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Last Updated on 15 August 2018

Is Medicare Enough? Public vs. Private Health Care: Know Which is Right for You


Thinking about private health insurance but not sure where to start? Can you get by with Medicare or do you need further coverage? Above all, are the benefits really worth it?

The truth is, there is no one-size-fits-all answer because each person and family is different. But everyone’s health should be number one, which is why we’ve gathered all the facts and figures so that you can make a confident and informed decision based on your personal needs.

Key Points
  • There are three types of coverage available for private health insurance: hospital, ambulance and general cover.
  • The Medicare Levy Surcharge is an additional charge applied to single taxpayers who earn over the income threshold of $90,000 per year, and couples and families earning over $180,000 per year.
  • Lifetime Health Cover encourages Australians to take out a policy before they turn 31, in order to avoid an extra loading on their hospital cover premium.

The Medicare Language Simplified

Australia’s universal health care system, Medicare, is offered to all Australian citizens and permanent residents. It subsidises a range of healthcare services, prescription medications and medical procedures so that Australians can maintain their health with minimal out of pocket expenses.

But there’s more to the story than meets the eye. When deciding whether to stick with Medicare alone or take out private cover, it’s worth knowing a bit about the lingo. Have you considered:

  • The Medicare Levy Surcharge (MLS)
  • Lifetime Health Cover
  • Private Health Insurance Rebate
  • The Pharmaceutical Benefits Scheme (PBS)
The 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, who choose not to have a private health insurance (hospital) policy. This surcharge is only applied to those eligible if they do not 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.

Note that there is a difference between the Medicare Levy Surcharge and the Medicare Levy. Every taxpayer is charged the Medicare Levy, while those who earn above the threshold and don’t have an eligible health cover policy must also pay the Medicare Levy Surcharge.

Lifetime Health Cover

Lifetime Health Cover was put in place to encourage young Australians to seek out private health insurance early in their lives and maintain cover for their lifetime. If you do not take out an eligible hospital policy before you turn 31, extra charges will be applied when you take out a policy at a later time.

This means you will pay a 2% loading on top of your hospital cover 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% premium loading, then at age 40, 20% and so on, up to a maximum loading of 70%. Over the course of 10 years this is big bucks.

However, this premium loading is not forever. Once you’ve held hospital cover for 10 consecutive years the loading will be withdrawn.

Regardless of whether you think private health insurance is right for you or not, it’s a good idea to start looking into your options as soon as possible. This is especially true for anyone in their late twenties looking to avoid extra premiums kicking in. Get started by using our comparison tool to find a policy that suits you.

Private Health Insurance Rebate

If you are eligible for Medicare you may also be eligible to receive a rebate on your health insurance premium, paid by the Government.

The level of rebate is determined by the age of the oldest member covered by your health insurance policy as well as household income. People aged over 65 are eligible for a higher rebate.

The vast majority of people can receive a rebate of 20%-25% of the cost of their cover and access their rebate by registering for the rebate at the time they take out the insurance. It’s simply a matter of requesting that it is deducted from their premiums upfront. We quote prices assuming that this is your choice.

Alternatively, you can choose to claim the rebate if you are eligible when you complete your tax return each year.

Pharmaceutical Benefits Scheme

This is the last bit of lingo for now, we promise. Medicare’s Pharmaceutical Benefits Scheme is the Government’s way of assisting Australians with their prescribed medication costs. Click here to check whether your medication is included in the list of subsidised items.

So, you’re thinking of Private Health Insurance?

When comparing public and private healthcare, there’s no need to choose one or the other. When you take out a private health insurance policy, you can still use public hospitals and facilities. The difference? You’ll enjoy extra perks, greater flexibility, more choice and peace of mind.

You think it might be right for you but how do you know for sure? What exactly do you get with private health insurance? There are three main types of private health insurance:

Hospital Cover

Hospital cover, as you may expect, covers you for medical procedures and hospital stays. Should anything happen to you or a family member (touch wood) you’ll have the flexibility to choose a doctor you trust. Best of all, you can skip the public system’s lengthy waiting list by choosing to be admitted to a private hospital.

Sometimes you can be waiting on a list with a public hospital for months or even years for some non-emergency (but nonetheless significant) procedures. If you’ve been there and done that, you’ll be well aware it’s not a fun situation to be in.


Public Hospital Waiting List Calculator

Our Public Hospital Waiting List Calculator gives you an idea of how long you'll need to wait to have a procedure done through the public healthcare system. Data is sourced from the Australian Institute of Health and Welfare.

