Get covered for private hospital accommodation and side-step the LHC and MLS penalties with hospital health insurance.
Health insurance is split up into two separate types of policies: hospital and extras. While extras cover lets you claim for general treatments like dental, optical and physio, hospital cover can insure you for hospital procedures and accommodation, let you to choose your doctor and in many cases skip lengthy public hospital waiting lists.
Hospital policies can be popular for both those on incomes high enough to incur the Medicare Levy Surcharge (MLS) and those who are over 31 and wanting to avoid the Lifetime Health Cover loading.
Compare hospital cover from 30+ Australian funds
Learn more about the different types of hospital policies
Cover obviously differs between funds but a top hospital policy will typically include the following benefits:
- Private hospital. Cover as a private patient in a private hospital, allowing you to choose both your hospital and your doctor.
- Ambulance services. Cover for emergency ambulance treatment and transport when you are taken to hospital.
- Shoulder and knee reconstructions. This includes investigative surgery and operations to repair ligament tears, extract loos tissue and fix any other damage.
- Appendicitis. This covers you when you are hospitalised for appendicitis and also for the cost of having your appendix removed.
- Tonsils and adenoids. Cover for removal of tonsils and adenoids.
- Removal of wisdom teeth. Hospital charges incurred for the surgical removal of wisdom teeth will be covered under a comprehensive policy.
- Colonoscopies. Cover for Endoscopic examination of the large bowel and the distal part of the small bowel.
- Palliative care. If you have a life-limiting condition, the resulting health care costs will be covered by your policy.
- Psychiatric treatment. From addiction problems to diagnosed psychiatric disorders, any resulting hospital costs are covered.
- Rehabilitation. This includes the cost of any approved exercise, physical therapy and rehabilitation programs.
- Heart services. This includes cover for open heart and bypass surgery, angiograms, the insertion of stents and hospital stays.
- Obstetrics services. Regular and caesarean childbirths are covered, along with inpatient pregnancy services such as diagnostic imaging.
- Fertility treatments. Treatments under the IVF and GIFT programs are covered.
- Plastic and reconstructive surgery. While surgery for cosmetic purposes is typically not covered, surgery to repair deformities or improve function following a traumatic injury or caused by a congenital defect are covered.
- Major eye surgery. This includes treatment for vision loss caused by cataracts and other eye conditions.
- Hip and knee replacement surgery. All other joint replacements are also typically covered.
- Renal dialysis. The cost of treatment resulting from kidney failure is also covered.
- Other hospital services. All other in-hospital services and procedures where Medicare will pay a benefit.
What won't I be covered for?
- Assisted reproductive services such as IVF.
- Major heart operations.
- Psychiatric services
- Surgery or hospital treatments for which Medicare does not offer a benefit.
- Long-stay patients. You will be classed as a long-stay patient if you are hospitalised for more than 35 days.
- Services provided outside Australia.
- Services that are not provided face to face.
- Some high-cost medications.
- Cosmetic surgery which is not medically necessary.
- Prostheses that are over the value of approved benefits on the Government’s Prostheses list.
As mentioned, exclusions and restrictions can vary greatly from one policy to the next. Once you understand all the exclusions and restrictions that apply to your policy, it’s a good idea to review your cover every year to ensure that it still matches your health needs. You can also upgrade to a higher level of cover that includes services you think you may need in the future. However, if you require a treatment or service that your policy does not cover, discuss your treatment options with your doctor or consider how you can pay for the cost of treatment yourself.
How does hospital only cover compare with what is offered by Medicare?
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6 crucial steps to compare hospital insurance policies
- Which hospitals are covered under your policy? You will need to find out what hospitals you are entitled to receive treatment at under your policy. While basic cover may only offer treatment as a private patient in a public hospital, higher-level policies can provide you with a private room in a private hospital should you ever need it. Not all private hospitals will be covered by your fund. Many funds strike up arrangements with private hospitals, which can limit your choice in certain parts of the country, so make sure to examine a full list of hospitals that have an agreement with your health fund.
- Can you receive treatment at other hospitals? Also consider the cover provided if you receive treatment in a non-agreement hospital, and if you live in a regional area it’s vital that you choose a fund that has an agreement with a local hospital. Failing to do so can result in you incurring significant expenses and enduring substantial inconvenience travelling to your nearest agreement hospital to receive treatment.
- The excess or co-payments applied. Some funds will contain an excess and co-payment. The excess is the price you will pay when admitted to a hospital, regardless of long you will stay. The co-payment is paid for every day that you spend in hospital. These charges vary from fund to fund so it's crucial you know exactly what you will be paying. While having a no-excess policy will save you in the event of being admitted to hospital, it will reflect a higher premium rate.
- Does it include ambulance cover? Whether or not you are covered for ambulance transport will vary from fund to fund. Some funds will include it under the hospital only cover while others will offer it under Extras cover. Ambulance cover is also available as Full (100% cover for emergency and non-emergency ambulance) or Emergency Only (Ambulance trips that are deemed an emergency by the paramedics). Some funds might also not cover air or sea ambulance services.
- What's the health fund gap? In the event you are admitted to hospital, Medicare will cover 75% of the charge and private health insurance will cover the remaining 25%. However, if your doctor or specialist charges above this amount you will be required to pay for this GAP (difference between fee charged and Medicare benefit schedule. Find out how to avoid the gap in the section below.
