How it works
There are two types of private health insurance - hospital policies cover you when you go to hospital, while general treatment policies (sometimes known as ancillary or extras) cover you for ancillary treatment (e.g. dental, physiotherapy). Most health funds offer combined policies that provide a packaged cover for both hospital and general treatment services, or you can buy separate hospital and general treatment policies to 'mix and match'.
If you are purchasing cover for the first time or upgrading your plan, you need to serve a waiting period before you can claim your benefits. During the waiting period, you do not receive any benefits for certain treatments or you receive lower benefits for a period of time.
You should also take note of what is and isn't covered on your policy - not all policies are comprehensive. Depending on your level of cover, you may not be fully covered against all costs associated with your treatment and have to pay some out-of-pocket expenses.
You should review your cover from time to time to ensure it still meets your healthcare needs. If the premium has become a concern for you, there are a number of ways you may be able to manage your policy and lower costs. If you already have private health insurance, you can also consider moving to a different fund.
Hospital policies help cover the cost of in-hospital treatment by your doctor and hospital costs such as accommodation and theatre fees. Generally, any medical services listed under the Medicare Benefits Schedule (MBS) can be covered on some form of private hospital insurance. Some services which are not listed on the MBS, such as elective cosmetic surgery or laser eye surgery, are only covered by private hospital insurance to a limited extent or not at all.
- Top Private Hospital Cover - has no exclusions or restrictions and must cover all services where Medicare pays a benefit;
- Medium Private Hospital Cover - excludes or restricts one or more of the following but includes any services in the basic classification: Pregnancy and birth related services, Assisted reproductive services, Cataract and eye lens procedures, Joint replacements i.e. shoulder, knee, hip and elbow including revisions, Hip and knee replacements, Hip replacements, Dialysis for chronic renal failure and Sterilisation.
- Basic Private Hospital Cover - excludes or restricts one or more of the following: Cardiac and cardiac related services, Non-cosmetic plastic surgery, Rehabilitation, Psychiatric services, Palliative care;
- Public Hospital Cover - covers minimum benefits for treatment in public hospital only. Public hospital waiting lists still apply.
The classifications do not take into account hospital treatment for which Medicare pays no benefit (e.g. most cosmetic surgery or other services with are not listed on standard information statements); and do not take into account whether a policy includes an Excess and/or Co-payment or benefit limitation period.
For explanations of the medical terms used in the Standard Information Statements, you can refer to the Glossary. For advice on policy exclusions and restrictions, you can refer to the Ombudsman's Factsheet on Exclusions and Restrictions.
Funds generally offer several different policies across these categories, combined with different levels of excess or co-payments.
An excess is amount that you agree to pay towards the cost of hospital treatment, in exchange for lower premiums. You may be required to pay an excess every time you go to hospital, or only the first time, depending on the private health insurance policy you take out. A co-payment is where you agree to pay a set amount for each day you are in hospital, in exchange for lower premiums - for example, you agree to pay the first $50 per day in hospital.
General Treatment cover
General treatment policies (also known as ancillary or extras cover) provide benefits for ancillary services - for example, physiotherapy, dental and optical treatment.
General treatment policies may be offered separately or combined with hospital cover. There are three general categories of policies. The classifications are based on the services that are shown as covered on standard information statements.
- Comprehensive Cover - must include cover for General dental, Major dental (benefit limit must be average or above average for the industry), Endodontic, Orthodontic (benefit limit must be average or above average for the industry), Optical, Non-PBS Pharmaceuticals, Physiotherapy, Podiatry, Psychology;
- Medium Cover - must include cover for General dental, Major dental, Endodontic AND any five of the following: Orthodontic, Optical, Non-PBS Pharmaceuticals, Physiotherapy, Chiropractic, Podiatry, Psychology, Hearing aids;
- Basic Cover - all other policies.
For explanations of the medical terms used in the Standard Information Statements, you can refer to the Glossary
Many health funds offer packaged policies that provide cover for both hospital and general treatment services. Some funds have pre-packaged policies, while others allow you to mix and match hospital and general treatment options. For example, you may be able to select a basic hospital cover and a comprehensive general treatment policy to create your own combined package.