Selecting the right health cover for you can sometimes feel a little overwhelming and downright confusing. A good starting point is to understand how hospital insurance and extras insurance work so you can decide on either or both.
So, how does private health insurance work?
Basically, there are two types of private health insurance – Hospital Insurance and Extras Insurance.
You can select hospital-only insurance, extras-only insurance, or take out a combined hospital plus extras policy that covers you for both types of insurance.
When you have hospital insurance you can choose your own doctor and decide whether to go to a private or a public hospital.
Hospital insurance covers all or some of the costs of treatment as a private patient (in both private and public hospitals) including costs such as doctor’s charges (up to a set amount) and accommodation. It usually also covers emergency ambulance transportation and accidents*.
With hospital insurance, you benefit from increased choice, convenience and flexibility. For example, as a private patient in a private hospital you'll be treated as soon as you and your doctor are ready. You may also get a private room (subject to availability and need).
When it comes to private health insurance, always get in touch with your insurer before scheduling any treatment. This way you’ll be clear on what will be covered and whether there may be any out-of-pocket costs you will incur.
Extras insurance helps cover the cost of treatments that are generally unavailable under Medicare, including dental, optical, physiotherapy, chiropractic, speech therapy, podiatry and other services.
Generally speaking, the more expensive the health insurance cover you select, the greater the range of procedures and treatments will be included in your policy. For extras insurance, you’ll also have a higher annual limit and receive a higher percentage back when you claim.
Again, always get in touch with your insurer before scheduling any treatment to be clear on what will be covered and whether there may be any out-of-pocket costs you will incur.
Costs, incentives and surcharges
The Australian Government has introduced a range of surcharges and incentives that may affect your private health cover premiums. These measures were brought in as an incentive for more people to sign up to private health insurance cover.
Firstly, most Australians are eligible to receive a rebate from the Australian Government to help reduce the cost of their health cover (for both hospital and extras covers). The rebate amount varies depending on eligibility, age and income levels, with levels being adjusted by the Government on 1 April each year.
Next, the Medicare Levy Surcharge (MLS) can add between 1% and 1.5% to your tax if you don’t have private hospital cover and you earn more than $90,000 (for singles) and $180,000 (for families) ^. The good news is that you can buy a basic level of hospital cover for around the same price as (or even less than) the additional tax you might have to pay.
And finally, the Government’s Lifetime Health Cover (LHC) Loading will tack on an added 2% loading for every year you haven’t had hospital cover over the age of 30 (maximum loading of 70%). It takes 10 years’ continuous hospital cover to have this loading removed.
If you’ve got questions about anything that we haven’t covered, please check out our Private Health Insurance FAQs, or you can give us a call on 1300 793 157. We’re here to answer your questions from 8.30am until 8pm AEST on business days.
*If your policy includes Accident cover and you need hospital treatment for an injury sustained during an Accident that occurred after joining your hospital insurance, and the hospital treatment is within a Clinical Category that is listed as Restricted or Not Covered, that hospital treatment will be treated as Covered.
^Contact your registered tax agent or accountant if you have specific tax-related questions on individual circumstances.