Health insurance explained

HOSPITAL AND EXTRAS COVER

There are two types of private health insurance cover: hospital cover and extras cover.


HOSPITAL AND EXTRAS PACKAGES

All funds* offer policies that include cover for both hospital cover and extras. Generally, the more extensive your health cover, the higher your premium. When choosing your private health insurance fund, it’s important to ensure it suits both your needs and your budget.


*Care To Compare does not compare all products in the market. Not all products are available at all times.


BE MINDFUL THAT… 

If you are taking out health insurance cover for the first time, or you’re upgrading to a higher level of coverage, you could face a waiting period before you can claim benefits through your new plan.


Make sure you inquire about waiting periods that will affect you. It’s important to note that some procedures, such as wisdom teeth removal, would require both hospital and extras cover as there is a hospital stay involved.


If transferring to a policy that has higher annual limits than your previous cover you will be required to serve the waiting period before receiving the additional annual limit.


WHAT IS HOSPITAL COVER?

Hospital cover is health insurance that covers your costs as a private patient in a public hospital, private hospital or day hospital facility, up to the MBS (Medicare Benefit Schedule) fee. The insurance covers your hospital accommodation, medical treatment (theatre, doctor and pharmacy fees), prostheses, and ambulance (in some states).


WHY SHOULD YOU GET HOSPITAL COVER?

One of the major benefits of hospital cover is peace of mind. As much as we like to think we have the stamina of youth, our health care needs change.


In Australia, we’re lucky to have a strong public healthcare system. But Medicare has its limitations. Private health care can help you and your family choose a preferred doctor or avoid elective surgery waiting lists.

WHY YOU SHOULD CONSIDER HOSPITAL COVER

Not only can hospital cover help you and your family choose a preferred doctor, or avoid elective surgery waiting lists, it can serve as a financial safety net and save you from unexpected tax.


If you’re looking for some peace of mind, or simply want to save on the Medicare Levy Surcharge, here’s why hospital cover matters.


WHAT ISN’T INCLUDED UNDER HOSPITAL COVER?

The procedures that aren’t included with hospital only cover depend on your level of cover and your health fund. You can choose to include or exclude many services depending on your current life stage – for example, pregnancy and assisted reproductive services can be removed once you have children.


If you’re after general treatment such as dental, optical, chiropractic or physiotherapy cover, these are only available under an extras policy rather than hospital cover.


WHAT ARE THE WAITING PERIODS FOR HOSPITAL COVER?

Every health policy includes waiting periods that you need to serve before you can claim benefits. The waiting periods for hospital cover are enforced by the Australian Government.


If you have a pre-existing condition that has shown signs or symptoms during the past six months – such as heart disease, high blood pressure or diabetes – you’ll be able to make a claim under hospital cover once you serve the 12-month waiting period.


Pregnancy similarly requires you to wait a period of 12-months. Psychiatric care, rehabilitation, palliative care (even for a pre-existing condition) and hospital admission only require a 2-month waiting period.


WHAT ARE THE DIFFERENT LEVELS OF HOSPITAL COVER?

Hospital cover has different levels ranging from basic hospital insurance to medium and top cover. 


Basic cover will usually cover you for the basics (such as accidents, and appendix and tonsil removal) while a higher level of cover will cover you for more complex procedures (such as back surgery, cancer, and heart procedures).


CAN YOU AVOID THE MEDICARE LEVY SURCHARGE (MLS) IF YOU GET HOSPITAL COVER?

Many people get hospital cover to avoid tax otherwise known as the Medicare Levy Surcharge (MLS). If you earn more than $90,000 as a single or $180,000 as a family, you could be paying up to 1.5% extra in tax if you don’t have hospital cover. 


By getting Government approved hospital cover, you won’t be liable for the Medicare Levy Surcharge.


HOW CAN YOU SAVE ON HOSPITAL COVER?

A great way to save money on your hospital cover is to compare health insurance in Australia. If you look at like-for-like policies, you can find the right policy for your budget and ensure you and your family get peace of mind.


WHAT IS EXTRAS COVER?

