Hospital cover – a complete guide

Private hospital cover starts at less than $75 a month and can cut your tax bill too. Here’s how it works.

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Hospital cover is great if you prefer using the private healthcare system, rather than relying on Medicare. But it's also a handy money-saving hack for anyone who earns over $90,000.

That's because you won't get hit with the Medicare Levy Surcharge if you have private hospital cover. Get it before you're 31, and you'll also avoid Lifetime Health Cover loading later in life. That's a triple win if you ask us.

Looking for cheap hospital cover?

If you earn over $90,000, hospital cover is a great way to cut your tax bill. Check out some options in the table below. They'll all exempt you from the Medicare Levy Surcharge.

Data indicated here is updated regularly
Name Product Tier Price Per Month Hide CompareBox
ahm starter basic
Basic
$74.40
Medibank Basic Accident and Ambulance
Basic
$76.15
AAMI Basic Hospital Plus
Basic
$79.26
Qantas Basic Hospital
Basic
$79.26
HCF Hospital Bronze Plus
Bronze
$92.45
Peoplecare Bronze Hospital
Bronze
$101.80
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*Quotes are based on a single individual with less than $90,000 income, $500 excess and living in Sydney.

What you should know about cheap cover

Cheap cover is great if you want to avoid the Medicare Levy Surcharge or Lifetime Health Cover loading later in life. However, it does have its drawbacks.

  • Not a lot is covered

The cheapest policies will usually only give you access to three restricted services, out of a possible 38. They're rehabilitation, hospital psychiatric services and palliative care.

  • There may be high excesses

Cheap policies may come with a high excess, so you'll have to pay a big lump-sum before you get any help from your insurer.

  • You'll have waiting periods to serve later

If you get a low level of health insurance now, then decide to upgrade later, you'll still have to serve the waiting periods for any benefits that weren't included in your initial policy.

How hospital cover helps cut your tax bill

The Medicare Levy Surcharge

If you earn over $90,000 and don't have hospital cover, you'll be taxed between 1% and 1.5% of your wage due to the Medicare Levy Surcharge. Get a cheap policy, and you can avoid the tax.

For a lot of people, the cost of a hospital policy can actually be less than what they'd be taxed if they didn't have it. So even if you don't plan on using private health insurance, it can make financial sense to get a policy anyway.

Lifetime Health Cover loading

Lifetime Health Cover loading kicks in on the 1 July, immediately following your 31st birthday. For every year you don't have health insurance from that date, you'll be charged an extra 2% when you eventually do decide to get a policy.

That means if you wait until you're 41, your premiums will be 20% higher than they would have been if you took out a policy before the deadline. Get life insurance before the deadline, and you won't be hit with the penalty.

Gold hospital cover

If you're looking for premium-level hospital cover, a gold-tier policy is the best you can get. It's the only type of policy that has to offer unrestricted access to all 38 categories and covers treatments related to pregnancy, weight-loss surgery and joint replacements.

Data indicated here is updated regularly
Name Product Excess Price Per Month Hide CompareBox
Medibank Gold Complete
$500
$164.30
Qantas Gold Hospital
$500
$179.58
HCF Hospital Gold
$500
$172.90
Peoplecare Gold Hospital
$500
$176.60
ahm top hospital gold
$750
$178.15
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Quotes are based on a single individual with less than $90,000 income, $500 excess and living in Sydney.

Ready to compare hospital cover?

If you already know what you're looking for with private hospital cover, don't let us stop you. Fill in your details below and we'll show you some hospital policies from Finder partners.

How does hospital cover work?

To understand how hospital cover works, you need to understand the Medicare Benefits Schedule (MBS) first. The MBS is basically a list of all the healthcare treatments and procedures that are subsidised by the government. These are usually called "items" and there are over 5,700 of them.

For every item on the MBS, there is a fee attached to it. This is the price that the government has defined as a fair fee for that particular service or treatment. However, your doctor isn't obliged to stick to this fee.

Now, here's why it matters. If you receive an in-hospital service as a private patient, Medicare will cover 75% of the MBS fee. Your private health cover will cover the remaining 25%.

However, if your doctor charges more than the MBS fee – which is pretty common – then you'll have to cover that amount yourself. These are called out-of-pocket costs.

Don't forget, hospital cover only helps with items that are on the MBS. If the treatment you want isn't on the MBS, you won't get help from private hospital cover.

How do the hospital cover tiers work?

Hospital cover comes in four tiers: basic, bronze, silver and gold. Each tier has a minimum number of hospital categories that it must include.

As you've probably guessed, basic offers no-frills cover while gold gives you all the bells and whistles. As you go up through the tiers, more treatments will be covered by your policy.

If a policy exceeds the minimum requirements of one tier but doesn't meet the requirements of the next, it will be referred to as a "plus" policy. For example, silver policies must cover 26 specific categories plus 3 restricted categories, while gold must cover all 38 categories. If a policy covers 30 categories, it would be referred to as a "silver plus" policy.

If you only want hospital cover to avoid the Medicare Levy Surcharge, basic might be the best place to start your search. If you want hospital cover to help with pregnancy or childbirth costs, a gold policy is the only type that will cover it.

What does private hospital insurance cover?

If you are treated in a hospital as a private patient, hospital insurance will cover 25% of the MBS fee and Medicare will cover the remaining 75%. If your doctor charges more than the MBS fee, you will have to cover that amount yourself.

The specific treatments that are covered by your health insurance will depend on which tier you get. The higher the tier, the more treatments that will be covered.

The table below shows which clinical categories are covered by each tier of health insurance.

