Basic Hospital is a good choice if you're young or you're a high income earner wanting to avoid the Medicare Levy Surcharge.
Basic Hospital is the entry-level form of private health insurance, which provides a limited range of cover for bare essential medical services at an affordable price.
Most insurers offer three levels of hospital cover: Basic, medium and top. The type of cover you opt for will depend on your budget and your personal health needs. If you have a family or you are older and more likely to require hospital services, you would be more suited to medium or top hospital cover.
Basic hospital cover is suited to young people who are fit and healthy and are unlikely to require hospital treatment in the foreseeable future. Cover may be restricted to treatment as a private patient in a public hospital and a wide range of treatments and conditions are normally excluded.
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While basic hospital cover usually includes a range of hospital treatments it also restricts or excludes a number of other treatments, which will vary with the insurer and policy. It will give you the option to choose your own doctor and possibly entitle you to a shared or private room, but if you're categorised as a private patient in a public hospital, you may be subject to a waiting list for treatment, as in the public health system.
A typical basic hospital cover will cover treatments such as:
- Emergency ambulance
- Accident related treatments
- Removal of tonsils, adenoids, appendix, kidney stones and gallstones
- Surgical treatment of a hernia
- Digestive disorder procedures e.g. bowel surgery
- Cancer related services e.g. chemotherapy
It will help you cover accommodation, theatre fees and doctors’ fees, but the benefits will be less than those paid under medium and top cover, so you may incur some out-of-pocket expenses for your treatment.
Exclusions applying to basic Hospital Insurance will vary between health funds, but treatments and services that are typically not covered include:
- Pregnancy and obstetrics
- Assisted reproductive services e.g. IVF
- Cataract and eye surgery
- Cardiac related services
- Non-cosmetic plastic surgery
- Gastric banding and obesity surgery
- Spinal fusion
- Hip, knee and joint replacements
- Renal dialysis
- Palliative care
- Psychiatric care
Other exclusions that will generally apply to all levels of hospital cover include:
- Cosmetic surgery that is not medically necessary
- Treatments supplied outside of Australia
- Long-stay accommodation (more than 35 days)
- Some high cost non-PBS medicines
- Treatments for which Medicare does not pay a benefit
- Prostheses costing more than the Government benefit limit
Basic hospital cover is best suited to those who don’t expect to need hospitalisation. It is taken out as a safety net for unforeseen events and mishaps therefore being a good choice for young people who are relatively healthy and not currently in need of hospital care.
They will often take basic hospital cover as part of a health insurance package, with a major part of their cover being made up of non-hospital related services like dental, optical and physiotherapy, which in the insurance world are commonly called extras.
Basic hospital cover is also taken out by those who wish to avoid government taxes and penalties, such as the:
- Medicare Levy Surcharge (MLS). High income earners (more than $90,000 for singles and $180,000 for families) must pay an extra 1-1.5% in tax unless they have adequate private hospital cover with an excess of no more than $500 for singles and $1000 for families.
- Lifetime Health Cover (LHC) loading. A 2% loading on your private health cover for every year after you turn 31 that you don’t have adequate private hospital cover.
There are a few important points to keep in mind if you are considering opting for basic hospital cover:
- What’s covered. While medium and top Hospital policies cover a range of treatments that are covered by Medicare but aren’t always listed in the policy, basic Hospital only covers exactly what’s listed.
- Gap payments. Because basic Hospital cover only offers limited benefits, make sure your insurer has a no gap agreement with your hospital and doctor, otherwise your out-of-pocket expenses could be exorbitant if your doctor charges more than the Medical Benefits Schedule (MBS) fee.
- Excesses and waiting periods. Basic Hospital policies often include an excess (payment you must make towards your treatment), so make sure you can afford this if you have to go to hospital. You will also have to serve a waiting period, which can be up to 12 months for some services, so don’t take out basic Hospital cover if you know you are going to need treatment in the near future.