Hospital cover

A public and private hospital cover comparison

You may be wondering what private cover has to offer, when you probably already pay for Medicare (nearly everyone in Australia pays a 2% Medicare Levy).

Private cover can offer a more comfortable and pleasant experience during your hospital visit and your treatment – and it doesn't always cost more. The major differences between public and private cover are listed in the following table:

What treatments does private health insurance cover

Private health insurers largely follow Medicare's lead and base their offerings on Medicare's official list of publicly covered treatments, called the Medical Benefits Schedule (MBS). The MBS contains hundreds of treatments from very routine procedures to very complex surgeries. Your private policy may or may not offer all treatments listed in the MBS, but even if it doesn't, you can still get those services done through Medicare.

Here are just a few of other treatments available through private cover:

Your private cover may also offer services not found on the MBS, with ambulance cover being the most notable example.

Comparing levels of private health cover

Most health insurance brands have a few different hospital policies you can choose from, based on how much or how little each offers. Here are the three tiers you'll come across most often:

• Top hospital cover. Covers pretty much everything Medicare does, although each policy is different and you might have to search around if you want something very specific and relatively uncommon like IVF or weight loss surgery.
• Medium hospital cover. Covers most of what top cover does, but without cover for very few truly expensive and complicated procedures like childbirth, in vitro fertilisation, weightloss surgery, kidney dialysis and replacement of major joints like hips.
• Basic hospital cover. Covers most basic treatments, but doesn't cover those treatments excluded by mid cover or a handful of other somewhat complicated procedures like heart procedures, psychiatry, rehab, end-of-life-care and joint replacements.
• Public hospital cover. A form of basic cover where you can choose your private doctor, but only in a public hospital. It covers many of the same treatments as basic, but has higher out-of-pocket fees and you must join the public queue and wait for your treatment.

Remember, if Medicare covers something that your hospital cover doesn't, you can still have that treatment provided through the public system.

Compare hospital cover from 30+ health funds

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What won't private hospital insurance cover you for?

In addition to the hospital treatments your policy excludes, there are several other things that won't be covered. Usually, those exclusions can be covered by private extras policies, which are different products sold separately from or combined with hospital cover:

What you need to know about the public system even as a private patient

Because Australia's healthcare system uses a hybrid approach that merges private and public health care, you'll notice lots of Medicare talk even as you navigate your private options. Here are three places where you'll need to know a little bit about how the two systems overlap:

• Lifetime Health Cover loading (LHC). The government doesn't want you waiting until you're old and sick to get private health care. If you don't have private cover by the time you're 31, you'll be penalised in the form of a 2% annual loading fee tacked onto your premium when you finally do.
• Medicare Levy Surcharge (MLS). Another way the government encourages private cover is by taxing high-income earners with the MLS if they don't have private cover. This kicks in once you’re earning over $90,000.
• Medical Gap Scheme. Public treatment is charged at a standard rate set by Medicare – no more, no less. When you have private cover, Medicare and your insurer team up to pay your doctor that same amount. But since private doctors can charge whatever they want, there may be a gap that you are responsible for. Some insurers offer to help you with that additional expense if you get treated by a doctor or at a hospital in their network.

What to look out for when comparing hospital insurance policies

Comparing hospital insurance isn't just about the treatments covered. There are also a few other factors that will make one policy more valuable to you than the other. When you've found a few policies that offer the treatments you need, then it's time to compare them based on the following:

1. Does your insurer have special hospital agreements? Some insurers have special agreements with private hospitals around Australia. You don't have to choose to be treated at these hospitals, but if you do, you may get extra perks and avoid some of the out-of-pocket expenses that commonly occur in the private system. These networks are the basis of the Medical Gap Scheme described in the section above.
2. What are your out-of-pocket expenses? In addition to the "gap" payments that vary from doctor to doctor, there are two types of out-of-pocket expenses that will be clearly defined in your policy. Your excess is the amount you agree to pay each time you are admitted to the hospital. Your copayment is the amount your policy requires you to pitch in for your nightly hospital accommodation. Generally speaking, the lower these amounts, the more you'll pay for the cover. Factor these expenses into your calculations when comparing policies.
3. How does your policy treat ambulance cover? Most policies, even the basic ones, will cover emergency ambulance rides, but not all of them will cover you if the paramedics show up and determine it's not an emergency. Some policies will cover you in non-emergency situations, so keep this in mind when comparing policies. Also check to see if you're covered for emergency air transport, because not all policies offer it.
4. How much are you actually covered for? Some policies have "restricted services" where they don't pay out as much as they would for a fully covered treatment. If you get treated in a private hospital, you insurer will pay the minimum amount for the treatment itself, but leave you responsible for all the other costs, like the remainder of the treatment costs and the cost of renting the theatre (the room where you get treated).
5. Does the insurer offer hospital combined with extras? Hospital cover is just one half of what private insurers offer. They also offer extras cover for things like dental, optical and physical therapy. If you want extras cover, find out if the insurers you are looking at will bundle it with hospital cover at a discount.

When can you start making claims for treatment?

When you sign up for brand new cover or increase your existing level of cover, you'll have to wait before you can claim for most benefits that you weren't covered for before. These waiting periods help keep costs down by stopping bludgers from joining a fund at the last minute, making a large claim and then cancelling their membership.

Here are the typical waiting periods you'll see, but make sure you check your policy in case yours is different:

• 12 months: pre-existing conditions, childbirth
• 2 months: all other hospital treatments including psychiatry, end-of-life care and rehab
• 0-2 days: accidents and ambulance

By law, any waiting periods you've already waited out under another policy will be ported over to any new policy so that you don't have to wait again.

Tips for finding cheap hospital cover

You may want the cheapest policy possible because you're young and in shape, or you just want to avoid the Medicare Levy Surcharge and the Lifetime Health Cover loading. That's perfectly legit. So here are some ways you can save, as well as some things to look out for to avoid getting ripped off.

• Check you’re not paying for things you won’t use. If you’re paying for a top hospital cover, sometimes the main difference could be treatments like pregnancy – if you’re not planning on getting pregnant, this could be an easy way to cut some costs.
• Pay in advance. Some insurers will give you a discount if you pay for the entire year up front.
• Beat the annual increase. You can lock in your current rates if you pay for the whole year before premiums go up on March 31st.
• Use direct debit. Some insurers will give you a discount for making their lives easier (and yours) by setting up direct debit.
• Increase your out-of-pocket expenses. You'll be able to save on your premium by choosing cover with higher a excess and co-payments. Just make sure you can afford these future out-of-pocket fees should you ever need to pay them.
• Join through an industry group. These are called restricted funds, and are available to members of industry groups like doctors, teachers, police and armed services. They sometimes have lower premiums and higher benefits.