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Private health insurance explained
Private health insurance in Australia allows people who are covered to be treated as a private patient in hospital, with some or all of the cost covered by their insurance. This may mean not needing to wait as long for a procedure. As a private patient, you also generally have more control over what hospital you’re treated at and by which doctor.
Health insurance also covers some things that are not covered by the public health system in Australia, such as dental check ups and procedures. But what exactly you get from health insurance will depend on the type of policy you have.
Types of health insurance cover in Australia
Hospital cover
Hospital cover provides a benefit if you are treated as a private patient in hospital. It covers a range of medical conditions, which depend on what tier cover you have, including treatment costs and additional costs like travel and accommodation relating to covered procedures.
Generally, a Hospital policy will only cover a portion of the cost of receiving treatment, with the difference (known as a gap payment) to be covered by the patient out of pocket.
There are four tiers of Hospital cover in Australia, with varying levels of inclusions and cost:
Extras cover
An extras policy covers a range of medical and related treatments that occur outside of hospital. Some of the more common Extras inclusions are dental check ups and treatments, optical, physiotherapy, and certain pregnancy related services.
Like hospital cover, the types of conditions covered under an Extras policy will depend on what level of policy you choose. Policies also vary in terms of the limits for claiming under different categories per year and what percentage of an individual treatment you can claim back.
The higher the level of Extras coverage you choose, the more expensive the policy is likely to be.
Combined hospital and extras
You can choose to take out private health insurance that’s a combination of Hospital and Extras, although effectively you will have two separate policies. You generally have the ability to ‘mix and match’ your Hospital and Extras based on your needs. For example, you might choose to have a high level of Hospital cover and a low level of Extras, or vice versa.
Most people who get Hospital cover choose to do so through a combined policy. It's more common for people to have an Extras-only policy, the latest health insurance statistics show.
According to the latest data from the Private Health Insurance Intermediaries Association (PHIIA), combined Hospital and Extras policies represented 76.3% of all policies sold in 2024-25.
Ambulance cover
Depending on where you live in Australia, you may be charged for using ambulance services. Ambulance insurance is designed to cover policyholders for all or part of these costs. Ambulance cover can be purchased as part of a wider health insurance policy or as a standalone.
Overseas Visitor Health Cover
This type of cover is designed for people who will be living in Australia under certain Visa classes, but who will not be eligible to access the Medicare system. Overseas Visitor Health Cover works differently to private health insurance for permanent residents and citizens. For example, pre-existing conditions may not be covered.
Singles, couples, family and single family cover
Whatever the make-up of your family, there is a policy type to fit. The types of treatments and services that can be covered are the same for each. The only difference is the number and ages of people who can be covered by each:
Our data shows that half of Australians using Money.com.au are looking for a singles policy, followed by family policies (24%), couples policies (20%) and single-parent policies (6%).
Why get health insurance in Australia?
Here are some of the main benefits of private health insurance in Australia.
1. Skip hospital wait lists
Having private health insurance means you may receive treatment faster than you would through the private system. Public waiting lists on certain treatments can be very long and private health insurance can mean being seen sooner.
2. Choice and flexibility
If you have private health insurance you may be able to choose where to be treated and by which doctor. You also have a lot of choice when it comes to tailoring you cover to suit you needs, particularly on Extras cover.
3. Avoid paying extra tax
Depending on your income, if you don’t have an adequate level of Hospital cover you won’t need to pay the Medicare Levy Surcharge. There are also government incentives designed to encourage people to take out private health cover when they are younger.
4. Private health insurance rebate
Depending on your income level, you may receive a rebate from the government to lower the cost of your private health insurance. This will either come in the form of a discount on your premiums or as a tax offset.
When Australians come to Money.com.au to compare private health cover, cost remains the biggest driver, with 32.17% seeking cheaper options. Many also want to avoid the Medicare Levy Surcharge (19.29%) or secure better hospital and extras cover (18.21%). Others are motivated by specific health needs for themselves or their family (13.26%), planning for a baby (8.26%), visa requirements (4.4%), or being new arrivals to Australia (4.4%).