Clinical categoryBasicBronzeSilverGold
RehabilitationRRR
Hospital psychiatric servicesRRR
Palliative careRRR
Brain and nervous system
Eye (not cataracts)
Ear, nose and throat
Tonsils, adenoids and grommets
Bone, joint and muscle
Joint reconstructions
Kidney and bladder
Male reproductive system
Digestive system
Hernia and appendix
Gastrointestinal endoscopy
Gynaecology
Miscarriage and termination of pregnancy
Chemotherapy, radiotherapy and immunotherapy for cancer
Pain management
Skin
Breast surgery (medically necessary)
Diabetes management (excluding insulin pumps)
Heart and vascular system
Lung and chest
Blood
Back, neck and spine
Plastic and reconstructive surgery (medically necessary)
Dental surgery
Podiatric surgery (provided by a registered podiatric surgeon)
Implantation of hearing devices
Cataracts
Joint replacements
Dialysis for chronic kidney failure
Pregnancy and birth
Assisted reproductive services
Weight loss surgery
Insulin pumps
Pain management with a device
Sleep studies

Public vs private comparison

Private health insurance has its benefits, but it isn't for everyone. Use the table to compare the public system – that's Medicare – to the private system and see which sounds right for you.

Medicare (public)Private
Cost2% of your taxable income (you'll pay this even if you get private cover)

If you earn over $90K a year, you'll be taxed at least $75 a month extra if you don't have private cover

As little at $70 a month, but can cost over $200 a month
Doctor and hospitalNo choiceYour personal preference
AccomodationPublic hospital, wardPrivate room
Waiting timeBased on urgency, but could take many monthsUsually a matter of days or weeks
Hospital and medical costsFreeMedicare pays 75% of the amount it would have paid if you had gone public. The remaining 25% is paid by your insurer. Anything else is your out-of-pocket costs.
Specialist servicesSpecialised services like weight-loss surgery, IVF and medically-necessary cosmetic surgery can be covered but are tricky to access.Some higher-level hospital policies will cover these procedures
EmergenciesYou may have to pay for your ambulance, depending on what state you live inAmbulance costs are covered

How long would I wait for treatment using public or private?

The time you'll spend waiting for surgery varies depending on what procedure you're booked in for and where the hospital is. However, private patients generally face much shorter waiting periods compared to public patients.

Public (Medicare) waiting times
StateMedian waiting time10% waited longer than
NSW56 days330 days
VIC28 days146 days
QLD40 days282 days
WA41 days220 days
SA40 days277 days
TAS57 days343 days
ACT48 days322 days
NT29 days229 days
TOTAL41 days279 days

It's also important to be aware that these waiting periods refer to the length of time you have to wait once you've been added to the list. They don't take into account the time you've waited to see a specialist, or specialists, which could add months onto your overall waiting time.

It's a little bit harder to track wait times with private hospital cover because you can usually book a day which suits you. However, a 2018 report by HBF found that the average time between booking and receiving surgery is just 14-28 days.

What isn't covered by private hospital insurance?

No matter what level of health insurance you get, there are certain things that won't be covered. They include the following:

  • Pre-existing medical conditions within the first 12 months
  • Out of pocket costs (that's when your doctor charges more than the MBS item fee)
  • Fees for any specialists you see outside of hospital
  • Any services you receive outside of hospital
  • Any medical treatment that does not have an MBS item number
  • Hospital stays that are longer than 35 days
  • Cosmetic surgery for non-medical reasons

There are also some treatments that aren't covered by private hospital cover but can be covered by extras insurance. These include the following:

  • Routine eye exams
  • Dental exams
  • Physical therapy
  • Hearing aids

How long do I have to wait before I can claim on my hospital cover?

For accidents and ambulance trips, you'll usually be able to claim on your hospital cover within 0-2 days of buying the policy. However, most other hospital categories do come with either a 2-month or 6-month waiting period.

For pre-existing medical conditions, the waiting period is even longer. In fact, most health insurance policies will apply a 12-month waiting period before you can claim for pre-existing medical conditions.

Hot tip: There are ways to skip some waiting periods. Insurers often run special deals or promotions so keep your eyes peeled, or visit our deals page.

Tips for finding cheap hospital cover

Regardless of what tier you're on, it's worth trying to get a good deal on price. These tips will hopefully help you do just that.

Read more on this topic

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4 Responses

    Default Gravatar
    JulieDecember 10, 2018

    Need to find health insurance that covers plastic surgery, breast lift and augmentation and lower body lift please.

      Avatarfinder Customer Care
      JeniDecember 14, 2018Staff

      Hi Julie,

      Thank you for getting in touch with finder.

      Top hospital cover will usually include plastic and reconstructive surgery. Please note that you will need to compare using the filter for ‘cosmetic surgery’ in your health insurance policy (part of hospital cover). It is also important to note that it’s only covered if deemed medically necessary, so best to check each specific surgery with the insurer directly. Not all surgeries are covered in full too – so always best to ask for the specifics.

      You may seek help from one of our health insurance team on 1300 594 882 to help you to fully understand your options when it comes to private health insurance and plastic surgery. Also, consider your cover needs and discuss the policies available with your health fund before deciding on the right policy for you.

      I hope this helps.

      Please feel free to reach out to us if you have any other enquiries.

      Thank you and have a wonderful day!

      Cheers,
      Jeni

    Default Gravatar
    CherylJuly 28, 2018

    Which hospital cover insurance is best value option for gastric lap band surgery please

      Avatarfinder Customer Care
      CharisseAugust 3, 2018Staff

      Hi Cheryl,

      Thank you for reaching out to finder!

      While we can’t recommend specific policies or insurers to our users, you may utilize our page to compare policies from insurance brands which cover weight loss surgeries such as lap band surgery.

      Please ensure that you carefully read through relevant documents such as Product Disclosure Statements/Terms and Conditions when comparing your options before making a decision to make sure it caters to your needs.

      Cheers,
      Charisse

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