Basic hospital cover provides a base level of health insurance, which can come in useful if you have an accident and need hospital treatment. While it offers more limited cover than higher-tier policies, it’s the cheapest type of hospital plan available and can help you avoid additional taxes like the Medicare Levy Surcharge or Lifetime Health Cover loading.
What is Basic hospital cover and what does it include?
Basic health insurance is the lowest level and cheapest tier of hospital cover available in Australia. It offers accident cover, emergency ambulance (in states and territories without state-provided ambulance services) and restricted cover for three areas of treatment:
- Rehabilitation
- In-hospital psychiatric services
- Palliative care
No other treatments or services are available on this level of hospital cover.
If you want to be covered for a wider range of hospital treatments and services, you will need to take out a Basic Plus policy or Bronze, Silver or Gold hospital cover.
What does ‘restricted cover’ mean?
When a service is restricted, your insurer will only partly cover the cost. This will generally pay for accommodation as a private patient in a public hospital, but it won’t cover the full cost of treatment in a private hospital, which can leave you with significant out-of-pocket expenses.
What is a Basic Plus hospital policy?
Some providers offer Basic Plus policies, which provide more cover than standard Basic policies. They usually cost slightly more but are still cheaper than Bronze hospital policies, which cover a broader range of treatments.
In addition to accidents, emergency ambulance and restricted rehabilitation, psychiatric and palliative care services, Basic Plus plans include additional clinical categories, which could include:
- Eye (not cataracts)
- Tonsils, adenoids and grommets
- Joint reconstructions
- Hernia and appendix
- Dental surgery
- Gastrointestinal endoscopy
- Gynaecology
- Male reproductive system
- Miscarriage and termination of pregnancy
How much is basic hospital cover?
Basic cover is the cheapest level of private hospital insurance you can get.
How much it will cost you will vary depending on the provider, who the plan’s for as well as other factors such as where you live and how much you earn. However, you can find cover for less than $1,000 a year per person.
As an example, here’s how much someone living in Sydney on a base-tier income could expect to pay, based on the cheapest premiums available through Savvy in March 2026:
| Policy type | Cheapest monthly premium |
|---|---|
| Single | $78 |
| Couple | $157 |
| Family | $157 |
| Single parent | $125 |
| Source: Compare Club, March 2026 Quotes based on a 40-year-old living in Sydney earning a base tier income, choosing a $750 excess. |
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But how does this compare to the cost of other hospital insurance tiers?
The table below shows the cheapest monthly Basic Plus and Bronze policy premiums on offer through Savvy for the same applicant:
| Policy type | Basic Plus cheapest monthly premium | Bronze cheapest monthly premium |
|---|---|---|
| Single | $83 | $90 |
| Couple | $166 | $181 |
| Family | $166 | $181 |
| Single parent | $132 | $148 |
| Source: Compare Club, March 2026 Quotes based on a 40-year-old living in Sydney earning a base tier income, choosing a $750 excess. |
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Paying just a few dollars more each month could upgrade you to a higher tier, giving access to many more inclusions than a Basic plan. If you’re looking for a plan to give you coverage rather than simply savings at tax time, you might want to consider these higher-level policies.
Do I need Basic health insurance for tax purposes?
Taking out Basic hospital cover can help you take advantage of government incentives designed to reduce costs or avoid extra tax, and is often the main reason people choose this level of cover.
Medicare Levy Surcharge
The Medicare Levy Surcharge (MLS) is an additional tax you're required to pay on top of standard income tax and the Medicare Levy if you don’t have health insurance and earn above a certain amount. The more you earn, the more you’ll be required to pay.
These are the MLS income thresholds for the 2025–26 financial year:
| Base tier | Tier 1 | Tier 2 | Tier 3 | |
|---|---|---|---|---|
| Single threshold | $101,000 or less | $101,001 – $118,000 | $118,001 – $158,000 | $158,001 or more |
| Family threshold | $202,000 or less | $202,001 – $236,000 | $236,001 – $316,000 | $316,001 or more |
| MLS rate | 0% | 1% | 1.25% | 1.50% |
| Source: ATO | ||||
Example:
Let's say you’re a public school teacher in NSW on $127,281 and that you’re single. Without considering any other tax deductions, you'd be looking at an additional $1,591 in tax on top of the regular 2% Medicare levy if you don't hold hospital cover.
If you'd taken out the cheapest Basic hospital policy, you would have paid $936 for the year, saving you $655 as well as giving you cover if you have an accident or need an ambulance.
Lifetime Health Cover loading
If you don’t take out at least Basic private health cover by 1 July after your 31st birthday , you'll be required to pay Lifetime Health Cover (LHC) loading. This is an additional 2% on top of your premium for every year you aren’t covered by private hospital insurance over the age of 30, up to a maximum loading of 70%.
As an example, if you wait until you’re 40 to take out private health insurance, you might have to pay an additional 20% on top of the cost of a standard health policy.
On top of this, you will not receive the private health insurance rebate on the LHC loading component of a policy – making your insurance costs even higher.
Private health insurance rebate
The private health insurance rebate is an age- and income-tested benefit that helps to reduce the cost of private health insurance. You can either claim this rebate back at tax time as a lump sum or on an ongoing basis through reduced premiums from your health insurer.
Why compare health insurance policies through Savvy?
Top tips for finding the cheapest basic health insurance policy
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Compare your options
While the coverage might be the same, prices aren’t, so look at different providers to find the plan that offers the best value for your needs.
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Lower your premiums with a higher excess
Opting for a higher excess can reduce your monthly premiums, but make sure you can cover the out-of-pocket cost if you need treatment.
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Take advantage of sign-up deals
Many insurers offer discounts or special promotions when you join, which can help you save on your premiums straightaway.
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Pay annually to save more
Paying your premium upfront for the full year can earn you a discount. If you pay before April price rises, you may also lock in lower rates.
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Choose cover that fits your needs
Don’t just chase the cheapest price. Make sure the policy covers the services you actually need while still offering good value.
Is basic hospital cover right for me?
Basic hospital cover can be handy, but it depends on what you want it for and your situation.
It can be a good fit if you are:
- Young and healthy: Basic cover is often chosen by younger, healthy adults who want to keep costs low.
- About to turn 31: taking out cover now can help you avoid Lifetime Health Cover (LHC) loading later.
- A higher earner: even the most basic cover can help you avoid the Medicare Levy Surcharge (MLS).
- On a tight budget: Basic policies provide essential cover, such as emergency ambulance, without the cost of higher-tier plans.
However, Basic cover may not be ideal if you:
- Have existing health conditions or risks: the minimal coverage provided may not meet your needs.
- Plan to use cover for pregnancy or major treatments: most of these services are not included under Basic cover.
- Want more comprehensive protection: for broader coverage, you should look at a higher-tier policy – though these can cost significantly more.
