Private hospital insurance helps cover the cost of hospital services and treatments (known as ‘clinical categories’) if you fall ill or have an accident and require surgery or inpatient hospital care.
The benefits of hospital insurance vary from policy to policy – different policies and providers cover different clinical categories – but your cover enables you to claim rebates for hospital accommodation, theatre fees and your doctor’s charges. The Medicare Benefits Schedule outlines everything that private hospital insurance can cover.
Whatever hospital cover you choose, the main benefit is choice. Private hospital insurance gives you the freedom to choose how and when you’re treated, either in a private hospital or as a private patient in a public hospital. You can:
- Choose your hospital, doctor and specialist
- Stay in a private room (if available and included on your cover)
- Avoid lengthy public hospital waiting lists
Do I need private hospital insurance?
Medicare and the public health system provide a nationwide safety net, so you’re not obliged to take out hospital insurance. However, the public health system is operating under mounting pressure – longer waiting times are common.
Private hospital insurance can make a huge difference if the worst happens. You can choose the hospital and doctor or specialist you want – we cover more than 1,300 private hospitals across Australia. And thanks to AccessGap (our medical gap arrangement with the Australian Health Service Alliance), we can help you minimise or even eliminate your out-of-pocket costs.
Are waiting times shorter with private hospital insurance?
The time you’ll wait for treatment in the public health system varies. It depends where you live and what procedure you require. As a rule, though, you’ll get treated much sooner with hospital cover.
Here’s an example: a 2014-15 report by the Australian Institute of Health and Welfare found that patients in New South Wales who required a knee replacement waited an average of six months in the public system. Moreover, 6.6% of patients who underwent knee surgery that year waited over 12 months. That’s a long time to wait, especially if your quality of life is being compromised.
With private hospital insurance, the public waiting list doesn’t apply. You’ll be seen much sooner and you’ll be able to choose your doctor or specialist and even your preferred date for surgery, while patients in the public system risk having their treatment or surgery ‘bumped’.
How does private hospital insurance reduce my tax bill?
The Medicare Levy Surcharge (MLS) is a levy that the Federal Government introduced to encourage people to take out private hospital insurance. It’s designed to help relieve the pressure on the public hospital system.
If you earn over $90,000 a year and you don’t have private hospital insurance, the MLS is automatically added to your tax bill. And it increases incrementally – the more you earn, the higher your MLS levy.
Use our handy Medicare Levy Surcharge calculator to see how the Medicare Levy Surcharge works, how it affects you and how much you can save at tax time by taking out Bronze Plus cover.
What out-of-pocket medical expenses can I expect?
It’s hard to say how much – if anything – you’ll have to pay out of your own pocket when you claim for hospital treatment and care. It depends largely on whether your doctor or specialist charges within the Medicare Benefits Schedule (MBS).
The MBS is the schedule of fees set by the Government for medical services. It determines the amounts that Medicare considers to be fair for a doctor or specialist to charge. Assuming your doctor or specialist charges within the MBS, Medicare will pay 75% of the fee (up to the pre-defined limit). Your hospital insurance covers the remaining 25%, so there are no out-of-pocket expenses.
However, if your doctor or specialist charges more than the MBS fee, you’re likely to have an out-of-pocket expense (known as a ‘gap’). But that’s where our AccessGap scheme comes in. Find out how AccessGap works to minimise or eliminate your out-of-pocket expenses.
Should I take out hospital cover sooner rather than later?
Without a doubt. The Government introduced Lifetime Health Cover Loading to encourage Australians to take out private hospital insurance. A bit like the Medicare Levy Surcharge, Lifetime Health Cover Loading is designed to help alleviate the pressure on the public system.
You can find out more about how Lifetime Health Cover Loading works, but in a nutshell, it rewards you for taking out hospital cover at a younger age. The later you leave it to take out hospital insurance, the more expensive it will be when you eventually do.