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Time for a check-up: Take a closer look at your private health insurance

It’s that time of the year again. Your advice about the annual rise in your health insurance premiums has just arrived. But don’t just sigh and make a mental note of the extra dollars coming out in a few days. Take it as a sign - a sign to reexamine your policy and make sure it is working for you.

It’s not just about your age, but your stage in life. Are you thinking about having a baby? Do you need a lot of physio? Is your health deteriorating to the point you think you might be more likely than not to need to go to hospital within the next year?

You may not want to ditch your health insurance altogether, but by taking a closer look and thinking about what and where your policy delivers - or isn’t delivering - you could get a lot better value for money.

How do I get the most out of my private health insurance?

Customise your policy

You don’t have to accept everything in your health insurance policy. If you never go to a physiotherapist, for example, there’s no point in paying for physiotherapy cover. So ask yourself: Do you need cover for extras like dental and physio? Are you looking for hospital cover? Answering these questions will help you to zero in on the type of health insurance that’s right for you. If your insurer is HCF, you can use its tool to customise your policy.

Once you know what you need, it’s time to start shopping around. Health insurance is a competitive market and there are a number of ways to compare policies. The Australian Private Health Insurance Association website has a list of common health services and treatments. It shows whether or not they are typically covered by health insurance policies. The Australian government website has a health insurance comparison tool that allows you to compare policies side-by-side.

Talk to a private health insurance broker


A man talking to a private health insurance broker


Unlike health insurers and insurance agents, brokers ensure you are getting the best value for your money. They will look at your health and lifestyle. Then find a policy that meets your needs that's also within your budget. Plus, some brokers offer their services for free because they get a commission from insurance companies when you purchase a policy from them. But always confirm this with your broker before engaging their services.

Take advantage of discounts

Your health insurance premiums are likely to go up every year, but there are ways to soften the blow. Some health insurers, such as HBF and NIB, offer discounts if you pay your premiums annually instead of monthly. And health insurers offer age-based discounts that can save you money.

Check the details

When you’re looking at health insurance policies, it’s important to check the details. What is and isn’t covered? What are the excesses and co-payments? How much will you have to pay if you go to the hospital? Is there a limit on how much the health insurance company will pay? Medibank Bronze, for example, covers optical while HCF Hospital Bronze does not.

What factors influence your decision to have private health insurance?

Your age

The older you get, the more your health insurance premiums are likely to go up. Why? Because of the ailments associated with ageing. Heart diseases, such as heart attacks and angioplasty, are some of the most common health problems faced by those over 50. If you're over 60 and have suffered from heart complaints, you may require medication, surgery and/or lifestyle changes. The medical treatment for a heart attack is $25,000 on average, plus ongoing costs, which can include extensive surgical procedures and lengthy recovery periods. This translates to more time in hospital and more time away from work. The ambulance fee alone costs an average of $874 per trip.

Another is hip replacement. This is common for people over 45, particularly women. And the surgery can cost an average of $19,400 if you're without comorbidities or complications, according to the Australian Institute of Health and Welfare (AIHW).

Diabetes is another ailment associated with ageing, particularly for those 55 years and above. The cost associated with Type 1 diabetes is a whopping $738,000 if you develop complications. Sadly, 40 percent of those with T1 diabetes develop complications.

But that’s not to say you should automatically switch to a basic policy as soon as you hit a certain age. Just remember to factor in your health as you age when you’re reviewing your health insurance policy.

Having a baby

If you’re pregnant and have private health insurance, you should check whether your policy covers obstetrics (the medical care of a pregnant woman and her baby). We have previously mentioned that you don’t need to take out family cover. Each adult can have an individual policy, with only the mother-to-be requiring pregnancy cover. This way there will only be additional premiums on one policy, not both, so don’t be afraid to have separate policies.


a pregnant woman in doctor's office


Most health insurers cover at least the cost of the delivery, but some policies don’t cover any of the costs associated with having a baby, which could range from $1725 and $7392 in a private hospital.

Playing contact sports

If you play contact sports and you're a man, you're twice as likely to be hospitalised for sports injuries than women, according to the AIHW. This is especially true for men aged 65 or older or those who participate in all types of football. The largest proportion of hospitalised injuries was for hip and lower limbs, followed by the shoulder and upper limbs.


If you have children, they will likely increase the cost of your health insurance premiums. AIHW found that the number of hospital admissions for children has been increasing by 3.2 percent per year since 2016.

You also have to factor in dental work, which costs an average of $7.62/week or $396.24 annually. If you live in the ACT, it can be as high as $13.73 weekly or $713.96 per year. Take note: that’s per child.

Then there are eye problems for children, which affect about 35 percent of the population.

And, of course, the type of support needed can be as variable as your children’s personalities. Before signing up for a family plan, make sure each of the family member's needs can be met.

What is the Medicare levy and what triggers it?

The Medicare Levy is a 2 percent levy on your taxable income that helps pay for the public health system. It’s generally charged in the same way as income tax, in that your employer will take it out as part of your tax deductions before you get paid.