- How much are you actually covered for? You will need to determine exactly how much of your hospital bills will be covered under your policy. For example, while a top-level policy will cover 100% of your hospital bills, others may only cover a much smaller amount or require you to make a co-payment (up to an annual or per-admission limit) for every night you spend in hospital.
Other issues to consider include whether you will be covered for a single or shared room, and whether there are any additional benefits or rewards provided by a health fund.
When you start a new private health insurance policy or opt to increase the level of your existing cover, you will have to serve a waiting period before you can access any benefits under your policy. Waiting periods are designed to keep health fund membership costs down by preventing people from joining a fund, making a large claim and then cancelling their membership. The Australian Government sets a maximum limit on the waiting periods that Australian health funds are able to impose. The waiting periods listed below are typically imposed by most funds:
- 12 months for pre-existing conditions. This refers to any conditions, illnesses or ailments you had during the six months prior to taking out a hospital policy or increasing your level of cover.
- 12 months for pregnancy services (obstetrics). If you're interested in a private hospital birth, you’ll need to take out an appropriate level of hospital insurance for yourself and your newborn well ahead of time so that you can serve the 12-month waiting period and then access the necessary benefits.
- Two months for specific conditions. These include psychiatric care, palliative care and rehabilitation, even when pre-existing.
- Two months in all other circumstances. This waiting period applies to all other hospital treatments and services.
Waiting periods also apply to the benefits available under extras cover, but these waiting periods are set by individual health funds. Make sure you’re aware of any waiting periods that apply before you purchase health cover.
What's the Lifetime Health Cover loading?
In an effort to encourage people to take out private health insurance cover and keep it in place for the rest of their lives, the Australian Government introduced the Lifetime Health Cover scheme. Under this scheme, Australians must contend with an extra 2% loading on their private health insurance premiums for every year over the age of 30 that they do not have private health insurance cover in place. After 10 continuous years of cover, this loading is reduced to nothing.
This means that people who take out private health hospital cover before they turn 30 and maintain their policy can pay lower premiums than those who don’t. It’s important to note that this lifetime loading applies to hospital policies only and not to extras cover. When you take this loading into account, it quickly becomes clear that it makes better financial sense to take out private health cover before you turn 30.
What you need to know about the Medicare Gap Scheme
If you’ve done any research into private health insurance you will probably have heard "the gap" or "the medical gap" referred to quite frequently. The gap refers to a situation when your doctor charges a fee that is higher than the Medicare benefit schedule — for example, when you receive a $100 medical bill and Medicare covers only $70 of the total bill. The Medical Gap Scheme is designed to offer financial assistance to help you cover the cost of private medical treatment. Many private health funds run a Medical Gap scheme to help you meet the cost of medical services, so before you undergo treatment it’s a good idea to ask your doctor if they participate in your particular health fund’s Medical Gap Scheme. Doctors can choose whether to participate on a case-by-case basis, with three approaches to covering the gap:
- They can participate in ‘No Gap’ health cover. If your doctor participates in your health fund’s No Gap scheme, you will not have to pay any out-of-pocket expenses for the cost of treatment.
- They can offer ‘Known Gap’ cover. You will be charged a capped fee to cover the cost of the gap.
- They can choose not to participate in Gap cover. If your doctor is not a part of your fund’s Medical Gap Scheme, you’ll need to cover all costs not covered by Medicare.
Some final questions you might have
Q. What's the Medicare Levy Surcharge?
- A. The Medicare Levy Surcharge is an additional tax of up to 1.5%, on top of the standard 2% Medicare Levy, that is charged to taxpayers who earn above certain thresholds and do not have private health cover in place. This initiative is put in place to encourage more Australians to have private health cover in place to release pressure from the public system.
Q. Is it straightforward to transfer between health funds?
- A. Yes. If you are switching to a new fund with the same or a lower level of cover, you do not have to re-complete the time that has already elapsed on the waiting period, for benefits you had under your previous cover. You must transfer within the specified period of time for your chosen health fund. This can be anywhere between 2 weeks to 2 months.
Q. If I don't have cover already, will I have to undergo a waiting period?
- A. Yes. All funds apply waiting periods to new members that do not already have cover in place. Waiting periods will generally be between 2 and 12 months for conditions requiring hospitalisation.
Q. How can I pay less for hospital only cover?
- A. You can reduce the premium you pay for cover by choosing a basic policy with a higher excess charge. If you are considering taking out reduced cover, it is crucial you know exactly what you will be covered for and if it's really worth not paying extra for a higher level of cover. It can be worth finding a flexible option that allows you to add/remove benefits so you can tailor cover closer to your needs and budget.
Q. Is private health insurance compulsory if I am over 30?
- A. Private cover is not compulsory if you are over the age of 30 but if you do not apply for cover by the 1st of July following your 31st birthday, you will be charged the Lifetime Health Cover charge in addition to premium on private cover you purchase later.
Q. How much is the loading?
- The loading is an additional 2% on each year following age 31.
Q. Will I be charged the Lifetime loading if I have just become a permanent resident and am over age 31.
- A. You have one year from the date that you registered for Medicare to take out private health cover and avoid the Lifetime loading.
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