Hospital cover

Private health insurance offer two types of cover. Hospital cover pays for some of the costs of treatment in a private hospital or treatment in a public hospital as a private patient. Extras cover helps pay for any out-of-pocket expenses that aren’t covered by Medicare or provided by a hospital, such as dental procedures, chiropractic treatment, glasses and contact lenses, and physiotherapy. Most Extras policies allow you to claim back a certain percentage of costs for each service and will be subject to annual cover limits. You can choose to take out Hospital cover or Extras cover as standalone policies or combine the two.

You won't have to re-serve any waiting periods if you’re transferring to a policy that has the same or a lower level of benefits, as long as there’s a break in cover of 59 days or less. If you transfer part-way through a waiting period, you'll just need to serve the remaining waiting period before you can claim — so if you've only served six months of a 12-month waiting period, those six months will still count when transferring. If you upgrade your cover, you'll need to complete waiting periods for any new services. Where the excess on the new product is lower than the excess on the previous cover, the excess on the previous cover will apply until the unexpired waiting period has been served. Any benefit limits already used with your current fund will apply to your Seniors Health Insurance policy.

Health insurance premiums aren’t tax-deductible. However, the government may provide help with premiums in the form of the private health insurance rebate. This is a means-tested rebate which applies to Hospital, Extras and Ambulance policies. To be eligible for the rebate, you must be eligible for Medicare, have an appropriate level of hospital cover and meet the income requirement for the rebate.  Find out more about the health insurance rebate by visiting the Australian Tax Office website.

If you cancel your cover and take out private health insurance again in the future, you could receive Lifetime Health Cover (LHC) loading costs and may have to re-serve any waiting periods. 

LHC is a government initiative aimed at encouraging people to take out private hospital cover earlier in life and maintain it. If you don’t take out private hospital cover before 1 July after you turn 31, you’ll pay a 2% loading on top of your normal hospital premium for each year you don’t have hospital cover (up to a maximum of 70%). The loading applies for 10 years of continuous hospital cover. For every year you put off signing up for hospital cover, another 2% will be added. So if you wait until you’re 40, you’ll pay 20% more than someone on the same cover who joined when they were 31. For more information on LHC, visit this page.

If you earn over $93,000 as a single or $186,000 as a couple/family, you’ll also have to pay the Medicare Levy Surcharge (MLS) each year that you don’t have Hospital cover. The MLS is up to 1.5% of your income and is paid in addition to the Medicare levy, which is 2%. The surcharge is payable for every day you don't have hospital cover within the financial year. The Australian Tax Office uses a special definition of income (called income for MLS purposes) to determine whether you’re liable to pay the MLS, and the rate of MLS you’ll have to pay. This income is different to your taxable income.

Find out more about LHC and the MLS by visiting the Australian Tax Office website.

An excess is the amount of money you have to pay when making a claim on your Hospital cover — it doesn’t apply for Extras cover. Generally, the higher your excess is, the lower your premiums are. Depending on your cover, some of the remaining costs of your treatment are paid by Medicare and/or your health insurer. An excess shouldn’t be confused with out-of-pocket expenses or a ‘gap’, which are additional charges that aren’t covered by Medicare and are in addition to what your private health insurance will cover.