Better health and ageing for all Australians

Private health insurance

Private health insurance - frequently asked questions

This page contains frequently asked questions by consumers about Private Health Insurance.

In this section:

Am I covered as soon as I take out private health insurance?

When you join a health fund or increase your level of cover you may have to wait some time before you are able to claim benefits. This waiting period protects you and others in your health fund by making sure that people can not join a health fund solely for the purpose of making a claim, and then dropping their cover. This type of "hit and run" behaviour results in increased premiums for everyone.
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Am I covered for a condition that I had before I took out private health insurance?

If you were ill before you took out private health insurance, you will have to serve a pre-existing ailment waiting period before you are covered for treatment associated with your illness. This waiting period is usually 12 months, however, you should check this with your fund.

Can a Health fund refuse to insure me because I am elderly or chronically ill?

No. Health funds are not allowed to refuse membership to people on the grounds of health status, age or claims history. Health funds can impose waiting periods for pre-existing ailments.

Can I change health funds if I want to?

Yes. You can change health funds at any time. However, if you change to a higher level of cover you may have to serve a waiting period before you can claim benefits at this higher level.

Can I change the level of cover I have?

Yes. You can change health funds at any time. However, if you change to a higher level of cover you may have to serve a waiting period before you can claim benefits at this higher level.

Can I still access Medicare if I have private health insurance?

Yes, even if you have private health insurance you are able to access the public hospital system through Medicare.

Do I have to have private health insurance?

No. The decision to purchase private health insurance is a personal choice. People who cannot afford the premiums for private health insurance or do not wish to take out private health insurance for any other reason, continue to have the right to access the public hospital system through Medicare on the basis of clinical need.

Please note that even if you have private health insurance, you can still elect to be treated as a public patient in a public hospital under Medicare.

Does my income affect whether or not I have to have private health insurance?

No, the decision to purchase private health insurance is entirely up to you. However, if you are eligible for Medicare, and in the financial year of 2009–10 if you earn an annual income in excess of $73,000 for singles and in excess of $146,000 for couples/families (with family income being adjusted by $1,500 per annum for each child after the first), you will be required to pay the Medicare Levy Surcharge if you do not have an appropriate level of private health insurance. These income thresholds are indexed to keep pace with average weekly earnings (For other financial years, contact the Australian Taxation Office (ATO)). This Medicare Levy Surcharge is 1% of your income. The surcharge is administered by the (ATO) who can be contacted on 13 28 61.

In the 2009-10 Budget, the Government proposes to means test the private health insurance rebate with changes to the Medicare Levy Surcharge. Further information can be found at Health Budget 2009-2010.

On 9 September 2009, the Senate voted against the Fairer Private Health Insurance Incentives Bill 2009. The Government is currently considering its opinions regarding the rebate tiers legislation.

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If I go overseas, how can I avoid waiting periods and pre-existing ailment restrictions when I get back?

You should ask your health fund if they are prepared to offer a suspension of your health cover while you are overseas. Suspending your membership allows you to stop paying your premiums for the time that you are overseas and then return to private health insurance at the end of your suspension period without having to re-serve any waiting periods.

If you have not served your total waiting period or pre-existing ailment waiting period at the time your suspension is granted, you will have to serve the rest of your waiting period when you resume contributions at the end of your suspension period.

Suspension rules vary between private health funds in relation to the length of time allowed and the grounds for granting the suspension. If you are still overseas at the end of the agreed suspension period granted by your health fund and they are unable to extend the suspension, you can check with other funds to see if they are prepared to grant a further suspension or you can resume paying your premiums from overseas until you return to Australia.

While your private health cover is suspended by your health fund, you are considered to have private health cover for Lifetime Health Cover purposes. You will not be required to pay any age-based loading on your premium provided you resume your premium payments at the end of the agreed suspension period.

If I have private health insurance, do I have to use my private health insurance, or can I still go into hospital as a Medicare patient?

