What are restricted services in health insurance?

Restricted services are treatments where your insurer only pays a limited portion of the costs, leading to potential out-of-pocket expenses. Unlike covered services, which are fully paid, or excluded services, which receive no payment, restricted services offer partial coverage. This often applies to rehabilitation, psychiatric services and palliative care, which must be offered as restricted services in all hospital policies.

How do restricted services affect my out-of-pocket costs?

Restricted services typically result in higher out-of-pocket expenses because your insurer only covers a portion of the treatment cost. This is especially true in private hospitals. To avoid unexpected bills, it's crucial to confirm coverage details with your insurer in writing before receiving treatment, as you will be responsible for the remaining balance.

What are restricted insurers?

Restricted insurers are those that provide cover to members that belong to a specific or industry, such as current or former members of the ADF, members of Australia's police & emergency services or education union members. In some cases, family members may also be covered.

Restricted treatments and health insurance

Restricted services mean you will only be partially covered.
If you have restricted cover for a treatment, you may face really high out of pocket costs from private treatment.
All hospital policies must offer restricted cover for rehabilitation, hospital psychiatric services and palliative care.

What is a restricted service?

In short, a restricted service is only partially covered - it's that simple. However, there's very little transparency from either health funds or the commonwealth government on what that means, which makes it super confusing.

Here's the short version: If a service only has 'restricted' cover, you should consider it to not be covered. That approach is overly cautious, but it's going to stop you from getting hit with massive out of pocket costs.

Restricted, covered and excluded services

Here's a bit more detail on the difference ways a health fund can cover a treatment.

Restricted service

Restricted services are treatments that your health insurer will over pay a limited benefit towards. This means you'll likely have out of pocket expenses. Since the 2019 private health insurance reforms, all health funds must offer restricted cover for rehabilitation, hospital psychiatric services and palliative care.

Covered service

With a covered services, your health insurer will pay the full benefit towards the cost of treatment – so long as it's listed on your hospital cover policy. This means that when you're treated as a private patient in a private hospital, medicare will generally pay 75% of the MBS costs and your private health insurance will pay the remaining 25%.

Excluded service

Excluded services are treatments that your health insurer will pay no benefit towards. For example, if you hold a basic or bronze level of cover, you probably won't be covered for pregnancy and birth, so you'll have significant out of pocket expenses.

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What types of procedures are restricted?

Any hospital treatment can have restricted cover on a particular policy, However, the most common restricted services include:

Rehabilitation
Hospital psychiatric services
Palliative care

These 3 treatments have to have restricted treatment on all hospital insurance policies. In most cases, you won't find them fully covered until you get gold level hospital cover.

How can restrictions treatments affect you?

Restricted services generally mean you'll have significantly larger out of pocket expenses. This is because you won't be covered for the full cost of treatment. This is especially the case in a private hospital, as opposed to being a private patient in a public hospital, which could be a little less expensive.

The most important thing you can do is to contact your health fund before you go into hospital, and confirm exactly what they will cover. Get them to give that information to you in writing - that protects you from the health fund trying to pull a fast one on you after your treatment.

Frequently asked questions

Restricted services are treatments where your insurer only pays a limited portion of the costs, leading to potential out-of-pocket expenses. Unlike covered services, which are fully paid, or excluded services, which receive no payment, restricted services offer partial coverage. This often applies to rehabilitation, psychiatric services and palliative care, which must be offered as restricted services in all hospital policies.
Restricted services typically result in higher out-of-pocket expenses because your insurer only covers a portion of the treatment cost. This is especially true in private hospitals. To avoid unexpected bills, it's crucial to confirm coverage details with your insurer in writing before receiving treatment, as you will be responsible for the remaining balance.

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Tim Bennett

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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

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What is a restricted treatment for health insurance?

Some private hospital insurance policies will list treatments as 'restricted'. Restricted treatments are when your health insurer only pays for a limited part of the hospital bill.