Nathan S.
Nathan S.Jun 30, 2020

The decision to take up private health insurance can be a very involved process, and the factors that go into your decision will be unique to you. Your first dip into the policy selection process can be pretty overwhelming, so this guide will help lay everything out for you as plainly as possible to get you on your way.

Starting Out

When you first take out private health insurance, you will need to decide if you require one or a combination of the following options:

If you don’t want any of them, you’re still covered for public hospital visits and basic checkups under the public system, Medicare.

Getting private health insurance does not mean you give up your Medicare coverage, you can have both at the same time. Under Medicare, you can visit a public hospital as a public patient, but may be placed on a waitlist and cannot select your own doctor.

Medicare also covers your visit to a GP and most of the Medicare Benefits Schedule (MBS) fee for visiting a specialist, so if all you need is basic checkups you may be fine just relying on Medicare alone.

If you do decide to take up private health insurance, remember that you’re entitled to the same cover at the same price as anyone else, regardless of your risk profile.

Hospital Cover

Private hospital cover is designed to take the strain off the public health system. To encourage people to join and spread the load across both systems, the government has several financial incentives for people to join a private health insurance fund. If you’re interested in the financial benefits of private health insurance, or what rebates are available, you can read our article on the tax benefits of private health insurance.

With private hospital cover you can choose your own doctor, be in a private hospital instead of a public one, and ensure shorter waiting times for elective surgery. You'll also have peace of mind should any medical emergency or illness arise - you could otherwise be out of pocket for thousands of dollars or be put on a long waitlist for surgery.

Tiers of Hospital Cover

The tier system applies only to Hospital Cover and began rolling out in April 2019, becoming mandatory on April 1st 2020. It was designed to make comparison between providers more straightforward by dividing levels of cover into four tiers:

  • Basic,
  • Bronze,
  • Silver,
  • Gold

Each of these tiers has its own minimum requirements that must be met in order for a policy to be classified as being part of that tier. These minimum requirements are cumulative, meaning that each increasing tier includes all the minimums of the tiers below it.

There is some wiggle room allowing providers to include additional coverage on top of the minimum requirements for a tier - these are referred to as ‘Plus’ policies. Only the first three tiers can have a better ‘Plus’ versions (i.e. Basic Plus, Bronze Plus or Silver Plus). Because a Gold policy covers everything, there’s nothing additional that can be added to it in order to make a ‘Plus’ version.

For example, surgery to remove wisdom teeth is covered under Dental Surgery, which is mandatory for Silver cover, but not Bronze. However, a provider may choose to include it on top of their normal Bronze policy to create a Bronze Plus policy. This means you can claim this benefit without the full price increase that would come with an upgrade to Silver. This allows you to avoid paying for other mandatory benefits covered under Silver that you might never use, such as podiatric surgery.

It’s important to note that not all ‘Plus’ versions of the same tier are directly comparable, since each provider may choose to include different clinical categories as optional inclusions. For example, Provider A may offer a Bronze Plus package that includes bloodwork, while Provider B offers a Bronze Plus package that includes reconstructive surgery instead - they are both still Bronze Plus policies.

Minimal Coverage Requirements for Each Tier

Minimal Coverage Requirements for each product tier

Do I need Hospital Cover?

There are a few reasons to take up private hospital cover:

  • You get to choose your own doctor in either a private or public hospital.
  • If you decide to go to a private hospital, you can choose from any that your provider has an agreement with.
  • You may have reduced waiting times for some hospital procedures
  • Additional MBS fees and other costs may be covered as part of your policy

If you have no problems admitting as a public patient to a public hospital should the need arise, then you may decide you don’t need private hospital cover. If the costs you incur during an unexpected hospital visit are less than the amount you would have spent on hospital cover up until that point, then you could finish out ahead without hospital insurance. Unfortunately, there’s no way to tell if this will be the case, so many people take out hospital cover just for ‘peace of mind’, especially as they get older and the chances of needing it become more likely.

Extras Cover

Extras insurance will help cover the cost of ancillary health needs, like dental care, clinical therapies and prescription glasses or contact lenses. If you don't use these services, you may prefer not to purchase Extras Cover as there is no tax benefit to having it. If you're after just the basics and don't require more expensive treatments like orthodontics, you'll be able to extract the most value out of an entry-level policy. However, don't expect to get 100% back on your bills; most funds offer a 50-60% rebate.

One of the most popular reasons to take out Extras is dental cover. Dental is typically split into different levels of cover from routine or general up to major and complex procedures, with orthodontics usually being a separate option as well. Additionally, depending on what procedures you have done and where, not everything may be covered under your Extras policy. For example, if you elect to have wisdom teeth taken out in a hospital, some of the hospital and doctor fees may not be covered under your Extras policy and you’ll have to pay these out-of-pocket.

Do I need Extras Cover?

There’s more value to be had from Extras Cover when you're using them regularly, so assessing your present and potential future needs is the best place to start. Many providers won’t include cover for pre-existing conditions, so if you have a family history of something like osteoporosis or diabetes, you may need to be covered before these issues arise so that they’re not counted as a pre-existing condition.

Providers approach Extras Cover in different ways. Some will give you a lot of flexibility over which services you want to include, while others have strict packages you must choose from. If you start by writing down a list of your personal must-haves (e.g. complex dental, physiotherapy, and hearing aids) you can then whittle down the list of possible policies to only those that include exactly what you’re looking for.

Ambulance Cover

Unless you live in Queensland or Tasmania, ambulance call-out fees are not covered under Medicare and will have to be paid for out-of-pocket. You can find out more about ambulance fees for your state in our Ambulance Cover article.

Decision Time

One thing to remember that will help you avoid confusion when browsing policies is that Hospital Cover is sorted into Basic / Bronze / Silver / Gold tiers, while Extras will be called whatever marketing name the provider has come up with for themselves (E.g. “Lifestyle Extras”, “Black Extras 60”, “Essential Extras”, or “Top Extras”). It may be possible to mix-and-match your hospital and extras cover in many ways, such as combining the most expensive Hospital Cover with the most basic Extras Cover or vice-versa. Your provider may also offer some pre-selected Hospital & Extras combinations.

ProductReview.com.au is a great tool for seeing feedback about Health Insurance providers from real customers. You can browse our list of health insurance providers and easily see a summary of how other Australians rate their health fund for customer service, value for money, and transparency. If you click through to an individual fund, you can use the Filter Reviews button to narrow down the reviews to see to just those that are similar to you, or that you might be interested in reading.

For example you can see reviews by couples who took out Extras Only cover, or you can filter for reviews specifically from those who rated Transparency poorly to see what their issues were.