Is Basic Hospital cover the cheapest health insurance?

Yes, Basic Hospital cover is generally the cheapest private hospital insurance tier in Australia. Policies vary by insurer, but most Basic plans have lower premiums because they offer limited treatment and fewer inclusions. Some funds offer Basic Plus policies with a few useful services while still keeping costs low.

Can Basic Hospital cover help me avoid the Medicare Levy Surcharge?

Yes. Taking out an applicable Basic Hospital policy with an approved insurer will exempt you from paying the Medicare Levy Surcharge if your income exceeds the threshold. Just make sure the policy meets your needs and treatment options.

What is the cheapest health insurance to avoid the Medicare Levy Surcharge?

A Basic Hospital policy that meets government requirements is the cheapest way to avoid the Medicare Levy Surcharge. These policies often have minimal cover, so it’s important to compare options and check for exclusions before signing up.

Does Basic Hospital cover include private hospital treatment?

Generally, Basic Hospital cover only includes treatment as a private patient in a public hospital, and even then, only for limited services. Most Basic policies don’t offer full private hospital access or choice of specialist, unless upgraded to a Basic Plus or higher tier.

What’s the difference between Basic and Basic Plus Hospital cover?

Basic Plus policies meet the same minimum requirements as Basic cover but include additional services, like cover for hernia and appendix or joint reconstructions. They offer better value for those wanting more than the bare minimum without paying much more in premiums.

What’s the difference between Bronze and Basic Hospital cover?

Bronze Hospital cover includes more treatment categories than Basic cover, such as ear, nose and throat, bone fractures and chemotherapy. Basic policies may only cover limited services or just public hospital accommodation. Bronze is a step up for people wanting broader cover while still keeping premiums relatively low.

Does Basic Hospital cover help avoid Lifetime Health Cover loading?

Yes. If you take out a compliant Basic Hospital policy before 1 July after your 31st birthday, you can avoid the Lifetime Health Cover loading. Maintaining continuous cover also ensures the loading won’t apply in the future, even if you upgrade later.

Does everyone pay the 2% Medicare levy?

Most Australians pay the 2% Medicare levy through their tax to help fund the public health system. However, some low-income earners and people with specific exemptions – like certain veterans or foreign residents – may not have to pay it, according to the ATO. The levy is separate from the Medicare Levy Surcharge, which applies to higher-income earners without private hospital cover.

Basic Hospital Cover (Cheapest Health Insurance Australia)

What is Basic health insurance?

Basic health insurance in Australia refers to Basic Hospital cover, the most affordable and entry-level tier of private hospital insurance. It’s designed to meet the minimum legal requirements set by the government while offering very limited medical coverage.

As the lowest tier in Australia’s four-level hospital insurance system (Basic Hospital cover, Bronze Hospital cover, Silver Hospital cover, Gold Hospital cover), Basic Hospital cover includes only a few essential hospital services – often on a restricted basis. These typically include rehabilitation, psychiatric services and palliative care, and even then, access may be limited to public hospitals or come with significant out-of-pocket costs.

Basic cover is mainly used by people who want to avoid government taxes like the Medicare Levy Surcharge (MLS) or Lifetime Health Cover (LHC) loading, without paying high premiums. It’s not intended for those looking for comprehensive treatment options, but rather those seeking the cheapest way to maintain private Hospital cover.

What does Basic Hospital cover include?

Prior to the 2019 private health insurance reforms, Basic cover was often criticised as offering poor value for money and sometimes referred to as “junk policies.” While reforms have standardised what must be included at each tier, that stigma still lingers today.

Here’s what Basic Hospital cover generally includes:

Accident-only cover: Some Basic policies are "accident-only" products. They provide treatment in hospital if you're injured in an unforeseen accident, along with emergency ambulance transport and treatment for related complications. These policies don’t cover planned procedures or chronic conditions.

Ambulance services: Many Basic policies include emergency ambulance cover, but this varies by state and insurer. In some states (like Queensland and Tasmania), ambulance services are covered by the state government.

Hospital psychiatric services (restricted): Basic cover must include access to psychiatric care, but typically on a restricted basis – meaning cover is limited to treatment in a public hospital, and you may not be fully covered for private hospital stays.

Rehabilitation (restricted): This includes treatments like physical therapy following surgery or stroke. Under Basic cover, this is usually restricted, so you may only be covered in a public hospital with limited provider choice.

Palliative care (restricted): Basic cover includes end-of-life or symptom-relief care, again usually in a public hospital and with access restrictions compared to higher cover tiers.

