Hospital cover is private health insurance that helps cover the costs of inpatient hospital admissions, including accommodation, theatre fees and charges raised by your doctor or specialist.
All medical treatments and services listed under the Medicare Benefits Schedule (MBS) are covered by private hospital insurance, although specific benefits – and the amount you can claim – depend on your level of cover.
With private hospital insurance, 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 you have to take out private hospital insurance?
No, it’s entirely your choice, but with the public health system in Australia under increasing pressure, private hospital cover can make a huge difference if you find yourself in need of hospital treatment.
The public health system is a good safety net, but you’re likely to encounter long waiting times for treatment and a growing risk of being ‘bumped’. What’s more, you don’t get any choice in the public system, whereas private hospital insurance gives you the freedom to choose your hospital and doctor or specialist.
At HIF, we cover more than 1,300 private hospitals across Australia. And thanks to our AccessGap scheme (our medical gap arrangement with the Australian Health Service Alliance), you can minimise and even eliminate your out-of-pocket expenses.
How do private insurance and public system waiting times compare?
It’s impossible to say how much longer you’ll wait for treatment in the public system, compared to a patient with private hospital insurance, but you’ll have a longer wait – potentially much longer – in the public health system.
Here’s an example, taken from a 2014-15 report by the Australian Institute of Health and Welfare. The research found that patients in New South Wales who required a knee replacement waited an average of six months in the public system, with some patients (6.6%) waiting over 12 months. Bearing in mind we’re talking about a painful, debilitating condition, that’s a long time to wait.
With private hospital insurance, you can effectively bypass the public waiting list and fast-track your treatment, choosing your doctor or specialist and even your preferred date for surgery.
How does private hospital insurance reduce my tax bill?
It all comes down to how much you earn and the Federal Government’s Medicare Levy Surcharge (MLS).
The MLS is paid by anyone earning over $90,000 and was introduced to encourage people to take out private hospital insurance and relieve pressure on the public hospital system. The levy increases incrementally with your income, so the more you earn, the more you pay at tax time – unless you have private hospital cover, in which case you don’t pay the MLS at all.
If you’d like to see how the Medicare Levy Surcharge works and how much you can save at tax time, use our Medicare Levy Surcharge calculator.
Is it better to take out hospital cover sooner rather than later?
Without a doubt. If you leave it too late, you’ll be hit by Lifetime Health Cover Loading (LHC).
The loading is another government incentive designed to encourage people to take out private hospital insurance and reduce the burden on the public system. It’s an additional cost that’s applied to private hospital insurance premiums, based on when you first took out hospital cover. In short, the later you leave it, the more expensive it’s likely to be when you eventually take out private hospital insurance.
Read all about how Lifetime Health Cover Loading works and rewards you for taking out hospital cover sooner rather than later.