All permanent Australian residents have access to the public health system ‘for free’, yet almost 11 million people choose to supplement this by purchasing private health insurance.

The public health system generally takes longer to access (than private services) and provides less choice about who you’ll be treated by. All surgery that is not life threatening is referred to as Elective Surgery and people can wait several months or even years for operations on hips or knees, heart surgery or a even a colonoscopy. There can also be delays accessing rehabilitation services.

Private health insurance circumvents these delays and should you require it, allows you to have surgery performed within the period recommended by the doctor as well as access to rehabilitation facilities.

Private health cover gives you more choice and control if you need to go to hospital. If you have a private health insurance policy, it enables you to choose who your doctor will be, where you will have the procedure, and when. This is subject to availability and what your policy covers.

There are many different types of hospital covers with various health insurers in the market. Your Health Fund will offer hospital policies on one of the four tiers below:

  • Gold
  • Silver
  • Bronze
  • Basic

Your insurer will assign existing policies to a tier based on the level of cover it provides. They will let you know what tier your policy is.

General treatment policies (also known as ancillary or extras ​cover) provide benefits for non-medical health services – for example,  physiotherapy, dental and optical. General treatment policies may be offered separately or combined with hospital cover.

There are three general categories of policies:

  • Comprehensive Cover – includes most or all of: general dental, major dental, orthodontics, optical, physiotherapy, chiropractic,  occupational therapy, pharmaceuticals, podiatry, and hearing aids,
  • Medium Cover – includes most or all of: general dental, major dental, optical, physiotherapy, chiropractic, podiatry, occupational therapy services (but usually does not include orthodontics, health management, hearing aids, and other items),
  • Basic Cover – includes at least one of general dental, optical, physiotherapy and chiropractic.

Many health funds offer packaged policies that provide cover for both hospital and general treatment services. Some funds have pre-packaged policies, while others allow the member to mix and match hospital and general treatment options. For example, a member may be able to select a basic hospital cover and a comprehensive general treatment policy to create their own combined package.

All health funds have waiting periods. These are periods following the time a member joins or upgrades their benefits before they can claim on their health insurance.

When you start a new private health insurance policy or increase your level of cover, you have to complete waiting periods before you can claim benefits under your new level of cover. A waiting period protects members of the insurer by ensuring that individuals are not able to make a large claim shortly after joining and then canceling their membership. This kind of behaviour would result in increased premiums for all policy holders.

When purchasing health insurance, make sure you are fully aware of any waiting period you may have to serve. There is usually no waiting period if you need hospital or medical treatment because of an accident that happens after you start your policy.

Lifetime Health Cover (LHC) loading is a Government initiative designed to encourage people to take out hospital insurance earlier in life and to maintain their cover. The LHC rules determine how much members pay for hospital cover on top of the standard rates. If a member does not have a Certificate as proof of their previous membership, they may be charged a higher premium as though they were purchasing private hospital cover for the first time. LHC loadings only apply to hospital cover.

If your income is over $180,000 as a family or $90,000 as a single in the 2019/20 financial year and you do not have Hospital Cover, you will be required to pay an additional Medicare Levy Surcharge (MLS), on top of the existing Medicare Levy that most people pay as part of their taxes. The MLS is means-tested so those on the highest incomes will pay more.

Income threshholds
Tier 0 Tier 1 Tier 2 Tier 3
Singles $90,000 or less $90,001 – $105,000 $105,001 – $140,000 $140,001 or more
Families $180,000 or less $180,001 – $210,000 $210,001 – $280,000 $280,001 or more
Medicare levy surcharge rate 0% 1% 1.25% 1.5%

The Medicare Levy Surcharge works out to be a minimum of $1800 for families and $900 for singles. This can be avoided by taking out Hospital Cover, which in some cases can be cheaper than the additional tax.

The private health insurance rebate is income tested and is something most Australians with private health insurance receive from Government to assist them with the cost of their premiums. The rebate applies to hospital, general treatment (extras), and ambulance policies. It does not apply to overseas visitors health cover.

These rebate rates are reviewed annually and are adjusted on 1 April of every year, so it is best to check the Australian Tax Office website for these income thresholds and rebate rates on an annual basis.

When we help you review your cover and place you with another health fund, that health fund pays us a small commission so that you don’t have to. That makes our service free to use. There’s no obligation to buy what we quote you on either. Our goal is to find you the right cover for the best value taking all the hassle out of the paperwork.

Choosewell’s corporate health plan and its advantages can usually be provided at no cost to the employer.