Choice of doctor (limited to included services): For the restricted services mentioned above, some policies may allow you to choose your doctor or specialist in a public hospital, but for all other treatments, you'd rely entirely on the public system without choice or flexibility.

Yes, waiting periods apply to Basic Hospital cover, just as they do for all tiers of private hospital insurance in Australia. Regardless of whether you choose Basic, Bronze, Silver or Gold, insurers impose waiting periods before you can claim benefits for certain treatments.

Waiting periods include:

No waiting period for accidents that require immediate hospital treatment due to an unforeseen injury.

No waiting period if you're switching to another Basic level of cover and have already served waiting periods.

1 day for ambulance services, if included in your cover or covered by your state government.

2 months for mental health, rehabilitation and palliative care, which are the main restricted services included in Basic cover.

12 months for pre-existing conditions, which are assessed by your health insurer’s medical advisor.

These waiting periods are in place to prevent people from taking out insurance only when they need immediate treatment. If you’re switching from another policy and maintaining the same level of cover, your waiting periods may be waived.

How much is Basic private health insurance?

Basic Hospital cover typically costs between $80 and $120 per month for singles, $160 to $240 for couples and families, and $128 to $193 for single-parent families, according to Money.com.au analysis. This encompasses “Basic Accident Only” and “Basic Plus” policies.

Your exact premium for Basic Hospital cover will depend on several personal factors, including your age, where you live, your chosen health fund and whether you're eligible for the Australian Government Private Health Insurance Rebate. This rebate can lower your premium based on your income and age.

Other factors, like the Lifetime Health Cover (LHC) loading, may also apply. This is a penalty of up to 70% added to your premium if you didn’t take out eligible Hospital cover by July 1 after your 31st birthday.

If you're a high-income earner without Hospital cover, you may also be charged the Medicare Levy Surcharge (MLS) at tax time, which ranges from 1% to 1.5% of your income. Taking out Basic Hospital cover can be the most affordable way to avoid this surcharge, even if you don’t plan to use private hospital services.

Chris Whitelaw General Manager Health Insurance Money.com.au

Chris Whitelaw, General Manager - Health Insurance at Money.com.au

“Basic Hospital cover is the cheapest tier of private hospital insurance, but it really only suits a narrow set of needs. We speak to customers every day and quickly assess whether this bare-bones cover is right for them – or if they’d get far better value by stepping up to Bronze. In many cases, paying just a little more can unlock access to more treatments and greater peace of mind.”

Chris Whitelaw, General Manager - Health Insurance at Money.com.au

Pros and cons of Basic cover

Pros

It’s the most affordable tier of private Hospital cover, making it accessible for budget-conscious Australians.

Helps higher-income earners avoid the Medicare Levy Surcharge and the Lifetime Health Cover loading.

It includes limited access to rehabilitation, psychiatric care and palliative care, plus accident cover and potentially ambulance services.

Cons

Most treatments and procedures aren’t included, leaving you reliant on the public system for anything beyond restricted services.

Services that are included (like psychiatric or rehab care) are often covered only in public hospitals, with little or no choice of doctor.

In some cases, it isn’t that much cheaper than a Bronze policy, which usually has more benefits and inclusions.

Here’s a quick comparison of the key differences between Basic cover to the other hospital tiers:

Feature / Tier	Coverage scope
Basic	Covers essential and emergency hospital treatments only
Bronze	Covers 18 clinical categories, with many exclusions and restrictions
Silver	Covers 26 clinical categories, with some exclusions or restrictions
Gold	Covers all 38 clinical categories without restrictions
Feature / Tier	Pregnancy and birth
Basic	Excluded
Bronze	Usually excluded
Silver	Often excluded or limited, unless added to a Silver Plus policy
Gold	Included, usually with 12-month waiting period
Feature / Tier	Pre-existing conditions
Basic	12-month waiting period applies
Bronze	12-month waiting period applies
Silver	12-month waiting period applies
Gold	12-month waiting period applies
Feature / Tier	Psychiatric and rehabilitation care
Basic	Restrictions apply
Bronze	Restrictions apply
Silver	Restrictions apply
Gold	Included with standard 2-month waiting period
Feature / Tier	Premium cost
Basic	Lowest
Bronze	Moderate
Silver	Moderate to high
Gold	Highest
Feature / Tier	Out-of-pocket costs
Basic	Highest for non-covered treatments
Bronze	Higher
Silver	Moderate
Gold	Lowest for covered treatments
Feature / Tier	Ideal for
Basic	Those needing minimal cover for emergencies only
Bronze	People on a budget with basic hospital needs
Silver	Those looking for mid-level cover
Gold	People needing comprehensive care or pregnancy services

