Introduction To Health Insurance

The who, what, why, when and how of Australian private health insurance.

What is private health insurance?

Private health insurance is designed to cover all or some of the costs of health care and treatment as a private patient in a private hospital. There are two areas that private health insurance will contribute towards: hospital cover and extras cover.

Hospital insurance covers a hospital’s accommodation fees and doctor/surgeon’s charges. This applies when you are a private patient in either a public, private, or day hospital facility. Extras cover helps with the cost of non-medical services such as physiotherapy, dental and optical treatment etc.

Generally, the more extensive the health cover, the greater the premium cost. When choosing your private health insurance, it is important to make sure it suits your particular needs, as well as your budget.

What are the benefits of having health insurance?

Private health insurance allows you to be treated in a private or public hospital as a private patient. This means that you may be able to choose the doctor that treats you, the hospital you are treated in and a time for treatment that suits you. Private health insurance also provides cover for services not covered by Medicare such as physiotherapy, dental, optometry and podiatry services. Many people rely on private health insurance to access services they would otherwise be unable to afford.

The decision to purchase private health insurance is a personal choice. People who cannot afford the premiums for private health insurance or do not wish to take out private health insurance for any other reason, continue to have the right to access the public hospital system through Medicare on the basis of clinical need.

What does private health insurance cover me for?

Hospital fees and accommodation within public or private hospital as a private patient. This includes, but not limited to:

  • Bed fees,
  • Operating theatre fees,
  • Intensive care fees,
  • Labour ward fees,
  • Pharmaceuticals covered by the Pharmaceutical Benefit Scheme,
  • Ancillary health services such as in-hospital physiotherapy,
  • Consumables (e.g. dressings),
  • Surgically implanted prostheses.

Medical fees charged by doctors and surgeon for in hospital services, such as;

  • Primary service fees (e.g. Knee reconstruction)
  • Anaesthetist and support staff fees,
  • Check-ups and consultations (whilst still in hospital),
  • Pathology and radiology services,
  • Allied health care,
  • Rehabilitative specialist, and
  • Psychiatric staff.

An finally, extras cover, like;

  • Dental,
  • Optical (eye glasses and contacts),
  • Physiotherapy,
  • Podiatry,
  • Natural Therapies,
  • Chiropractic,
  • Remedial Massage,
  • Hearing aids,
  • Health Appliances, etc.
What doesn’t private health insurance cover?

Private health insurance does not cover medical services that are provided out of hospital and which are covered by Medicare. These services include GP visits and consultations with specialists in their rooms and diagnostic imaging and tests. Private health insurance may not cover the total cost of the doctors’ services provided to you in hospital, which in turn may leave you with an out of pocket expense. This out of pocket expense is referred to as a ‘gap’.

Lastly, private health insurance will not pay towards services which are not deemed to have a medical basis, like cosmetic surgery.

Will I be covered as soon as I take out private health insurance?

When you join a health fund or increase your level of cover, you may have to wait some time before you are able to claim benefits. This waiting period protects you and others in your health fund by making sure that people cannot join a health fund solely for the purpose of making a claim, and then dropping their cover. This type of “hit and run” behaviour results in increased premiums for everyone.

The government sets the maximum waiting periods that funds can impose for hospital treatment:

The waiting periods for extras cover are set by individual health funds. However the industry generally sets them as:

  • 12 months for major dental, orthodontics and health appliances,
  • 2-6 months for optical cover, and
  • 2 months for everything else.
Can I still access Medicare if I have private health insurance?

Yes, even if you have private health insurance you are still able to access the public hospital system through Medicare and be treated as a public patient in a public hospital under Medicare at no charge, should you wish to do so.

Can a health fund refuse to insure me because I am elderly or chronically ill?

No. Health funds are not allowed to refuse membership to people on the grounds of health status, age, sex or claims history and must charge everyone the same premium for the same insurance policy. Health funds can however impose waiting periods for pre-existing ailments.

Can I change the level of cover I have?

Yes. You can change insurance policies and health funds at any time. However, if you change to a higher level of cover you may have to serve a waiting period before you can claim benefits at this higher level. This includes transferring to policies with lower excesses or higher limits.

“HIA simplified the process of sorting through the various policies available. It was an exceptionally quick and easy process.”

- Rebecca Crook, VIC