What is private hospital cover?

Hospital insurance products are divided into four private health insurance tiers: Basic, Bronze, Silver and Gold. Each tier has a set number of clinical categories it must cover regardless of which health fund you’re with. That said, insurance providers have the choice of adding ‘plus’ or ‘+’ to Basic, Bronze and Silver hospital policies, which include coverage from the above tiers without covering enough to be in that tier. For example, a Silver Plus policy might cover pregnancy and birth-related services but not weight loss surgery.

The treatments included on your hospital insurance will depend on what tier policy you have. For example, Basic policies only include restricted cover for 3 of the 38 clinical categories, while Gold includes them all on an unrestricted basis.

Here’s a glimpse of what treatments are included on each hospital insurance tier:

You can find the full list of hospital treatments included on the health insurance tiers on our health insurance categories page.

Your hospital cover only includes medically necessary treatment that you receive as an inpatient, which usually requires you to be admitted to a hospital. It typically excludes non-hospital outpatient health services, including but not limited to:

• Dental check-ups
• Physiotherapy sessions
• Chiropractic work
• Optometry (such as prescription glasses).

The above treatments are subsidised by extras cover policies, which are sometimes called ancillary policies.

The treatments you can claim on will also depend on your level of cover or ‘tier’. For example, with a Silver policy, weight loss surgery and pregnancy and birth are exclusions as they aren’t a minimum requirement of the Silver product tier.

The highest level of hospital cover is Gold, which includes all 38 clinical treatments available under private hospital insurance. With this level of cover you’ll be able to claim a benefit for any medically necessary treatment performed in a hospital with a corresponding MBS item number.

While this is the maximum amount of hospital cover available, you can also take out a combined gold hospital and extras policy which will not only include all 38 clinical categories but will also pay towards select out-of-hospital services which Medicare doesn’t subsidise.

Basic hospital cover is the lowest level of private hospital insurance and is an option for those seeking a policy to avoid the Medicare Levy Surcharge (MLS). It includes restricted coverage for hospital psychiatric services, rehabilitation for patients recovering from surgery or illness and palliative care. If you choose to be treated as a private patient in a public hospital, you may be subject to public waiting lists for these services.

In addition to this, when claiming on a restricted benefit you will only be covered to a very limited extent. If you choose to go into a private hospital, the health fund will not pay any benefits towards the theatre fees and only a small benefit towards the accommodation fee. This means that you will have considerable out-of-pocket costs.

These policies don’t offer much in the way of coverage. However, some insurance providers may offer Basic Plus policies that come with additional benefits. These plus policies will likely come with a higher premium, so it might be worth going all the way up to the next tier with a Bronze hospital policy, or even a Bronze Plus policy if you want coverage for more clinical categories.

Depending on your state or territory of residence, ambulance services may be covered by your private health insurance. Residents in all states and territories except for QLD and TAS (where ambulance services are free), can take out ambulance cover through their private health insurer or their state’s ambulance authority.

People who hold a Department of Veterans’ Affairs Gold Card are entitled to free ambulance services across Australia, while residents of QLD and TAS have their ambulance costs covered by their state governments.

Generally when you have a private hospital insurance policy, your insurer will pay 25% of the Medicare Benefit Schedule fee (MBS), while Medicare will pay the remaining 75%. Your health fund could also pay towards other hospital expenses like your theatre fees, accommodation and food.

The MBS fee is the amount that the government has deemed fair to charge for medical treatments and services. Because private hospitals and doctors are allowed to charge above the MBS, you might have to pay the gap (the difference between the MBS and what you’re charged) as an out-of-pocket expense. Some hospitals might have a known gap or a no gap agreement in place with your health fund, meaning you may only have to pay a reduced gap or none at all. To determine if you’ll have to pay the gap, check with your health fund and doctors before receiving treatment.

Hospital cover excess is the lump sum you pay when you get admitted to hospital. Sometimes you can choose a higher excess in exchange for a lower premium, and vice versa. You will only be required to pay the excess if you are admitted to hospital. This payment is often limited to once per person per year. In addition to this, many providers won’t charge an excess for any dependent children on your policy. This will depend on who your provider is and the specific policy that you are on.

Similar to excess, co-payments are an amount you pay when you’re admitted to hospital. However, these are paid for each day you’re in the hospital. For example, you may choose a co-payment of $100 per day in hospital, which would result in a $500 payment if you’re admitted for five days.

Co-payments can also be capped per admission, per year of membership or both.

You could receive an Australian Government rebate (sometimes called the private health insurance offset) on the cost of your hospital cover. You can choose to receive this with your tax return or as a discounted premium. Your eligibility for the rebate will depend on your age and income.

The MLS is a tax levied on higher-income earners ($97,001+ for singles and $194,001+ for families) who don’t have hospital cover for everyday of the financial year. If you earn over the income threshold and want to avoid it, get covered – simple as that! You will not pay the MLS for each day that you hold an eligible hospital policy.

By taking out hospital cover before 1 July following your 31st birthday, you will not be subject to the Lifetime Health Cover (LHC) loading for as long as you hold the cover, even if you switch between health funds. Conversely, purchasing private hospital insurance after this age may subject you to a 2% loading on your premiums for every year after the age of 30 that you don’t have hospital cover as part of the government’s LHC regulations. LHC loading caps out at 70% and is removed once you’ve held continuous cover for 10 years.

After you take out hospital insurance before 1 July following your 31st birthday, you’re able to let the policy lapse for up to 1,094 days in your lifetime without incurring the loading. Keep in mind, that to become eligible to use the 1,094 days you must still hold an active hospital policy on 1 July following your 31^st birthday, so if your policy lapses prior to this date you may incur an LHC.

Above all, hospital cover gives you the confidence of knowing that when a medical event arises, you and your family have access to high-quality private care. The most important thing in life is your health. Regardless of what stage of life you’re in, everyone can benefit from private hospital cover.