Feature / Tier	Basic	Bronze	Silver	Gold
Coverage scope	Covers essential and emergency hospital treatments only	Covers 18 clinical categories, with many exclusions and restrictions	Covers 26 clinical categories, with some exclusions or restrictions	Covers all 38 clinical categories without restrictions
Pregnancy and birth	Excluded	Usually excluded	Often excluded or limited, unless added to a Silver Plus policy	Included, usually with 12-month waiting period
Pre-existing conditions	12-month waiting period applies	12-month waiting period applies	12-month waiting period applies	12-month waiting period applies
Psychiatric and rehabilitation care	Restrictions apply	Restrictions apply	Restrictions apply	Included with standard 2-month waiting period
Premium cost	Lowest	Moderate	Moderate to high	Highest
Out-of-pocket costs	Highest for non-covered treatments	Higher	Moderate	Lowest for covered treatments
Ideal for	Those needing minimal cover for emergencies only	People on a budget with basic hospital needs	Those looking for mid-level cover	People needing comprehensive care or pregnancy services

This is a general guide only. Always read the Product Disclosure Statement (PDS) and other relevant policy documents before making a decision.

Who should consider Basic Hospital cover?

Basic policies are the lowest tier of Hospital cover in Australia, with minimal services and treatments included. They may suit individuals or families on a tight budget who don’t want a broad scope of coverage or need to be treated as a private hospital patient. Some Australians who might benefit from a Basic policy include:

Young singles or couples in good health

If you're fit, rarely visit hospitals and mainly want cover for unexpected accidents, Basic may be a cost-effective safety net.

Low-income families with basic care needs

Those who need some protection for essential treatments, like ambulance cover or overnight hospital stays in a public hospital, may find Basic cover meets their needs without costly premiums.

People between policies or planning to upgrade

If you’re switching funds or in a transitional life stage – like finishing study or between jobs – Basic cover can help you maintain continuity for LHC purposes while keeping premiums low.

People wanting to avoid the MLS or LHC

Basic cover helps eligible Australians avoid the Medicare Levy Surcharge (MLS) if they earn over the income threshold, and it can also prevent the Lifetime Health Cover (LHC) loading if taken out before 1 July following your 31st birthday.

Here’s how to find the best Basic health insurance policy:

1

Know what “junk” cover looks like

Some ‘Basic Accident Only’ Hospital policies only meet the minimum legal requirements and cover little more than public hospital care as a private patient. ‘Basic Plus’ policies may expand coverage to treatments like gastrointestinal endoscopy and tonsils, adenoids and grommets.

2

Compare beyond the premium

A cheaper monthly premium might hide high excesses or exclusions that leave you out of pocket when you need treatment. Read the Product Disclosure Statement (PDS) or speak to health insurance consultants to always check what’s included, what’s excluded, and whether your preferred hospitals or doctors are covered.

3

Consider a Basic Plus policy

Policies labelled ‘Basic Plus’ often include more common treatments while still being relatively affordable. These can be a smart middle ground if you want cover that’s not bare bones but still budget-conscious.

4

Choose a higher excess if it’s suitable

Choosing a higher hospital excess – like $750 for singles and $1,500 for families – can significantly reduce your premium. Just be sure you could afford to pay that amount upfront if you’re ever admitted to hospital.

5

Take a look at any incentives on offer

Some funds offer more value than just low premiums, such as health insurance sign-up discounts or access to virtual health services. If you're combining Hospital and Extras cover, check whether any waiting periods on Extras are waived for new members to help you claim sooner.

Is Basic Hospital cover worth it?

While the 2019 reforms aimed to phase out truly junk policies, many Basic policies still offer very limited cover – often only public hospital treatment or a few restricted services.

For people who mainly want to avoid the Medicare Levy Surcharge (MLS), Lifetime Health Cover (LHC) loading, or just need minimal protection in case of accidents, a Basic or Basic Plus policy can provide peace of mind.

That said, it’s essential to read the fine print. Some Basic policies are little more than tax-avoidance tools, while others include useful features like accident cover or inclusions for dental surgery and joint reconstructions.

If you’re young, healthy or between life stages and not expecting to use the cover much, it can be a reasonable choice – just make sure you’re not paying for something you can’t actually use. Always weigh up the pros and cons of health insurance before jumping in.