Private health insurance versus medicare
| Private health insurance | Medicare |
|---|---|
Your choice of doctor when you go to hospital | Covers hospital treatments but you can't choose your doctor |
Covers certain out-of-hospital services, like dental, through Extras cover | Does not cover out-of-hospital services, like dental |
Some policies cover ambulance services | Ambulance services not covered (but are paid by for the government in some states and territories) |
May mean you avoid the Medicare Levy Surcharge | You may need to pay the Medicare Levy Surcharge to help fund the system |
Health insurance basics everyone should know
Waiting periods
Health insurance policies usually have waiting periods, which is the time you must wait before you can claim on certain services. These can range from two months for basic hospital treatment to 12 months for pre-existing conditions or health insurance for pregnancy-related services. However, there are some scenarios where you may be able to get health insurance with no waiting period.
Gap payments
Even with private health insurance, you might still have out-of-pocket costs, also known as ‘the gap’. This happens when the doctor’s or hospital’s fees are higher than what Medicare and your health fund will pay. How much the gap payment will be depends on the type of treatment, which hospital you visit and other factors.
Excess
An excess is the amount health insurance policyholders need to pay upfront when admitted to hospital, as a contribution towards the cost of treatment. You may be able to opt for a higher excess to lower your health insurance premiums.
Lifetime Health Cover (LHC) Loading
This is a government initiative encouraging Australians to take out private hospital cover before they turn 31. If you join after that age, you'll pay an extra 2% on your premium for every year you're over 30, up to a maximum of 70%.
Medicare Levy Surcharge (MLS)
Higher-income earners who do not have private hospital cover may need to pay the Medicare Levy Surcharge. This is an additional tax designed to encourage people to take out private insurance and reduce pressure on the public health system.
Community rating
In Australia, health insurance premiums are not determined by your health status or risk. Under community rating, everyone pays the same premium for the same policy, regardless of age (including seniors), gender, or health conditions. This is different to other kinds of cover (like car insurance) where insurers can take account of factors like the policyholders age and past claims.
We recently surveyed over 1,000 Australians and found that 51% use their Hospital cover 1-2 times a year, 10% use it 3-5 times a year, 5% use it 6-10 times a year, and 2% use it more than 10 times a year. Our survey also revealed that 69% of respondents find the health insurance tier system (Basic, Bronze, Silver, Gold) somewhat confusing, particularly regarding what each tier covers and how it impacts costs.
How to save on health insurance
Regularly compare policies
Money.com.au research shows that less than 1 in 5 Aussies (19%) are confident comparing health insurance without professional help. The good news is getting help is easy and switching health insurers is a very simple process. So don’t be afraid to regularly review what you’re paying and change if you can find better value elsewhere. Comparing health insurance at least once a year is a good way to ensure you’re not overpaying.
Look for discounts
Some providers have health insurance offers and discounts of up to 12 weeks free on new eligible policies. This can be equal to hundreds of dollars in savings. Money.com.au research shows that weeks free is the most popular incentive for Aussies switching health insurance, with 33% saying it would motivate them.
Get coverage while you’re young
There are various incentives (and penalties) in place to encourage people to take out health insurance while they are young. For example, if you have not taken out hospital cover from the year you turn 31, but then decide to take it out later on, you will pay a 2% loading on top of your premium for every year you are aged over 30.
Pay your premiums before they increase
Health insurers typically increase their premiums once a year on 1 April. However, it may be possible to pre-pay your premiums for the remainder of the year at the current level. This would mean avoiding the premium increase for that year. Just be sure you won’t need to cancel your policy after you have forked out for the premiums in advance.
Only pay for what you need
Health insurance policies are sold in tiers to reflect the level of coverage available under the policy. Take a look at what’s covered under each tier and match your level of cover to what you actually need (or are likely to need in the future). Consider reducing your cover level if you are overpaying for cover you don’t need.
Increase your excess
On Hospital cover, you may be able to choose a higher level of excess on your policy. This will mean a higher up-front cost if you are admitted to hospital and make a claim, but your premiums should be lower.
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