Even if you have private health insurance, you are still able to be treated as a public patient in a public hospital under Medicare at no charge, should you wish to do so.

My private health insurance has a benefit limitation period. What does this mean?

See benefit limitation period in the Glossary.

My private health insurance has a co-payment on it. What is a co-payment?

See 'co-payment' in 'Glossary of Common Private Health Terms'.

My private health insurance has an exclusion on it. What is an exclusion?

See 'exclusion' in 'Glossary of Common Private Health Terms'.

My private health insurance has restricted benefits. What does restricted benefits mean?

See 'restricted benefits' in 'Glossary of Common Private Health Terms'.
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What are the benefits of Private Health Insurance?

Being a private health insurance member allows you to be treated in a private or public hospital as a private patient. This means that you may be able to choose the doctor that treats you, the hospital you are treated in and a time for treatment that suits you. Private health insurance also provides cover for services not covered by Medicare such as physiotherapy, dental, optometry and podiatry services. Many people rely on private health insurance to access services they would otherwise be unable to afford.

The decision to purchase private health insurance is a personal choice. People who cannot afford the premiums for private health insurance or do not wish to take out private health insurance for any other reason, continue to have the right to access the public hospital system through Medicare on the basis of clinical need.

What are the contact details of the registered health funds?

The contact details for the health funds can be found in the Yellow Pages under health insurance. Or, if you would like information relating to the various health funds via the Internet, the Private Health Insurance Administration Council (PHIAC) the web site details all registered health funds within each State. It also provides contact details for each fund and, if they have a web site, a link to each fund's website.

What can I do if I think my health fund has treated me unfairly?

If you feel that you have been treated unfairly, or you are unhappy with the service and information provided by your health fund, you should contact the Private Health Insurance Ombudsman which is established to assist consumers in these situations. The free call phone number is 1800 640 695.

What does private health insurance cover me for?

If you purchase hospital cover with a private health insurance fund, you will be covered for some or all of the costs of being a private patient in either a public or private hospital. Alternatively, you can still be treated as a public patient in a public hospital at no charge to you under Medicare, should you wish.

The exact amount of hospital treatment you are covered for depends on the level of hospital cover that you purchase, as well as the hospital and doctor you choose and whether they have an agreement with your health fund.

You can also purchase ancillary cover (also known as extras cover) that may offer you cover for services out of hospital that are generally not provided under Medicare, such as:
  • Dental treatment;
  • Ambulance;
  • Chiropractic treatment;
  • Home nursing;
  • Podiatry;
  • Physiotherapy;
  • Occupational therapy;
  • Speech therapy; and
  • Glasses and contact lenses.
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What doesn't private health insurance cover?

Private health insurance does not cover medical services that are provided out of hospital and which are covered by Medicare. These services include GP visits and consultations with specialists.

Private health insurance may not cover the total cost of the doctors' services provided to you in hospital, which in turn may leave you with an out of pocket expense.

What if I fall behind in my contributions?

If you are less than two months behind in your contributions, your health fund has to allow you to pay your outstanding contributions and maintain continuity of cover. This means that your private health insurance will be considered to have been continuous during this period.

If you are more than two months behind in your contributions, your health fund would most likely consider you not to be a member of that fund. You should discuss this with your health fund.

What is a front end deductible, also known as an excess?

See 'front end deductible' in 'Glossary of Common Private Health Terms'.

What is a loyalty bonus and how can I get one?

Health funds may offer loyalty bonuses to members in recognition of length of membership. A loyalty bonus may be offered as a discount on premiums or as goods and services.

The decision to offer a loyalty bonus and the type of bonus is at the discretion of the health funds. You should contact your health fund to find out what kind of loyalty bonuses it offers and how they are applied.

What is the pre-existing ailment rule?

See 'Pre-existing ailment' in 'Glossary of Common Private Health Terms'.
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What is a suspension?

Most health funds allow their members to suspend their private health insurance in certain circumstances, eg. when going overseas.

