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What does private health insurance cover that Medicare doesn't?

Private health insurance gives you access to similar hospital treatments to what's covered by Medicare – but you get other benefits like your choice of doctor, private rooms, and wait times are significantly shorter. The amount you pay for health insurance depends on the tier of hospital cover you have.

If you're treated as a private patient in a hospital (either private or public), Medicare will cover 75% of the Medicare Benefits Schedule (MBS) fee for services that are listed on the MBS.

Your health insurance typically covers the other 25%, plus accommodation costs and theatre fees, depending on your level of cover and provided you have served relevant waiting periods. You will often be out of pocket for costs like the excess, and the gap between the MBS fee and the total cost of your procedure.

Public vs private health insurance comparison

Not sure if private health insurance is worth it? Here are some key differences between the public and private healthcare systems in Australia:

Pros and cons of health insurance

Our expert says

"Private hospital insurance covers all the same treatments as Medicare. The difference lies in the standard of care. It's kind of like choosing between a dependable budget car or something flashier. Both will get you from A to B but one is a faster and nicer place to be."

Gary Ross Hunter

Journalist

Expert insight

"I've always been a big proponent of private health cover – and geez I was glad I had it when I was diagnosed with breast cancer in 2021. With any unexpected serious illness, the type of treatment – and crucially the speed of it – could make all the difference."

Nicole Pedersen-McKinnon

Freelance finance journalist

Our expert says

"Health insurance is heavily regulated in Australia, which makes it easier to compare health insurance policies like-for-like. That said, funds still have different products and prices, so it's still important to make sure you're getting the right cover for you and your family."

Tim Bennett

Insurance expert

Learn more about private health insurance

• Hospital Cover: Hospital cover helps pay for a range of hospital treatments in a private hospital. This can include joint reconstructions, hernia operations and childbirth.
• Extras Cover: Extras cover helps towards out-of-hospital healthcare. This includes trips to the dentist, eye care by an optometrist, physiotherapists, natural therapies and more. As of March 2025, 55.1% of Australians have extras cover.
• Health insurance rebate: The private health insurance rebate makes health insurance cheaper for most people. Your exact rebate is determined by your age and income.
• Private health and tax: Whether you're a high earner or turning 30, there are a few things you need to know about private health insurance at tax time.
• Switching health funds: Switching health funds is quick and easy. You can transfer your waiting periods, while potentially saving money with new sign-up deals.

I've saved $800 by switching

"Changing health insurance had been on my to-do list for ages, but I found it very confusing. Eventually I compared and took advantage of sign-up offers –by switching health insurers, I've saved around $800 so far."

Alex Holderness

Head of publishing

Watch & learn more about health insurance

Frequently asked questions about health insurance

• What is private health insurance?

  Private health insurance can help you cover the cost of medical care in a private hospital (hospital cover) and help pay for out-of-hospital medical costs that aren't covered under Medicare (extras cover). Most private health insurance policies also cover the cost of emergency ambulance transport, which isn't covered by Medicare in most states.

• How does private health insurance work?

  When you take out a private health policy, you have the option of going to a public or private hospital. If you go to a private hospital, or if you're treated as a private patient in a public hospital, your health fund will help cover the cost of care. The main advantages of using the private system are that you can choose your own doctor, get access to improved facilities like a private room, and have access to shorter waiting lists for important surgery.

• What are the hospital cover tiers?

  Hospital cover is available in the following tiers; basic, bronze, silver and gold. Each covers a different list of treatments with gold being the most comprehensive hospital policy avaialable.

• How does private hospital cover work?

  In the public system, prices are set according to the Medicare Benefits Schedule (MBS) and Medicare pays 100% of the cost. You won't be left out of pocket, but you won't get your choice of hospital, doctor or appointment time either. In the private system, prices are usually higher than those listed in the Medicare Benefits Schedule and Medicare will only pay 75% of what it would have, had you gone public. Your private health insurance covers at least the remaining 25%. If your private doctor charges more than a doctor in the public system, which is usually the case, you'll have to cover the extra expense.
  Remember, with hospital insurance, you'll also have to serve waiting periods. For example, if you have a pre-existing medical condition, you'll have to hold your policy for at least a year before your cover would chip in towards the cost of treatment.

• How does private extras cover work?

  Extras insurance helps towards non-hospital-related healthcare, such as dental work, new glasses and physiotherapy appointments. Usually, an extras policy will pay a percentage of your bill – this could be anywhere from 50% to 90%. In other cases, they will cover the whole bill, up to a certain amount. Extras policies also have waiting periods. For example, you often need to hold a policy for a year before you can claim for orthodontics.

• What is a waiting period?

  Waiting periods apply to both extras and hospital policies - you'll need to serve these before claiming a benefit. Some extras policies let you skip some waiting periods.

• What are extras health insurance annual limits?

