Unsure about what health insurance can offer you? All the benefits of private health cover explained.
Private health insurance is all about peace of mind. It allows you to access the medical treatment you need whenever you need it, giving you the freedom to choose your own doctor and helping you to avoid out-of-pocket medical costs.
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Contents of this article
- What are the general advantages of having health insurance?
- What are the specific benefits of each health insurance type?
- Do health insurers offer policies for different life stages?
Some of the main advantages that private health cover offers to all Australians include:
- Control. If you want to choose the hospital where you’re treated and the doctor who treats you, private health insurance gives you that power.
- Avoid waiting lists. Private health insurance allows you to gain quicker access to treatment as a private patient and avoid lengthy waiting lists in the public hospital system.
- Covers what Medicare doesn’t. There are a wide range of out-of-hospital health care expenses that Medicare doesn’t cover, such as optical, dental and physio visits. A private health insurance extras policy allows you to take out cover for these services.
- Tax benefits. If you have private health insurance cover in place, you can avoid paying more tax due to the Medicare Levy Surcharge if you earn over $90,000 p.a. as a single.
- Peace of mind. Taking out private health insurance gives you the financial protection you need to cover unexpected medical costs, ensuring that you don’t end up significantly out of pocket if disaster strikes.
There are three types of health insurance cover available in Australia with each offering their own unique benefits:
- Private hospital cover. This provides cover for the cost of a wide range of in-hospital procedures, including cover for hospital accommodation, theatre fees, intensive care, doctor’s fees and in-hospital pharmaceuticals. Hospital cover allows you to choose where you will be treated and select your own doctor, ensuring that you can avoid public hospital waiting lists and receive treatment when you need it. And if your treating doctor charges more for your procedure than the Medicare Benefits Schedule (MBS) fee, private hospital insurance will cover “the gap”.
- Extras cover. Also called general treatment cover, this health insurance type is designed to help you cover the costs of a wide range of out-of-hospital health care services that Medicare doesn’t cover. This includes optical treatment and eyewear, general and major dental and orthodontics, physio and chiropractic services, remedial massage and much more. High-level extras cover policies also include cover for a range of natural therapies, podiatry and even hearing aids, helping you access a broader range of health care services.
- Ambulance cover. An essential consideration given that Medicare does not cover the cost of ambulance treatment and transportation for Australians. If you take out a policy that provides ambulance cover, you can ensure that you won’t be faced with an expensive bill for ambulance services following an emergency.
As your life changes, so does your health insurance needs. It's for this reason that Australian private health funds design their policies to suit the needs of customers at different life stages. Some common types include:
- Young singles
- Single parent families
- Empty nesters
The Australian Government wants you to take out health insurance because it reduces the strain on the public healthcare system. To encourage more people to take out health insurance, the government introduced a range of incentives and penalties which are:
- Lifetime Health Cover. Under this scheme, if you don’t take out an adequate level of private hospital cover before your 31st birthday, a premium loading will apply whenever you do take out cover. The longer you wait to take out a policy, the more your health insurance will cost.
- Private health insurance rebate. This incentive helps reduce the cost of your health insurance premiums.
- Medicare Levy Surcharge. Penalises with additional taxation for not being covered by private health insurance. The higher your income, the higher the surcharge.
By taking out health insurance cover as soon as possible, you can avoid paying extra tax and claim a rebate to make your premiums more affordable.
Even if you take out a high-level hospital cover policy, there are certain services and treatments that cannot be covered by health insurance. On some policies these services receive restricted cover, which means only minimum benefits are paid, and on others they may be excluded altogether. The most commonly excluded or restricted services and treatments include:
- Cardiac and cardiac-related procedures (heart surgery)
- Cataract and eye lens procedures (major eye surgery)
- Assisted reproductive services (IVF)
- Joint replacements
- Rehabilitation and psychiatric services
- Plastic or reconstructive surgery
- Any services for which Medicare does not pay a benefit
- Long-stay patients (if you are hospitalised for more than 35 days)
- Cosmetic surgery that is not medically necessary
- Some high-cost medications
Check the fine print of your policy to make sure you know which treatments and services are covered, and to what level.