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Last Updated on 21 August 2019

Private Health Insurance: How It Works

Through Medicare, Australians have access to a quality healthcare system that is affordable but you can choose to supplement this with private health insurance that offers a wider range of benefits such as cover for private patient hospital costs such as theatre and ambulance fees, shorter waiting times, greater control regarding when and where you’re treated and access to treatment options that aren’t covered on Medicare.

What is covered

There are two main types of private health insurance: hospital policies that cover hospital visits, and general treatments that cover ancillary treatments that aren’t on offer through Medicare such as treatments delivered by a chiropractor or physiotherapist, and dental and optical costs. It’s common for private health insurance policies to cover both to some degree.

Treatments that are covered by the Medicare Benefits Scheme (MBS) are often covered by private health insurance policies but this may not be the case for treatments that aren’t included on Medicare.

Hospital Cover

As a private patient, you can be treated in both private and public hospitals. Whereas Medicare restricts you to being treated by a doctor allocated to you by the public hospital in question, being a private patient allows you to have a greater say in where you’re treated and gives the option of being treated by your own doctor. As a private patient, Medicare will cover 75% of Medicare Benefit Scheme (MBS) fees for your associated medical costs. The remaining 25% is payable by you, although this may be covered by your private health insurance depending on the level of cover that you’ve got.

General Treatment/Ancillary Cover

For visits to a doctor outside of a hospital setting, Medicare covers you for 85% of the costs for a specialist) and 100% of the costs for a GP. However, Medicare doesn’t cover you for all situations, which is where private health insurance comes into its own. With the right type of private cover, you can arrange to be treated for dental treatment and examinations, physiotherapy, occupational therapy, chiropractic treatments, acupuncture treatments, optical costs (such as glasses or contact lenses).

Pharmaceutical Cover

Under the Pharmaceutical Benefits Scheme, you don’t have to pay the full costs for most prescription medication bought in a pharmacy as long as you show your Medicare card. Not all prescription medication is covered, but you can arrange private health insurance for some of those that aren’t on the list. In most cases, you’ll have to pay a co-contribution and are limited on how much you can claim for.

Ambulance Cover

Medicare doesn’t cover ambulance transport but if you live in certain states, you can still get free ambulance cover. The State Government provides free ambulance services in Queensland and Tasmania, while free ambulance cover is on offer in New South Wales and Australian Capital Territory if you’re a pensioner or are on low income. If these scenarios don’t apply to you, private health insurance can provide ambulance cover.

Waiting Periods

When you first take out private health insurance or upgrade your coverage levels on an existing policy, you won’t necessarily be able to use the benefits straight away. If you’re involved in an accident that requires medical treatment, waiting periods don’t usually apply but in most other situations, you can expect to wait before you can access the benefits of your cover.

Pre-existing conditions

Your health fund can impose a waiting time of up to 12 months on treatment for pre-existing health conditions. Generally speaking, you’re deemed to have a pre-existing condition if you’ve been displaying symptoms for 6 months prior to taking out or upgrading a private health insurance policy, even if you hadn’t consulted a doctor about it.


You may also have to wait 12 months before accessing pregnancy-related benefits. If you’re looking to start a family, you’re usually advised to arrange private healthcare cover some time beforehand to ensure that you’ll be able to access the benefits of your cover. Not all hospitals cover pregnancy-related treatments and in some cases, you’ll only be able to receive treatment in a public hospital.

Transferring to another health fund

If you switch health funds without upgrading your coverage levels, you shouldn’t have to serve out another waiting period.

Cancelling a policy

If you opt to ditch your health fund policy altogether, upfront contributions should be refunded back to you minus an administration charge.

Disclaimer: The above information is correct and current at the time of publication

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