The Medicare Levy Surcharge (MLS) is an extra tax paid by Australians who do not have private health insurance and earn above a certain amount. The surcharge is currently one percent or 1.5 percent, depending on your income. If you choose not to have private health insurance and your income is above the surcharge thresholds, you'll be hit with the MLS.

For example, if you're a single person earning $105,000 a year, you'll pay an extra $1050 in tax because you don't have private health insurance. There are, however, a number of exemptions.

So, whether you have private health insurance or not, it’s important to understand how the Medicare Levy Surcharge works and how it might impact you.

Does private health insurance give you better access to specialists?

Private health insurance does not always guarantee you faster access to health specialists. In fact, public patients are seen first, followed by private patients, particularly for routine surgeries in public hospitals. The wait time for some treatments, on the other hand, might be lengthy. About 3 percent of patients are waiting more than a year for surgery.

Having private health insurance may give you the option of choosing your own specialist, rather than being referred by your GP. And if you're admitted to the hospital as a private patient, you may be able to choose the hospital and even the time of your admission.

So, having private health insurance doesn't always guarantee you faster access to health specialists. But it does give you more choice and control over your health care.

But note that private health insurance usually only covers the cost of a specialist consultation if you're admitted to the hospital as a private patient. This is because, by law, private health insurance can't help pay for out-of-hospital specialist fees, possibly to avoid double-dipping and wasting taxpayers' money.

If you're not admitted to the hospital as a private patient, you'll need to pay for the cost of your specialist consultation out of your own pocket. However, you may be able to claim a rebate from Medicare for part of the cost.

What about elective surgery?

Elective surgery is surgery that you choose to have, as opposed to surgery that's required because of an illness or injury. A common example is surgery to correct a health condition, such as a hip or knee replacement.

Most health insurance policies cover elective surgery when it's performed in a hospital. But there may be some exclusions, such as dental and optical procedures. And the level of cover for each operation can vary from policy to policy.

Some health funds also offer cover for elective surgery when it's performed in a day surgery or private hospital. This is sometimes called 'extras' cover.

The waiting time for elective surgery can vary depending on the type of surgery and the hospital. In some cases, you might have to wait many months for an appointment. In 2019–2020, the median wait time for elective surgery in the public system was 39 days. But during the Covid pandemic, this has increased to about 48 days in some cases. For some, it could be as long as 348 days of waiting.


a woman using her health insurance to get a surgery


If you have private health insurance, you might be able to choose your surgeon and the hospital where you have your surgery. You may also be able to choose the time of your admission because private insurers give a list of links to the reports from the state government on wait times in the public health system for different procedures for different states in Australia.

However, keep in mind that there are usually extra costs involved with having surgery as a private patient. These can include things such as accommodation and anaesthetic.

You may be able to claim a rebate from Medicare for part of the cost of your surgery, but you'll need to check with your health fund.

How easy is it to change funds?

It's relatively easy to change health funds. You just need to give your health fund of choice written notice, usually within 30 days of your policy's anniversary date. Although the number of people with private health insurance is in decline, companies do want to keep you so they may adjust your policy as a sweetener. It’s always worth asking.

Bear in mind that if you switch health funds, you may have to wait a while before your new health fund will start covering you. This is known as the 'waiting period'. This is particularly the case if you have preexisting conditions.

Waiting periods exist to stop people from signing up for health insurance only when they need it. For example, if you wait until you need surgery before taking out health insurance, your health fund may make you wait 12 months before they start covering you for surgery.

Some health funds have shorter waiting periods than others. And if you have continuous health cover, you may not have to wait at all. But usually, this is limited to accidents. Compare insurance policies to see waiting periods.

You can also change health funds if you're moving to a new state or if your health fund increases its premiums.

Is private health insurance worth it?

There are a number of factors to consider when deciding whether private health insurance is worth it for you. The main reason people take out private health insurance is to avoid waiting for treatment in the public health system.

But you need to weigh up the cost of your health insurance premiums against the out-of-pocket costs you'd incur if you had to pay for treatment yourself.

Another factor to consider is the level of cover you need because Medicare doesn't cover everything. If you're young and healthy, you might decide that basic health insurance is all you need. But if you have a family history of health problems, you might decide that comprehensive health insurance is a better option.

If you rarely see a doctor or haven't been to a hospital in the last few years, you might decide that private health insurance is not worth the cost.

It's important to remember that you can't usually claim on your health insurance for something that is already covered by Medicare. So, if you're only looking for cover for things like dental and optical, you might be better off just taking out extras cover.

Extras cover is usually much cheaper than comprehensive health insurance. And it can be used for a range of services, including physiotherapy, chiropractic and massage.

The bottom line is you might not want to ditch your insurance altogether. But you might just want better value for money. So use this annual premium rise as a time to take stock, and examine your policy.

When deciding whether to change insurers, factor in the cost, convenience and peace of mind offered. As well as the level of coverage for your current circumstances.

If you have any problems with your private health insurance, lodge your complaint with us. We are here to help you handle it. Just say the magic words 'Help Me Handle It'.