Admissions The number of people admitted to hospital for Cystoscopy in QLD in 2013. 4855
Days waited at 50th percentile The 'median' number of days waited for this procedure to be carried out. In other words, out of 100 people, 50 people will wait more days for this procedure, and 50 people will wait fewer days. 23
Days waited at 90th percentile 90% of people will have their procedure complete in this number of days or fewer. 98
Per cent waited more than 365 days The percentage of people waiting over a year for their procedure. 0.9

Ambulance Cover

Keep in mind that hospital cover does not always include ambulance cover. This means that in an emergency, if you require an ambulance, you will need to pay for it out of your own pocket. You never know when you or a family member might need it, so be sure to consider this type of coverage when taking out a new policy. Some health funds offer ambulance cover and in some states, the state ambulance authority might offer it.

General (Extras) Cover

General (or Extras) cover offers a range of additional health services that may end up saving you time, money and stress. And regardless, for peace of mind, a little extra cover goes a long way. Some of these extras include full or partial coverage of consultations, treatments and procedures associated with the following:

  • Dental/oral health
  • Hearing impairments
  • Optical glasses and contacts
  • Podiatry
  • Physiotherapy
  • Psychological services
  • Acupuncture and other alternative therapies

Optimise Your All-Round Health While Keeping Cash in Your Pocket

Chances are you already recognise the benefits of investing in Extras cover for your own personal needs. Let’s face it, not all of us are blessed with perfect genes. Some individuals and families will be able to take full advantage of the above services, like regular dental checkups, and even more if certain health issues run in the family, such as vision or hearing impairments. If the whole family needs glasses, for example, or if you enjoy updating your frames every year or so, there’s likely a policy out there that will save you money already.

But the otherwise healthy general public, including those who are blessed with above-average genes (we’re all envious), can make good use of these services to optimise their health, prevent illness and therefore save money in the long run. But how?

A Healthy Mind = A Healthy Body

In certain circumstances, Medicare provides cover for a limited number of psychology consultations.  However, without private health cover, access to psychology services such as counselling can be expensive. For many, it’s simply unaffordable. The importance of strengthening and training the muscles of our mind, as we would the muscles of our body, is often underestimated. So is the power of a listening ear.

Stress-related medical appointments are on the increase and, ironically, 40% of Australians are stressed by the need to stay healthy. Research has found that prolonged stress can lead to burnout, exhaustion, tissue damage, immune system breakdown, obesity, heart problems and inflammation.

And that’s just the beginning. It’s crucial to address stress and any other mental health concerns before they spiral out of hand. This way, you’ll avoid expensive and potentially life threatening health issues down the track.

The Hidden Health Gem: Remedial Massage

You may find that remedial massage is beneficial for your health. If so, you’ll want to drop whatever you’re doing and go get a massage now. Studies suggest some of the health benefits of remedial massage may include:

  • A boost in immunity
  • Stress reduction
  • Increase in joint mobility
  • Greater alertness
  • Improved posture
  • Improved skin tone
  • Relief from insomnia and anxiety
  • Relief from back pain and arthritis

Another Opportunity to Save with Private Health Insurance

What made private health funds even more affordable in recent years? The Government’s Private Health Insurance Rebate. Great news for your wallet, the rebate lowers health insurance costs for most Australians with private cover, and older Australians may enjoy even higher rebates.


Depending on your age, family status, and income level, you may be entitled to a Government Rebate on your private health insurance policy. Use the sliders and dropdown menu below to calculate your rebate.






Your Rebate is 0
Singles < $90,000 $90,001 - 105,000 $105,001 - 140,000 > $140,001
Families < $180,000 $180,001 - 210,000 $210,001 - 280,000 > $280,001
Rebate
Base Tier Tier 1 Tier 2 Tier 3
Age < 65 25.415% 16.943% 8.471% 0%
Age 65-69 29.651% 21.180% 12.707% 0%
Age 70+ 33.887% 25.415% 16.943% 0%

Medicare offers access to public hospitals with no out-of-pocket costs, however, for non-emergency situations there is less flexibility in choice of doctor(s), the hospital you attend and when you can receive your hospital treatment/care. Importantly, most people can’t claim for extras such as dental, optical and physiotherapy services from Medicare and so may incur significant out-of-pocket costs without private Extras insurance.

There’s a lot of information out there but, with this quick guide and our handy tools, you’ll be well on your way to making an informed decision based on your needs and those of your family.

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.

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


Still have questions? Let's talk!

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Trauma
March 18, 2018 at 5:30 pm

Good evening. Many thanks 🙂 Really enjoyed reading this page.

    Emma Deriu
    July 19, 2018 at 1:53 am

    Thanks for the feedback. Glad to hear it!

Therese Westray
June 13, 2018 at 1:16 am

Do you mind if I quote a couple of your articles as long as I provide credit and sources back to your blog? My blog is in the exact same area of interest as yours and my users would truly benefit from a lot of the information you present here. Please let me know if this ok with you. Thanks a lot!

    Emma Deriu
    June 15, 2018 at 2:37 am

    Hi Therese, certainly. Be sure to let us know when you do, so we can check out the articles on your blog. Have a great day.

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