Last Updated on 19 February 2020

The Dos and Don’ts of Private Health Insurance

Let’s face it: health insurance can be hard to get your head around. It’s this confusion that leaves many Australians with less-than-ideal cover—or worse—without cover at all. How do you get the best bang for your buck? When’s the right time to buy? What are the common mistakes Aussies make when it comes to health insurance, and how do you avoid them? We’ll cover these points so that you can be confident in your level of cover, while saving as much money as possible.

Don’t: Buy a Policy That is Too Basic

Many young, healthy people don’t see the need for comprehensive health cover. Instead, they feel a basic level of cover is adequate, as they don’t see themselves going to hospital anytime soon. Throw in the fact that you only need a basic Hospital policy to avoid the Medicare Levy Surcharge, and you can see why many people have cover that doesn’t actually offer them much protection. These are known as “junk” policies and can lead to big out-of-pocket costs if you need treatment that isn’t included on them.

Don’t: Forget About the Annual Premium Increases

Health funds in Australia up their premiums year-on-year. The increases kick in on April 1st each year, meaning you have a chance to prepare yourself before they hit by shopping around to find a good deal and pre-paying at that rate for 12 months to “lock in” before it goes up.

Don’t: Struggle in Silence

Confused about a specific aspect of health insurance? Our advisers are here to help! We can help you to make sense of things so that you don’t make a bad decision that leaves you paying over the odds.

Do: Act Before You’re 31

It’s cheaper to take out health insurance before your base date – July 1st after your 31st birthday. If you buy health insurance after this, Lifetime Health Cover  (LHC) loading fees come into play and this adds 2 per cent to your premiums for every year that you delayed (up to a maximum loading of 70 per cent).

Do: See If It’s More Cost Effective to Buy Cover

Depending on your income, the Medicare Levy Surcharge (MLS) can mean that it’s actually cheaper to buy Hospital cover rather than pay the MLS for not having it.

For singles, the MLS kicks in if you earn at least $90,001 and for families/couples, it’s $180, 001. The amount you’re charged depends on which income tier you fall into. Many higher earners find it more cost effective to buy eligible Hospital cover than pay the MLS.

Do: Be Honest About Your Health

Always tell your health fund about any pre-existing medical conditions, even if these haven’t been officially diagnosed. It’s likely that you’ll have to wait up to 12 months until your health fund will cover hospital treatment relating to the condition, but if you keep quiet, you may not be covered at all. This will leave you needing to pay out-of-pocket so it’s always best to be upfront!

Do: Compare Health Cover Regularly

Before you take out a particular policy, it’s worth shopping around and comparing other policies to see if you could get a better deal elsewhere on the same type of cover. In many cases, you can get equivalent cover for less or sometimes even superior cover for the same price just by switching health funds.

If you’re put off the idea of shopping around because you think it’s takes too much time and effort, let us do it for you. At, we compare quotes for a range of health funds to help you see how far your budget could go.

Frequently Asked Questions About Health Insurance

There are three types of health insurance in Australia. They are:

  • Hospital Cover
  • Extras Cover (also known as general or ancillary cover)
  • Ambulance Cover

Hospital cover can ensure any unexpected surgeries, treatments or hospital stays you may require will be covered. With appropriate cover you will have the flexibility to choose your own doctor and the option of receiving treatment in a private hospital.  Most hospital covers allow you to stay in a private room. One other perk is skipping the public hospital systems’ waiting list, which can be lengthy for non emergency treatment.

Extras cover pays benefits for a a range of services, often including treatments and procedures related to the fullowing:

  • Dental/oral health
  • Glasses and contact lenses
  • Podiatry
  • Physiotherapy
  • Psychulogy
  • Acupuncture
  • Remedial massage
  • Chiropractic
  • Hearing aids
  • Travel vaccinations

Ambulance cover, as the name suggests, will cover you should you require emergency ambulance transport. In an emergency, there is enough to worry about. Having the expenses covered for provides security and peace of mind. Many hospital covers include emergency ambulance transport If yours doesn’t, you will need to shop for this separately.

Life is unpredictable. You never know when you might need cover. No matter what life stage you’re in, there’s a policy out there for everyone. You can select as much or as little cover as you want, depending on your health needs and requirements. It’s a small price to pay for the peace of mind health cover provides.

There is no one answer here. Costs vary across providers and policy types. Just because a policy is cheap, that does not mean it is ‘value for money’ and vise versa. Make sure you check what’s included and excluded in a policy before signing up, as you want to purchase a policy that best fits your specific needs.

Premium: A premium is the price you pay for your insurance policy (it may be paid annually or on an ongoing basis).

Policy: An insurance plan. In other words, it is the type of insurance you choose to select.

Policy Holder: The owner, or ‘holder’ of a policy.

Claim: In the event that you require treatment for a service covered by your policy, you can lodge a claim for reimbursement of all or part of the cost of that treatment.. These days, most claims are submitted electronically by the health care provider (dentist, physio etc)

Lifetime Health Cover: Lifetime Health Cover was put in place to encourage young Australians to seek out and maintain ownership of private health insurance early in their lives. If you do not take out a policy before you turn 31, extra charges will be applied should you take out a policy at a later time.

This means you will pay a 2% loading on top of your premium for every year that passes after you turn 30. For example, if you take out a policy for the first time at age 32, you will be charged 4% of your premium as an extra, then at age 40, 20% and so on, up to a maximum loading of 70%.

The loading is payable for 10 consecutive years of cover - after which it is removed and you premiums will be reduced.

Pharmaceutical Benefits Scheme (PBS): Medicare offers assistance for Australians with many of their their prescribed medication costs through the PBS. This assistance is in the form of subsidies towards the cost of many medications. You can check if your prescribed medication is on the list of subsidised items here.

Medicare Levy Surcharge: The Medicare Levy Surcharge is an additional charge (tax) applied to single Australian taxpayers who earn over the income threshold of $90,000 per year, or families/couples who earn over $180,000 per year. This surcharge is only applied to those who choose not to have a private health insurance policy.

The surcharge is designed to reduce pressure on the public health system by encouraging those with higher incomes to invest in private health cover.

Private Health Insurance Rebate: The government’s Private Health Insurance rebate lowers premiums for most Australians with private health insurance Older Australians may enjoy an even higher rebate. Our calculator can help you estimate the Government health insurance rebate you may receive.


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