What is Private Health Insurance?

There are two types of private health insurance - hospital policies cover you when you go to hospital, while general treatment policies (sometimes known as ancillary or extras) cover you for ancillary treatment (e.g dental, physiotherapy). Most health funds offer combined policies that provide a packaged cover for both hospital and general treatment services, or you can buy separate hospital and general treatment policies to 'mix and match'.

Page last updated: 31 October 2012

Primary medical health care treatment, including visits to GPs or medical specialists, or diagnostic imaging outside of hospital is funded through Medicare only. Private health insurers are prohibited by law from offering benefits for medical services that are provided out of hospital, and can only fund medical treatment provided in hospital to admitted patients.

People with private health insurance who attend private emergency departments usually can not claim theses costs under their health insurance unless they are subsequently admitted to the hospital.

Hospital cover

Hospital policies help cover the cost of in-hospital treatment by your doctor and hospital costs such as accommodation and theatre fees. Generally, medical services listed under the Medicare Benefits Schedule (MBS) are covered by private hospital insurance. Some services which are not listed on the MBS, such as elective cosmetic surgery or laser eye surgery, are only covered by private hospital insurance to a limited extent or not at all.

Hospital policies fall into four general categories:
  • Top Private Hospital Cover - has no restrictions or exclusions on MBS-payable items (medical services provided by doctors in hospital),
  • Medium Private Hospital Cover - does not exclude any items on the MBS, but has restrictions on some MBS items; only limited benefits are paid for restricted items,
  • Basic Private Hospital Cover - excludes one or more MBS items; no benefits are paid for excluded items,
  • Public Hospital Cover - covers default benefits for treatment in public hospital only.
Funds generally offer several different policies across these categories, combined with different levels of excess or co-payments.

An excess is amount that you agree to pay towards the cost of hospital treatment, in exchange for lower premiums. You may be required to pay an excess every time you go to hospital, or only the first time, depending on the private health insurance policy you buy. A co-payment is where you agree to pay a set amount for each day you are in hospital, in exchange for lower premiums - for example, you agree to pay the first $50 per day in hospital.

General Treatment cover

General treatment policies (also known as ancillary or extras cover) provide benefits for non-medical health services - for example, physiotherapy, dental and optical treatment. General treatment policies may be offered separately or combined with hospital cover.
There are three general categories of policies:
  • Comprehensive Cover - includes most or all of: general dental, major dental, orthodontics, optical, physiotherapy, chiropractic, occupational therapy, pharmaceuticals, podiatry, and hearing aids,
  • Medium Cover - includes most or all of: general dental, major dental, optical, physiotherapy, chiropractic, podiatry, occupational therapy services (but usually does not include orthodontics, health management, hearing aids, and other items),
  • Basic Cover - includes at least one of general dental, optical, physiotherapy and chiropractic.

Combined cover

Many health funds offer packaged policies that provide cover for both hospital and general treatment services. Some funds have pre-packaged policies, while others allow you to mix and match hospital and general treatment options. For example, you may be able to select a basic hospital cover and a comprehensive general treatment policy to create your own combined package.

If you would like to see what private health insurance products are available or are simply looking for further information on private health insurance in general, you may wish to visit the Private Health website. The website will enable you to browse Standard Information Statements (SIS) for each private health insurance product available in Australia, and contains contact details for each private health insurer as well. SIS are standard documents required under legislation which provide brief summaries of each private health insurance product in Australia including the monthly premium and any applicable benefit limitations.