Private health insurance

  • There are some things you can do to make sure health insurance meets your needs.
  • Several government agencies administer and regulate the private health insurance industry.

What the ACCC does

  • We can take action against private health insurers for breaking competition and consumer laws.
  • We prepare a yearly report to the Australian Senate on the health insurance industry.
  • We provide guidance for consumers on health insurance.

What the ACCC can't do

  • We don’t resolve individual disputes about private health insurance.
  • We don’t administer specific private health insurance laws.

There are different reasons why people take out health insurance

Private health insurers cover some of the costs of treatment for private patients. Treatment can be in private or public hospitals.

Health insurance can cover some services not usually covered by Medicare, such as:

  • dental and orthodontics
  • glasses and contact lenses
  • physiotherapy
  • chiropractic care
  • home nursing
  • speech therapy.

Other reasons why people might choose to take out health insurance include:

  • the ability to choose your doctor or specialist and the hospital you prefer from the health insurer’s agreed providers
  • often being able to get treatment faster in a private hospital than might be possible on a public waiting list
  • to respond to government incentives and taxation policies.

There are some things you can do to make sure health insurance meets your needs.

Consider the costs and benefits

Buying private health insurance is not compulsory.

The decision whether to get health insurance may affect your tax obligations and your ability to access the medical treatment of your choice. Weigh up the costs and benefits to decide whether insurance will make your healthcare more affordable. Think about how important the benefits of insurance are to you, such as greater choice about treatment.

Buying health insurance will only reduce your tax bill if your income is above a certain threshold. The Medicare levy surcharge applies to individuals with a taxable income above $90,000 (or above $180,000 for families) who don’t have health insurance hospital cover. This is separate to the Medicare Levy, which is something most taxpayers pay regardless of whether they have health insurance. The Australian Taxation Office has more information.

Lifetime Health Cover is a government program designed to encourage people to take out health insurance earlier in life and to keep their cover. Lifetime Health Cover can affect health insurance premiums, but it doesn’t affect your tax bill. The government’s private health website has more information.

Know your health needs when choosing a policy

There are 2 types of private health insurance cover:

  1. hospital cover for in-hospital treatment, and
  2. ancillary or ‘extras’ cover for ambulance, optometry, dental, physiotherapy and other services.

Many consumers hold combined policies that cover both hospital and extras.

Consider your health needs when buying or renewing health insurance. Talking to a doctor may help.

As your medical needs change over the course of your life, so will your insurance needs. Before you renew a policy, check whether it still meets your needs.

Consider whether a policy covers the conditions that are most relevant to you or your family in the short to medium term. Think about the chance that you will need insurance soon due to something happening, for example:

  • a sports or fitness-related injury
  • having a baby
  • needing a hip replacement or other procedure.

There are some conditions that you can’t predict, including psychiatric care, cardiac conditions and plastic and reconstructive surgery. These are all treatments that can be restricted or excluded under lower-level policies. Make sure to check the exclusions before you buy.

If you buy new health insurance, or upgrade your existing insurance to include additional cover, you may need to serve a waiting period. Consider getting covered or changing your cover before your needs change.

Shop around and compare policies

In Australia, there are more than 30 insurers offering a wide variety of distinct health insurance products. While the number of policies available to you will vary depending on where you live and your individual circumstances, you may still have more than 100 different policies to choose from. Comparing offers can help you to make a decision and find an offer that suits your needs.

You can compare health insurance policies on the government’s private health website. Every insurer is required by law to provide up-to-date information about each policy and their prices.

Commercial comparison sites can be useful, but you should know how these sites work before you rely on them. They may not cover every insurer or every type of policy available. They may also have commercial relationships with, or receive payment from, listed businesses.

Choosing the cheapest policy is not always the best option

It might not always be best to choose the cheapest policy. Some cheaper products have lower levels of cover, higher out of pocket expenses and smaller rebates, so they may not be value for money in the long run.

Don’t set and forget – review your policy regularly

Review your cover at least every couple of years to ensure it continues to meet your needs and remains value for money.

The right to switch cover or insurer

By law, consumers can switch their hospital cover or insurer without financial loss or having to re-serve waiting periods.

Waiting periods will, however, apply for any added benefits or better conditions on your new policy. You should check if this applies to you before switching insurers. In some cases, the new insurer may offer to waive waiting periods for higher levels of cover. Ask if this is available when you're thinking about switching.

When a health insurer changes the policy

Health insurers must notify you of changes to your policy, including increases in health insurance premiums or changes to cover.