Extras cover, also referred to as general or ‘ancillary cover’, is insurance that offers benefits for day-to-day treatments often not covered by Medicare, including dental, physiotherapy and optical. Extras cover can also include podiatry, chiropractic, occupational therapy and alternative treatments like acupuncture, myotherapy and massage.


CONSIDERING EXTRAS COVER?

Extras cover is for treatments not included in your hospital healthcare. Some policies offer flexible limits, so you can spend your limits on the services you use most often. Maybe you’re after the best extras cover for physiotherapy or looking for dental insurance only.


Most health cover providers offer packaged health insurance for both hospital and extras. You also have the choice to purchase them separately. In the end, it’s your personal choice to invest in extras cover.


Navigating the long list of extras health cover policies and special offers can be tricky, because the range of benefits offered and paid will typically vary widely between health funds.


Health funds may restrict the total amount you can claim by setting either a total claimable maximum per year, or applying individual service limits. It is also important to be aware that funds may apply family or single limits restricting the number of times you can claim.


TYPES OF EXTRAS COVER

Extras health insurance can provide cover for ongoing costs such as dental, some pharmacy costs, physio, chiro or optical up to the benefit limit provided for under the policy.


Basic cover:

Great for younger members or infrequent users who are unlikely to require extensive coverage on extras services. Often includes general dental, physio, chiro and podiatry.


Medium cover:

If your needs are changing and you want extras health cover for more than just the basics. Often includes general dental, major dental, endodontic: orthodontic, optical, physiotherapy, chiropractic, podiatry, psychology and remedial massage.


Comprehensive cover:

Ideal if you want to be covered for an extensive range of services for you and your family members. Often includes general dental, major dental (benefit limits vary), endodontic, orthodontic (benefit limits vary), optical, physiotherapy, podiatry, orthotics psychology, remedial massage, natural therapies and medical aids and appliances such as hearing aids.


EXTRAS COVER MEANS MONEY IN 

YOUR POCKET

Extras cover gives you money back for non-hospital services. The total amount you can claim depends on the level of cover you have. So, the higher the level of health insurance cover, the higher your annual limit, and the higher the percentage you can claim back. That means more money in your pocket if you are a frequent user of the extras services.


The range of benefits offered and paid will typically vary widely between health funds. Some health funds may restrict the total amount you can claim by setting either a total claimable maximum per year, or applying individual service limits. It is also important to be aware that funds may apply family or single limits restricting the number of times you can claim.


WAITING PERIODS FOR EXTRAS

As a first-time buyer, or someone updating their health insurance plan, you’ll likely have a waiting period. These range from two months for benefits on general dental and 12-months for major dental or pre-existing conditions before you can make your first claim. During this time, you won’t receive benefits for certain treatments or you’ll receive lower benefits. 


For those customers switching policies any waiting periods already served won’t need to be re-served, so you’ll be able to claim on those services immediately.


EXTRAS COVER BENEFITS DIFFERENT PEOPLE, DIFFERENTLY

If you’re single or in a couple interested in health insurance for dental, optical, and physiotherapy, basic or medium cover shouldn’t break the bank. Generally, a couples policy is the same price as two single policies. This offers you and your partner the flexibility to choose the extras that meet your individual needs, rather than having to choose the same.


On the other hand, if your family is experiencing ongoing dental issues, maybe per person limits are important to you rather than a family limit. Maybe you are wanting to invest in braces for the kids? In this instance, comprehensive cover may be more suitable.


The bottom line is to choose a fund that reflects your lifestyle. Everyone has different needs and desires so it is helpful that most health insurance providers offer multiple levels of cover.


IS EXTRAS COVER GOOD VALUE?

Extras health cover can be great value if you’re making the most of the services available.


When booking treatment or care, check for HICAPS availability. This option allows you to make immediate claims on many services. If you miss making a claim on the spot, don’t worry, as most funds will refund claims up to 2 years after the date of service.


Look out for early payment discounts. Some funds offer up to 4% in discounts for payments made by direct debit, or by paying your annual premium upfront.


Review your health insurance payments. It can be better value to choose a fund that pays out a percentage of your bill for each treatment (e.g. 60%) rather than a fixed amount (e.g. $30).