Last Updated on 26 February 2020

Private Health Insurance Provides Extra Protection For Australians


Image by Elena Pérez Melgarejo

Summary of Medicare Benefits

Health insurance is available to all Australians through Medicare, the government’s public health system that provides free treatment in hospitals and government-subsidized treatment for out-of-hospital treatment. This public insurance offers benefits, particularly cost savings, but it doesn’t cover every possibility you or your family may experience throughout your lives. That’s why purchasing private insurance is a very good idea.

The typical expenses Medicare covers include:

  • 100 percent of your in-hospital costs
  • 75 percent of your General Practitioner’s costs
  • 85 percent of any specialists’ costs
  • Some tests, including x-rays, examinations and pathology tests
  • Prescription medicines and some immunizations
  • Other subsidized tests for which you may be eligible

Summary of Private Health Insurance Benefits

Private health insurance covers a myriad of expenses not covered under Medicare. While there is an extra cost associated with private health insurance, there’s a very high likelihood that you will need at least one procedure, piece of equipment or test during your lifetime that you’ll have to pay for out of your pocket if you choose to be covered by Medicare only. Most private health insurance offers both hospital and ancillary coverage, which most people purchase in a combination policy.

Hospital Coverage

Private health insurance offers hospital costs coverage in three tiers:

  • Top Private Hospital Cover covers all services for which Medicare pays benefits
  • Medium Private Hospital Cover excludes or restricts some services, such as pregnancy and birth related services, cataract and eye lens procedures, joint, hip and knee replacements, dialysis for chronic renal failure and sterilization services
  • Basic Private Hospital Cover excludes or restricts coverage of services such as cardiac and cardiac related services, non-cosmetic plastic surgery, rehabilitation, psychiatric services, and palliative care

Private health insurance hospital coverage also pays for accommodation costs and operating theater expenses.

Most private health insurance plans will expect you to pay an excess, or a co-payment, when you receive treatment. The amount depends on how much you pay in premiums. An excess is charged when your hospital expenses exceed the amount your private health insurance covers. You pay the difference. A co-payment is a set amount you agree to pay for each day you’re treated in the hospital.

Ancillary coverage

Some of the ancillary expenses covered by private health insurance can include:

  • Eye care expenses such as glasses or contact lenses and eye therapy
  • Hearing aids and other types of hearing appliances
  • Dental exams and treatment that isn’t part of of the Chronic Disease Management (CDM) program
  • Therapies, including physiotherapy, speech therapy, chiropractic services, podiatry services and psychological therapy unless it’s specifically included in the CDM program
  • Private hospital costs
  • Ambulance services
  • Home nursing
  • Prostheses costs, except for those covered by the External Breast Prostheses Reimbursement Program
  • Medical costs that someone else is responsible for paying, such as an employer or a compensation insurer
  • Medicines that aren’t covered by the Pharmaceutical Benefits Scheme
  • Medical services that aren’t clinically necessary, such as laser eye surgery, and cosmetic surgery

There are three basic levels of ancillary or general health coverage:

  • Comprehensive Cover provides for general and major dental expenses, endodontic and orthodontic expenses, optical services, certain pharmaceuticals, physiotherapy, podiatry and psychology
  • Medium Cover includes general, major and endodontic dental coverage, as well as expenses for any of five of the following services: orthodontic, optical, certain pharmaceuticals, physiotherapy, chiropractic, podiatry, psychology, and hearing Aids services
  • Basic Cover is the least expensive of the private health insurance ancillary policies

Extra Benefits of Private Health Insurance

In addition to coverage of current medical expenses, you have the option through private health insurance of pre-paying for hospital coverage you may need years in the future. Lifetime Health Cover is a government initiative begun in 2000 that encourages you to take out hospital insurance at a young age and to maintain that coverage.

The younger you are, the less expensive it is to pre-pay, or load the hospital cover. If you purchase hospital insurance by July 1 following your 31st birthday, you won’t have to pay a loading charge. If you are older than 31 when you purchase the coverage, you’ll be required to pay a percentage of the coverage you purchase, depending on your age.

The Private Health Insurance Rebate offers another financial incentive for purchasing private health insurance. The government provides subsidizes both private and ancillary coverage for between 30 and 40 percent. The government has also developed a negative incentive for people who don’t purchase private health insurance.

If your taxable income is above specified levels, you’ll be required to pay the Medicare Levy Surcharge, a percentage levy above the standard Medicare Levy. The Medicare Levy Surcharge is assessed whether or not you have private hospital costs you must pay out of your pocket.

Finally, with private health insurance you can avoid long waits to see doctors that are part of the public hospital program, or to schedule non-emergency procedures. In addition, you’ll be able to choose the doctors and hospitals you prefer.

So it’s easy to see that purchasing private health insurance is a good idea to help you manage your health care expenses. You’ll have peace of mind, knowing that you and your family will receive the health care you prefer.


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