Often insurers’ terms and conditions allow them to change your cover at any time, but they should give you notice. Read any documents that a health insurer sends to you as these may contain important information about changes to services and level of benefits. Before you have a procedure, check what the out-of-pocket costs could be with your insurer.

Changes to your policy may reduce your level of cover. If you don’t like any changes, have a look at other policies or insurers – you have the right to switch policies.

See the Commonwealth Ombudsman's The right to change: transferring your health insurance.

Understand the terms and conditions

Inclusions and conditions

Not all medical services or procedures will be fully covered by your chosen policy. Some services and procedures might not be covered at all. You may also need to serve a waiting period before being able to make a claim.

Make sure you understand the terms and conditions of your health insurance policy before getting insurance or switching insurers. When reviewing the terms and conditions:

  • don’t rely on the insurer’s website - read your policy’s Product Disclosure Statement
  • ask the insurer questions to clarify what is included in the policy and make a record of the conversation.

Exclusions and restrictions

Be familiar with the exclusions and restrictions which may apply to you and be sure the policy meets your needs. If you are treated as a private patient for an excluded or restricted item, you will be responsible for most or all of the cost of the treatment.

Gap and other costs when accessing benefits

The ‘gap’ is another word for the out-of-pocket expenses you may pay for your treatment. This happens when the fees charged by the hospital or doctor are higher than the amount covered by Medicare and your private health insurer.

If you know you want to be treated by a certain provider or at a certain hospital, you should check what arrangements your health insurer has with that provider or hospital. These arrangements can affect any out-of-pocket expenses.

When it comes to hospitals, your insurer may:

  • provide a higher or lower rebate depending upon which hospital you use
  • have ‘no gap’ or ‘known gap’ arrangements with some healthcare providers.

Some insurers will recognise and offer rebates for services provided by one type of healthcare provider, but won’t recognise the same or similar treatment when it’s given by another type of provider. Contact your insurer to find out whether the kind of provider you want to use will be covered.

You may also need to pay an ‘excess’ each time you visit a hospital under your hospital cover. An excess is an amount you pay towards your hospital admission before the health insurer will pay out benefits. Often a higher excess will mean a lower premium. A higher excess can affect your tax liability because it's relevant to the Medicare levy surcharge—the Australian Taxation Office has more information.

Example of a premium with and without an excess

Jane is choosing a health insurance policy with hospital cover. She has settled on a provider, and now needs to decide whether to include an excess.

She will pay $250 a month for hospital cover with this provider if she chooses a $500 excess.

Her premium will increase to $350 a month if she chooses to have no excess.

Before a hospital procedure, ask your doctor for a treatment cost estimate including the Medicare item numbers. Once you have these details, contact your insurer to find out how much of the cost will be covered, and what your out-of-pocket expenses are. The government’s Medical Costs Finder tool can help you understand what is typically paid and whether your likely out-of-pocket costs are high or low.

‘Extras cover’ will often have a maximum claim amount for each type of visit. For example you may only be entitled to claim a maximum of $30 per physiotherapy visit. ‘Extras’ cover often limits the amount you may claim in any year for a certain type of service. Once you have reached your benefit limit for that service, you will need to pay the full cost of those services.

Check what waiting periods apply to you

A waiting period refers to the time a person must wait to make a claim after they start a new policy or increase their level of cover. For example, a 12-month waiting period applies across all health funds to birth and obstetric services. This means you won’t be covered for the cost of having a baby in a private hospital for the first year after starting or increasing your insurance.

A 12-month waiting period usually applies to pre-existing conditions. The only exception is treatment for psychiatric, rehabilitation and palliative care, which only has a 2-month waiting period, even if the condition is pre-existing.

Waiting periods usually won’t apply if you are switching policies or insurers to a similar level of cover. This includes if you are switching to avoid losing cover because an insurer is changing your current policy.

Know your rights – where to go for help

Several government agencies administer and regulate the private health insurance industry.

  • The Department of Health administers the Private Health Insurance Act 2007 and private health insurance provider rules and is responsible for developing policy in relation to private health insurance.
  • The Commonwealth Ombudsman manages consumer complaints about private health insurance. They may be able to assist consumers in disputes with their insurers.
  • We enforce the Competition and Consumer Act 2010 and Australian Consumer Law. For example, these laws ban insurers making false or misleading claims. We also prepare a yearly report to the Australian Senate on the industry.

See also