to have elective surgery within weeks at a time and place of his or her choice compared to Medicare patients who are resigned to wait months or years to undergo surgery in the public hospitals.

Other Private Insurance benefits

? hospital expenses (theatre fees or accommodation) in a private hospital

  • major dental treatment
  • ambulance service
  • chiropractic treatment
  • home nursing
  • podiatry
  • physiotherapy, occupational, speech and eye therapy
  • glasses and contact lenses
  • use of hearing aids
  • gym membership cover
  • alternative therapies like remedial massage and acupuncture
  • medical and hospital expenses incurred overseas

The benefit of private health insurance is that it provides some health care trimmings such as the option to choose differing levels of cover, over and above the basics covered by Medicare, including (as mentioned above) greater choice of doctor, location and timing for treatments. Covered by premiums of varying benefits and costs made available to its members by registered health insurers, private health insurance helps to reduce or cover patients’ expenses on accommodation, theatre fees, drug costs, nursing care and doctors’ fees significantly especially at private hospitals.

Moreover, for both medical and pharmaceutical services, safety net arrangements exist to make sure patients who need a high level of treatment or medication do not incur significant out-of-pocket expenses. The safety net arrangement is the difference between the Medicare benefit involving 75% of schedule fee for services and procedures provided by the treating doctor and what the patient is actually charged. The benefit for private health insurance purchasers is that some or all of the outstanding balance may be covered.

Government Incentives

To make the cost of private health insurance premiums affordable to Australians, the Federal Government has introduced a rebate on private health insurance. The rebate means if one pays a $1000 premium on private health insurance, one will receive a portion back from the Federal Government. This also ensures that the Australian Government preserves Medicare as the universal safety net by assisting people facing high annual out-of-pocket health costs for medical services and pharmaceuticals. .

Private health insurers offer a wide range of services that vary in cost and type of cover depending on the client’s preferences and budget. It is important to compare different funds to determine what particular health insurance policy best suits your needs if you wish to purchase a private health insurance for better cover over and above the benefits that Medicare offers.


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