Private Health Insurance vs Medicare — Do You Need Both in Australia?
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Contents
Australia operates a dual system of public and private healthcare. Medicare provides a baseline of universal coverage — but private health insurance can provide access to private hospitals, shorter waiting times, and a broader range of services. Whether you need both depends on your income, health needs, and personal priorities.
How Medicare and Private Health Work Together
| Service | Medicare (public) | Private health insurance |
|---|---|---|
| GP visits | Covered (bulk billing or gap) | Not typically covered |
| Public hospital | Covered (as public patient) | Provides choice of doctor, private room |
| Private hospital | Not covered | Covered (hospital cover required) |
| Specialist | Partially covered (MBS fee) | May reduce gap fees |
| Dental | Not covered (adults) | Covered by extras policy |
| Optical | Not covered | Covered by extras policy |
| Physiotherapy | Limited | Covered by extras policy |
| Psychology | Up to 10 sessions/year (via GP plan) | Covered by extras policy |
| Ambulance | Not covered | Often covered by hospital policy |
Types of Private Health Insurance
Hospital cover: covers you for treatment as a private patient in a public or private hospital — includes your choice of doctor, potentially a private room, and earlier treatment for elective procedures.
Extras cover (also called “ancillary” or “general treatment” cover): covers services not covered by Medicare — dental, optical, physiotherapy, chiropractic, psychology, hearing aids, gym, and more. Extras policies have annual limits per category.
Combined hospital + extras: most health funds offer bundled products covering both.
When Private Health Insurance Makes Sense
Hospital cover is most valuable if:
- Your income exceeds $93,000 (singles) — you may be paying or close to paying the Medicare Levy Surcharge (MLS)
- You are approaching or over 30 — Lifetime Health Cover loading of 2% per year applies for each year over 30 you delay taking out cover
- You want to choose your own specialist or surgeon
- You want quicker access to elective procedures (without public hospital waiting lists)
- You want to avoid shared ward accommodation in hospital
Extras cover is most valuable if:
- You have regular dental needs (check-ups, major work)
- You wear glasses or contact lenses
- You use allied health services frequently (physio, chiro, osteo, psychology)
When Medicare May Be Sufficient
- If your income is under $93,000 (singles), you pay no Medicare Levy Surcharge
- If you are under 30 and in good health, the LHC loading has not yet become significant
- If you have limited healthcare needs and are comfortable with public hospital waiting times for elective procedures
- If the cost of premiums outweighs the likely benefits you would use
The Medicare Levy Surcharge Tipping Point
For singles earning just above $93,000, the MLS is 1% — approximately $930–$1,000/year. Basic private hospital cover can cost $800–$1,200/year (depending on excess, fund, and state). At this income level, private cover may be cost-neutral or slightly more expensive.
At $108,000+, the MLS rises to 1.25% ($1,350+), and at $144,000+, to 1.5% ($2,160+). At these income levels, private hospital cover is almost always cheaper than the MLS.
Lifetime Health Cover (LHC) Loading
If you take out private hospital cover after your 31st birthday, you pay a 2% loading on your premium for every year over 30. This loading applies for 10 continuous years of cover, then is removed.
| Age at first cover | LHC loading |
|---|---|
| 30 or under | 0% |
| 31 | 2% |
| 35 | 10% |
| 40 | 20% |
| 50 | 40% |
| 60 | 60% |
This loading significantly increases the long-term cost of delaying cover.
How to Compare Health Funds
Private health insurance is regulated by APRA and PHIO (Private Health Insurance Ombudsman). The government’s comparison tool is:
privatehealth.gov.au — the official Australian Government private health insurance comparison website. Compare plans from all registered health funds.
Factors to compare:
- Monthly or annual premium (after rebate)
- Hospital excess (aim for $750 or less to avoid MLS)
- What procedures are covered or excluded
- Waiting periods for pre-existing conditions
- Extras annual limits and claim processes
FAQ
Can I use my private health insurance at a public hospital? Yes — you can choose to be treated as a private patient in a public hospital. Your health fund covers the hospital costs, and the hospital may charge an excess. This can allow you to choose your own specialist.
What are waiting periods? Most health funds impose waiting periods for certain services when you first take out cover — typically 2 months for hospital, 12 months for pre-existing conditions, and 12 months for obstetrics. Existing conditions waiting periods can vary; check your fund’s policy document.
Do all health funds charge the same premiums? No — premiums vary significantly between funds for similar levels of cover. The privatehealth.gov.au comparison tool helps you compare. Age, state of residence, and the cover you choose all affect the premium.
See also: Medicare Explained | Medicare Levy Surcharge | Centrelink Payments Guide
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