With over 30 funds in the Australian private health insurance marketplace offering a range of policy options. However, having so many products to choose from can easily lead to confusion and prevent or discourage people from taking out cover that could save them and their loved ones a substantial amount of money on medical care.
The goal of finder.com.au is to help clear up the confusion around health insurance and assist you in finding a policy that suits your needs and budget. Getting a quote is easy and free of charge, either online or from an experienced adviser. There is no obligation to buy.
What types of cover are available to Australians?
Guide to making an informed health insurance decision
Before you start comparing policies, you need to have an understanding of how health insurance plans work including the types of cover available, the factors that can raise or reduce your premiums and why it's worth considering in the first place.
This guide was created to address some of the most common questions about health insurance and to assist you in finding the right type of cover. If you are only interested in a specific portion of this guide simply use the handy navigation bar to jump straight to that section.
What are the benefits?
What type of health insurance do I need?
What affects the cost of a policy?
How do I compare health insurance?
One of the primary reasons for purchasing health insurance is to avoid costly out-of-pocket medical expenses for services that are either excluded or partially covered by Medicare. With health insurance you can also enjoy:
- The ability to choose the hospital where you are treated.
- The ability to choose the doctor or specialist who treats you.
- Access to a private or shared room in a private hospital.
- Reduced waiting times for procedures or surgery.
- Cover for expensive out-of-hospital medical services if you take out an extras policy.
- Exemption from Government tax penalties and premium loadings.
Cover can be tailored to suit any budget
The Australian Government supports health insurance
The Australian Government has introduced a number of schemes to encourage people who can afford private health care to do so, to take the burden off the public health system. Learn more about the three Government schemes below and discover how they may affect you.
The earlier you take out cover the better
The Lifetime Health Cover loading (LHC) is designed to encourage Australians to maintain health insurance from a young age by increasing your premiums by 2% for every year after your 31st birthday you don't have cover. Here are the key points about the LHC:
- You have until the 30 June following your 31st birthday to purchase health insurance.
- Your premiums will go up by 2% every year you don't have cover. This increase is capped at 70%. The loading will be removed once you've held cover for ten continuous years.
- To be exempt from the LHC you need a private health insurance policy that covers hospital
Avoiding the Medicare Levy Surcharge (MLS)
This is an additional tax ranging from 1% to 1.5% depending on how much you earn and is applied every year that you do not have an adequate health insurance policy. The good news is that avoiding this additional tax surcharge is easy. Here is what you need to know:
- The policy cover hospital cover and have a maximum excess of $500 for singles ($1,000 for families).
- Singles who earn under $90,000 ($180,000 for families) are exempt from the MLS.
- The income threshold increases by $1,500 for each child you have, meaning you can earn more before being penalised by the MLS if you have a larger family.
- Your income for MLS purposes includes your taxable income, fringe benefits and contributions to your superannuation minus any net investment losses.
How does the private health insurance rebate work?
One of the major benefits of having private health insurance is being able to claim the private health insurance rebate. Important points regarding this rebate include:
- The rebate is determined by your age, relationship status and income.
- The income amount used when calculating your rebate is not your taxable income but your income for Medicare Levy Surcharge purposes.
- Citizens and permanent residents who hold a hospital, extras or combined policy are eligible for this rebate.
- Overseas visitors or student health insurance holders cannot claim this rebate unless they are from a country that Australia has a Reciprocal Health Care Agreement with.
- Single parents, couples and those in de facto relationships are considered families for the purposes of calculating the rebate.
Current rebate levels
Rebate rates are subject to change based on the cost of living and the average health insurance premium amount. The rebate levels applicable from 1 April 2017 to 31 March 2018 are:
< Age 65
< Age 65
This all depends on the medical services and treatments you want cover for, as well as how much you want to spend. Make a selection below based on what medical services you want insurance for to view a detailed breakdown of the policy type.
Extras cover (also called general treatment or ancillary cover), is the policy type used to insure you for any medical treatments or services that are not performed at hospital. Extras cover is available in three policy levels:
- Comprehensive. Comprehensive cover pays a benefit towards the cost of the widest range of services such as major dental, orthodontics, optical, pharmacy prescriptions and psychology sessions. It also includes the highest benefit limits.
- Medium. Medium extras covers a large number of services but is likely to exclude more specialised treatments like speech therapy, audiology and orthotics. The annual benefit limits are lower than comprehensive extras cover but still substantial.