  Extras benefit limits place a cap on the amount you can claim. They typically reset every 12 months. A higher limit may mean a more expensive policy, but not always.

• What impacts the cost of health insurance?

  Health insurance is community rated, which means you don't have to pay more for pre-existing conditions and the price you pay isn't impacted by your age.

  However, here are a few things that can impact your quote:

  • Your excess or co-payment. When you take out insurance, you can agree to take some responsibility for the health cover costs in return for lower premiums – this is your excess. You only pay it if you go to hospital. The higher your excess, the lower your premiums will be.
  • Your location. If you live in a regional area of Australia, your insurance might cost you more due to poorer access to health facilities as well as potential travel and accommodation expenses.
  • Which fund you choose. Some funds and policies are better value than others, charging less for similar cover. If you take the time to compare health insurance, you can find the cheapest health cover for your needs.

• How much does private health insurance cost?

  The cost of private health insurance varies and depends mostly on what level of cover you choose, your age, income and lifestyle. See the health insurance tiers and average costs.

• Do non-residents need health insurance in Australia?

  People from countries that Australia has a Reciprocal Health Care Agreement (RHCA) with can access some treatment from Medicare. If you don't have an RHCA, you'll need Overseas Visitor Health Cover. As of 2021, Australia has an RHCA with Belgium, Finland, Italy, Malta, the Netherlands, Norway, New Zealand, Ireland, Slovenia, Sweden and the UK. Traveling to Australia without coverage could result in huge medical bills if you are sick or injured.

• How do I find health insurance for specific treatments?

  Thanks to the most recent PHI reforms, which have introduced Basic, Bronze, Silver and Gold tier policies, finding cover for a specific service is easier than ever. Every tier is required to provide cover for specific services so you can check out what is included in each and select the one that covers the treatment you require. Some services often performed out of hospital are only covered when performed in a hospital, like the cost of MRI scans. Our guides for specific treatments have more details:

  • Drug and alcohol treatments
  • Psychiatric care
  • Psychology
  • Dental insurance
  • Major dental
  • Dental and oral surgery
  • No gap dental
  • Optical
  • Eye care
  • No gap optical
  • Major eye surgery
  • Physiotherapy

  • Gym benefits
  • Pregnancy
  • IVF and assisted reproductive services
  • Baby health insurance
  • Cosmetic surgery
  • Weight loss surgery
  • MRI scans
  • Joint replacement
  • Sterilisation
  • Breast reduction

  • Sex reassignment surgery
  • Pathology tests
  • Elective surgery
  • Acupuncture
  • Appendicitis
  • Remedial massage
  • Blood pressure monitors
  • Joint fluid replacement injections

  • Orthotics
  • Cancer
  • Prostheses
  • Orthodontic treatment
  • Insulin pumps and diabetes
  • Naturopathy
  • Endodontic services
  • Natural therapies
  • Palliative care

• What happens if I cancel health insurance?

  If you cancel your health insurance, you won't be entitled to the services you would have otherwise had access to. This means you would have to rely on the medical services provided by Medicare. Note that cancelling your health insurance may also have tax implications, depending on your circumstances.

• Do I have to re-serve waiting periods if I switch funds?

  When you switch health funds you generally won't have to re-serve waiting periods if you had similar or equivalent cover with another provider. However, if you're upgrading or didn't previously have cover for a service that your new policy includes, you will probably have to serve a waiting period.

• Is health insurance tax-deductible?

  No, health insurance is not tax-deductible, but it can help you make some savings, including on tax. For example, the Medicare Levy Surcharge (MLS) is a rebate based on your and your family's income and any dependents. Depending on your income, you may be entitled to a private health insurance offset at tax time or reduced insurance premiums.

• What health insurance do I need to avoid the Medicare Levy Surcharge (MLS)?

  Any level of hospital cover health insurance will let you avoid the MLS. However, extras cover alone will not exempt you from paying the MLS.

Written by

Tim Bennett

Insurance expert

A seasoned journalist with over 10 years of experience in news, politics and finance reporting, Tim has previously held roles at the ABC, SBS and Fairfax Media. Tim’s expert insights have been quoted in The Australian, The Daily Telegraph, The Courier Mail and more. He regularly appears on TV and radio, and has been interviewed on 7 News, Sunrise, SBS News, ABC Local, 3AW and 5AA. Tim is passionate about simplifying complex insurance topics for Australian consumers. He holds a Bachelor of Arts (Politics) from Macquarie University and a Tier 1 General Insurance (General Advice) certification, which meets the requirements of ASIC Regulatory Guide 146 (RG146). If you’re interested in a media interview with Tim, please reach out to our PR team at aupr@finder.com. See full bio

Tim's expertise

Tim has written 154 Finder guides across topics including:

• Personal finance
• Financial comparison
• Health insurance
• General insurance
• Life insurance