However, suspension rules vary between private health funds in relation to the length of time allowed and the grounds for granting the suspension.

While your cover is suspended, you will remain a member of the health fund and you will not be required to pay premiums. However, you will not be covered during the period that your membership is suspended. This means that you cannot claim any benefits in the period that your cover is suspended.

If a health fund agrees to grant you a period of suspension, you will not be required to serve further waiting periods or pre-existing ailment waiting periods (except where any waiting periods or pre-existing ailment waiting periods were not completed at the time of the suspension), provided you resume your premium payments at the end of the agreed suspension period.

If you are unable to suspend your membership, you may be able to lapse your cover without penalty under the Lifetime Health Cover period of absence provision.

What if I can't afford private health insurance?

If you cannot afford the premiums for private health insurance or do not wish to take out private health insurance for any other reason, you can continue to access the public hospital system through Medicare on the basis of clinical need.

What is a waiting period?

See 'waiting period' in 'Glossary of Common Private Health Terms'.

What is Private Health Insurance?

You may purchase private health insurance to cover all or some of the costs of health care as a private patient.

There are two types of private health insurance cover available: hospital cover and ancillary (or extras) cover.

Hospital insurance covers all or some of the costs of hospital treatment as a private patient including doctor's charges and hospital accommodation. This applies when you are a private patient in a public or private hospital or day hospital facility.

Ancillary cover helps with the cost of services such as physiotherapy, dental and optical treatment. Some funds offer packaged products that cover both hospital and ancillary services.

Generally, the more extensive the health cover, the greater the contribution rate (premium). When choosing your private health insurance, it is important to make sure it suits your particular needs, as well as your budget. Health funds should provide you with the information to make an informed choice about a private health insurance cover that is appropriate for you.
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Why is the Government encouraging people to take out private health insurance?

Prior to Government reforms such as the 30% Rebate and Lifetime Health Cover, the number of Australians with private health insurance was falling. This decline in membership numbers was creating unsustainable pressure on the public health system by substantially increasing Medicare costs.

The Government is committed to easing the burden on Medicare by striking a better balance between the private and public sectors, ensuring that Australians have a choice in their health care through a viable private health industry operating alongside a high quality public system with universal access.

In the 2009-10 Budget, the Government proposes to means test the private health insurance rebate with changes to the Medicare Levy Surcharge. Further information can be found at Health Budget 2009-2010.

On 9 September 2009, the Senate voted against the Fairer Private Health Insurance Incentives Bill 2009. The Government is currently considering its opinions regarding the rebate tiers legislation.

Why do I have to pay the Medicare Levy when I have private health insurance?

The Government supports universal access by all Australians to public health services under Medicare, irrespective of private health insurance status. People with private insurance can therefore choose to use Medicare or private health services depending upon their particular health needs.

In addition, privately insured patients using private services still draw substantially upon Medicare as well as health funds. For example, Medicare provides a number of Commonwealth funded health benefits such as the 75% Medical Benefits Schedule (MBS) rebate on in-hospital medical services (for people with private health insurance), the 85% (MBS) rebate on out-of-hospital medical services (e.g. GP visits) and the Pharmaceutical Benefits Scheme (which subsidises the costs of pharmaceuticals). On the other hand, health fund benefits cover 25% of the MBS fee for in-hospital medical services.

Health fund benefits may also not cover the total cost of hospital treatment, which in turn can result in an out-of-pocket expense. This out-of-pocket expense is referred to as the medical gap.

To remove the requirement that privately insured patients pay the Medicare Levy would therefore be inequitable.

Why do the health funds impose waiting periods on new members?

When you join a health fund or increase your level of cover you may have to wait some time before you are able to claim benefits. This waiting period protects you and others in your health fund by making sure that people can not join a health fund solely for the purpose of making a claim, and then dropping their cover. This type of "hit and run" behaviour results in increased premiums for everyone.
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