- Basic. While affordable basic extras is quite limited. It usually covers general and preventative dental, optical and physiotherapy at a minimum. Like basic hospital cover, this level of extras is more suited to the young and healthy.
Questions to ask before purchasing extras cover
Make sure you clarify these questions with your potential health fund before buying a policy, or you could end up not being covered for the services you require or paying more than you thought you would:
- Are there any lifetime benefit limits on services and if so, what is the amount? This is especially important if you are seeking cover for orthodontics.
- Are benefits paid as a set dollar amount or as a percentage of the fee charged for the service? What percentage of the fee is covered?
- If it is a percentage benefit does it cover any fee or is it capped by the health fund? For example, do you get 50% back on dental whether the fee is $200 or $600?
- Do any services need to registered with the appropriate state board, approved by the health fund or both in order to claim?
- Is emergency ambulance transport included the policy? Some health funds place this service in hospital cover, while others include it in both.
This insures you for the costs associated with being admitted to hospital such as accommodation, theatre fees and treatment costs. Hospital cover is typically available in three policy tiers and these tiers determine the amount of services you can claim for:
- Top. Covers you for all services that Medicare pays a benefit for but as a private patient in a private hospital. Additionally, you may be able to claim for specialised treatment such as spinal fusion, dialysis, pregnancy and cataract procedures.
- Medium. Offers cover for a substantial number of hospital treatments and allows you to be treated as a private patient in a private hospital. Pregnancy, maternity and other complex services, are often restricted or excluded from this level of cover.
- Basic. Provides the lowest level of cover for essential hospital services such as injury treatment and emergency ambulance transport. In some cases these policies will only allow you to be treated as a private patient in a public hospital.
Hospital cover for specific requirements or life stages
This chart can be used to give you an idea of what tier of hospital cover is ideal for specific ages, events or medical needs. Keep in mind this is a rough guide and it is always wise to research any policy you are interested in thoroughly to ensure you are covered.
Questions to ask before buying hospital cover
Before signing on the dotted line, be sure to clarify these details with the health fund by either checking the policy summary (available on most fund's websites) or by contacting the fund directly:
- Are any treatments restricted to public hospital benefits or excluded completely?
- Does the policy only cover you as a private patient in a public hospital?
- Does the health fund require you to be treated at a hospital approved by them?
- If there is a co-payment how many times does it have to be paid and how much is it?
- Will you incur any additional or hidden costs during your stay in hospital?
Hospital and extras cover
If you are looking for an all-around health insurance solution you can purchase a combined hospital and extras policy. Health funds usually offer this cover in two forms:
- Package. A pre-made combined policy with hospital and extras services chosen by the fund. They are typically designed to suit certain groups or lifestyles, with some common examples including family, young couple and fitness packages.
- Mix and match. This enables you to create your own custom hospital and extras policy. This can be useful as you can combine a basic level of hospital cover with a comprehensive level of extras cover and vice versa depending on your needs.
What is the advantage of combining cover?
- Convenience. Opting for pre-packaged cover can save you the trouble of sifting through hundreds of policies to find the right combination of hospital and extras. However, always be sure to double check that the services you need are included.
- Less maintenance. Having joint hospital and extras cover from the same fund means less hassle and paperwork than holding seperate policies with different health funds. It also makes applying for and purchasing the policy easier.
- Save money. Health funds may offer discounts, bonuses or extra benefits for purchasing a combined policy. These can include a premium reduction for a period of time, waiving of waiting periods or an increase in annual benefit limits on extras cover.
Health insurance for singles, couples, families and seniors
Does health insurance cover ambulance?
Many people are unaware that the costs associated with emergency ambulance transportation are not covered by the public health system in many states and territories, and the unexpected bill can be a nasty surprise with charges reaching as high as $5,000.
Thankfully, ambulance cover is offered by most Australian health funds, either as a stand alone policy or within hospital or extras cover. It also provide two tiers of protection which are:
- Comprehensive ambulance cover. This covers emergency air, road and sea transport, as well as extra features such as on-the-spot ambulance treatment, ambulance transportation between hospitals and paramedic attendance.
- Emergency only cover. This covers you for air and road ambulance transport due to an emergency, such as a major accident or heart attack.
Residents of Queensland or Tasmania are able to enjoy free ambulance cover provided by their respective State Governments. People residing elsewhere in Australia may be able to claim exemptions in some cases, or sign up to affordable ambulance subscription services.
