Key Takeaways
- Private health insurance comes with a huge range of benefits like shorter wait times, access to private hospitals, tax savings and rebates, and much more.
- Medicare covers the most essential services, but having private insurance is the only way to get cover for the majority of treatments and extras.
- Comparing your options with Fair Health Care Alliance can help you pick the right policy and avoid overpaying for cover.
Do you really need private health insurance?
On the fence about whether health insurance is actually worth it?
Not happy with your current provider and wondering if the public system will be enough for your needs?
If you’re still deciding about whether or not you need private health insurance, it can be helpful to have all the essentials broken down for you – which is what this page is all about.
Here’s the reality: while Medicare does indeed provide a solid foundation for healthcare in Australia, private health insurance pays for itself with lots of benefits, shorter waiting times, access to private hospitals and rooms, your choice of doctor or specialist, as well as cover for services that aren’t included under Medicare.
Top benefits of health insurance
- Your choice of private doctor
- Your choice to attend a private hospital or facility
- No public waiting lists for surgery
- Accommodation in a private room
- Avoid Lifetime Health Cover Loading penalties
- State-wide or national ambulance cover
- Avoid the Medicare Levy Surcharge
- Extras cover for your must-haves (dental, optical, etc.)
How does Medicare work?
All Australian residents and citizens (and some eligible visa holders) have access to Medicare, which has long been a staple of our country and provides free or subsidised healthcare in the public system. Medicare covers:
- Public hospital care: Emergency and medically necessary treatments.
- GP visits: Bulk-billed or subsidised visits to a GP.
- Specialist consultations: Some are partially covered, but you might have out-of-pocket costs.
- Imaging and pathology: X-rays, blood tests and other diagnostic services.
- Pharmaceutical Benefits Scheme (PBS): Subsidised prescription medications.
While Medicare is comprehensive in covering all the essentials, it does have its limitations. Most notably, the public hospital system is dealing with long waiting times for elective procedures, and there is very limited choice in terms of specialists. You also don’t get any cover for things like dental, optical, chiropractic, physiotherapy and other allied health services.
5 reasons to consider private health insurance
1. Faster treatment
Public hospital waiting lists can be agonisingly long in many parts of the country, with some elective surgeries taking months and even years to come through. But with private health insurance, you’ll get your treatment booked in and dealt with much faster.
2. Your pick of doctor and hospital
In addition to shorter wait times, you can choose your own specialist and get treatment at a private hospital of your choice.
3. Private hospital accommodation
Being in a public hospital usually means you’ll have to share a room, which can be confronting and uncomfortable for many people. Private health insurance is your best chance to get a private room all to yourself so you can be comfortable during hospital stays.
4. Cover for services not included in Medicare
Medicare don’t cover extras like dental, optical, physiotherapy, psychology, chiropractic care and alternative therapies. An extras policy will take care of all of these and more.
5. Financial incentives and tax benefits
- Medicare Levy Surcharge (MLS): If you earn over $97,000 (or $194,000 for couples/families) and don’t have private hospital cover, you will likely have to pay the MLS, which can be up to 1.5% of your taxable income.
- Lifetime Health Cover (LHC) loading: If you don’t take out private hospital cover by July 1 after your 31st birthday, you’ll pay an extra 2% on your premiums for every year you delay, up to a maximum of 70% extra as LHC loading.
- Government rebate: The government has a rebate on private health insurance premiums based on your income, which can help to reduce your insurance costs.
Public vs Private Hospital Care
| | Public Hospital (Medicare) | Private Hospital (with Insurance) |
|---|---|---|
| Doctor/specialist | Assigned by the hospital | You choose your specialist |
| Waiting times | Can be months or years | Much shorter than the public system |
| Hospital room | Shared | Private rooms available |
| Costs | Mostly covered by Medicare | Insurance covers most costs, but some out-of-pocket expenses might apply |
Portability
Don’t re-serve waiting periods when you switch to a new health fund or policy
“John was immediately covered for a hip replacement in private hospital because he had already served his waiting periods for joint replacements on his old policy”
What you can expect from extras cover
Extras can cover you for related costs associated with the following health services. Bear in mind that this list is just a snapshot and doesn’t detail all the health services that might be covered under your preferred health insurance extras policy:
- General & Preventative Dental
- Major Dental
- Orthodontics
- Remedial Massage
- Acupuncture
- Podiatry & Orthotics
- Speech, Eye and Occupational Therapy
- Health Management program
- Non-PBS Pharmaceuticals
- Optical
- Exercise Physiology
- Physiotherapy
- Chiropractic
- Osteopathy
- Myotherapy
- Psychology
- Medical Aids & Appliances
- Dietitian & Nutritionist
How does extras cover work?
Each extras policy has rebates (the amount the insurer contributes per service) and annual limits (the maximum amount you can claim per year). For example:
- Your physiotherapy rebate might be $40 per session, up to a maximum of $500 per year.
- Your dental limit might be $800 annually, to cover things like check-ups, fillings and other treatments.
Expert tip: Compare different policies to make sure you’re only paying for extras you’ll actually use.
What are the costs of private health insurance?
The cost of private health insurance will ultimately come down to the tier of policy you want, and whether you want hospital or extras (or both combined).
On average, if you are single and looking for a combined hospital and extras policy, you can expect to pay anywhere from $3,199 to $4,176 per year. It’s less for hospital-only cover, and if you think you’ll only need extras cover then you could be paying anywhere from $907 for the lowest type of extras cover, up to $1,239 for higher extras cover annually.
Expert tip: To make private health insurance more affordable, look for policies where you can pay a higher excess (the amount you pay before insurance covers the cost) in exchange for cheaper monthly premiums.
Most common mistakes when picking health insurance
- Choosing the cheapest policy without checking cover: Basic policies often come with a long list of exclusions. Make sure the most essential procedures (for you) are included.
- Ignoring waiting periods: Most hospital policies have a 12-month waiting period for pre-existing conditions and pregnancy-related services.
- Overpaying for extras you don’t use: If you don’t visit the dentist or physio much or at all, a high-cost extras plan might not be worth it.
- Not checking for gap-cover agreements: Some doctors charge more than what your insurer covers. Look for no-gap or known-gap policies to keep those unexpected bills to a minimum.
- Failing to review your policy at least once a year: Your healthcare needs will change as you get older, so review your policy every year to avoid paying for cover you are no longer using.
The golden question: Should you get private health insurance?
Private health insurance isn’t a one-size-fits-all solution.
You’ll want to take some time to think about your health needs, your current financial situation, your family’s needs as well as any lifestyle factors before making a decision. If you value shorter waiting times and getting treated in a private hospital, then taking out health insurance could be a great investment. But if you’re young, healthy and don’t expect to need elective surgery soon, you might decide to stick with Medicare or just get an extras policy for things you do need.
Still unsure? Fair Health Care Alliance is here to help, so contact us for a free health insurance comparison and find a policy that truly meets your needs – and your budget.
FAQ's
No, private health insurance is optional. That being said, high-income earners will need it to avoid the Medicare Levy Surcharge, and those over 31 can avoid Lifetime Health Cover loading.
Yes, but a 12-month waiting period will apply for pre-existing conditions before you can claim hospital benefits.
It depends on the policy. Some extras or hospital policies include ambulance cover, but state-based schemes might already be covering you for free.
If you earn over $97,000 ($194,000 for families) or are approaching your 31st birthday, getting private hospital cover can lift a few tax and loading burdens.
