What does health insurance cover?
Private health insurance helps you pay for hospital and medical costs that Medicare does not fully cover, and in many cases it lets you choose to be treated sooner as a private patient. In Australia, private health insurance is community rated. That means everyone is entitled to buy the same product at the same price — apart from Lifetime Health Cover loading and age-based discounts — and is guaranteed the right to renew. An insurer cannot refuse to cover you, and cannot refuse to sell you a policy you want to buy.
The choice of cover matters, and it rarely sits in isolation. Health cover is often considered alongside the other products that protect a household when illness, loss of income, total and permanent disability, or death disrupts a plan. That wider view becomes more important the more you carry — a family, a mortgage, and the financial obligations that come with both. Whether a particular policy or product is right for your circumstances is a question for your licensed financial adviser; what follows is general information to help you frame the conversation.
Private health cover versus Medicare
Private cover is built to sit over the top of Medicare, not replace it. The way the two interact differs across four main areas.
- Hospital cover. This covers you as a private patient in hospital — your choice of doctor where available, your choice of hospital, and shorter waiting times for elective procedures than the public system typically offers.
- Medical services and general treatment. General treatment (sometimes called ancillary or extras) covers services Medicare does not, such as dental, physiotherapy, optical and similar care.
- Pharmaceutical cover. Some policies contribute toward prescription costs beyond what the Pharmaceutical Benefits Scheme covers.
- Ambulance cover. Ambulance transport is not universally covered by Medicare, and the rules vary by state, so it is often handled either within a policy or as standalone cover.
Detailed, current coverage tables for each of these areas are published on the Government's PrivateHealth.gov.au website, which is the authoritative source for what each tier includes.
Types of private health cover
There are three primary types of private health cover:
- Hospital policies. Cover you when you go to hospital.
- General treatment cover. Covers ancillary treatment such as dental and physiotherapy.
- Ambulance policies. Cover you for ambulance transport.
Most insurers also offer combined policies that package hospital and general treatment together, or you can buy separate hospital and general treatment cover and assemble the mix that fits your circumstances.
Health cover considerations
When weighing up an appropriate policy, a few structural points tend to matter most:
- Waiting periods. If you are taking out cover for the first time, you serve a waiting period before benefits apply. During that period the relevant benefits are not payable. Waiting periods exist to keep cover sustainable for everyone in the community-rated pool.
- What isn't covered. Decide first what cover you actually need, then confirm the policy delivers it. Just as importantly, understand what a policy excludes — out-of-pocket expenses are common for some types of treatment, and exclusions are where surprises live.
- Changing needs. Review your cover periodically. What you need shifts with age and with financial obligations such as a growing family, and a policy that fit five years ago may no longer match where you are now.
Government surcharges and incentives
The Australian Government offers the Private Health Insurance Rebate, and most consumers are eligible for some level of it. An age-based discount applies for people aged 18 to 29, which can reduce premiums meaningfully over a lifetime. Working the other way, the Lifetime Health Cover (LHC) loading applies if you take out hospital cover after the 1 July following your 31st birthday — the loading increases for each year you are over 30, so the timing of when you first take cover carries a long tail. The Government publishes a range of resources on the types of private health cover and the limits of universal Medicare.
Health cover is one part of how a household protects its financial position, and the right structure depends on your full circumstances. Suitability of any health, life or income protection product is a matter for your licensed financial adviser, and the rebate, surcharge and Lifetime Health Cover settings above are tax matters to confirm with your accountant; AeFin's role is the credit and structuring side. If you would like to map how cover and obligations sit alongside a property or lending plan, book a strategy session.
General information only — not personal financial product, tax or credit advice. Health insurance product suitability should be confirmed with your licensed financial adviser, and any rebate, surcharge or Lifetime Health Cover tax position with your accountant. AeFin is an Australian Credit Representative (CR 464548) of Finsure (ACL 384704).