Find out more about ambulance cover in your state or territory
Health insurance for people visiting Australia
Certain Australian visas require the applicant to take out adequate health insurance in order to get approval. Some popular ones that have this condition are the Temporary Work (Skilled) visa (subclass 457), Temporary Graduate visa (subclass 485) and all student visas.
The reason behind this is because only citizens or permanent residents (except in some cases) can access the public health system called Medicare, and therefore would have to pay all their medical expenses out of their own pocket, which could be especially debilitating for students.
However, people from countries that Australia has a Reciprocal Health Care Agreement with can access a level of subsidised treatment from Medicare. Be aware that the benefits are very limited, with anything but the most vital medical services likely not to be covered.
Reciprocal Health Care Agreement countries
Overseas visitors and students health insurance portals
Unlike many other types of insurance, premiums for health cover are not calculated based on risk factors such as age, lifestyle, gender or health status. However, there are still multiple facets that influence the cost of private health insurance premiums, including:
- The level of cover you select. A top hospital or comprehensive extras policy is going to cost more than a basic hospital or medium extras policy.
- The type of cover you select. A stand alone hospital or extras policy is generally going to cost less than taking out a combined policy.
- Your marital status. Singles policies are also going to attract lower premiums than couple or family policies, as there are less individuals to insure.
- Where you live. Health services can cost more or less in different states and territories, while the claims profile is also different and can therefore affect premium amounts.
- Your age when you are insured. If you take out cover after the 30th of June following your 31st birthday your premiums are raised by the Lifetime Health Cover loading.
- Your income. Your annual income determines whether or not you are eligible to receive the private health insurance rebate, or what the rebate percentage is.
How and when you pay your premiums matter
- Monthly payments. If you are young you may not be able to afford to pay your premiums in a lump sum, so a monthly payment plan can make health insurance accessible. Be aware that much like mobile phone plans, you do end up paying more in the long-term.
- Annual payments. Conversely, if you pay your premiums annually you pay less in total than if you were paying monthly. This lower cost is due to the reduced amount of administration required by the health fund.
- Direct debit discounts. For much the same reason, some health funds offer discounts if you set up payments via direct debit rather than credit card due to the reduced administrative costs.
Money saving tips
- Avoid extra tax and premium loadings. Get covered early and avoid the Medicare Levy Surcharge and the Lifetime Health Cover loading. Be sure to take advantage of the private health insurance rebate as well.
- Consider an excess. You can reduce your premium by opting to have an excess on your policy, meaning you have to pay a set fee for staying in a hospital before you can claim benefits from your health fund. Many health funds offer multiple excess options.
- Consider co-payments. Another way to lower your premium is by using a co-payment if it is available. This is a fee you pay for a set number of days before your health insurance covers you. Similar to excess except it is a charge per day rather than an upfront sum.
- Purchase public hospital cover. This is a sub-type of basic hospital policy that only insures you as a private patient in a public hospital. While cover is extremely limited it is also very affordable and may be preferable to using the public health system.
Now that you hopefully have an idea of what type of medical services and treatments you want cover for, you may want to dive right in and start comparing policies. However, there are still some final points to consider.
Because each health fund is different the policy prices, services covered, annual benefit limits, excess options, potential discounts and more can vary. This is why comparing is so important, as you could easily miss out on a better deal if you rush into a decision. With that in mind, here are some tips to follow when comparing your health insurance options:
- Think about your requirements. This may seem obvious, but tailoring your search around your budget and lifestyle is a good starting point for comparing. For example, if you are young and not wanting to spend much basic cover would be preferable.
- Paying for services you don't need. There is not much point paying more for a higher level of cover if you are unlikely to use any of the additional services. This is especially true with higher tiered extras policies, which can cover a large amount of treatments.
- Shop around. You can compare you options in many ways by visiting a health funds retail outlet, speaking with them on the phone or by searching online. Our health insurance engine also allows you to do detailed side-by-side comparisons of policies.
- Include all the costs. Remember to include not only the premium cost of the policy but also excess, co-payments and deductibles. Going just by premium price could send you over budget if you did not factor in additional fees when signing up.
- Know what the annual benefit limits are. Extras policies apply benefit limits to some, or all of the services included. This is the maximum dollar amount you can claim per year for a specific treatment. Some policies also have combined limits and sub-limits.
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