Written by Private health insurance can help you cover the costs of medical treatment and care that aren’t included under Medicare. By taking out a policy and paying regular premiums, you can access to a choice of hospitals and doctors, along with a wide range of other benefits.
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Types of health insurance
There are two main types of health insurance available in Australia, available to purchase separately or as a combined policy:
Hospital cover
Hospital cover helps pay for in-hospital treatment as a private patient in either a public or private hospital. It may also give you the option to choose your doctor, access private hospital care and avoid public hospital wait times, depending on your policy. There are generally four different levels of cover you can choose from:
- Basic cover: covers only a small number of hospital treatments.
- Bronze: includes everything in Basic, plus additional treatments.
- Silver: covers more than Bronze, offering a broader range of services.
- Gold: the highest level, covering all treatment categories.
Extras cover
Extras cover helps pay for out-of-hospital treatments that Medicare doesn’t cover. It’s designed to help with preventative and remedial treatments that support overall health. Extras policies range from basic to comprehensive, with coverage varying by provider:
- Basic: covers a limited range of services, often with lower benefit limits.
- Mid-level: includes more treatments and higher rebates.
- Comprehensive: covers a wide range of services with the highest benefit and annual limits.
Common health insurance inclusions and exclusions
Hospital cover, as its name suggests, covers treatment from doctors and specialists which are provided in a hospital setting. It may cover the following areas:
- Consultations with doctors, specialists and anaesthetists
- Tests administered whilst you’re in hospital or undergoing surgery
- Cost of surgery or other treatments
- Specified allied health services such as psychiatrists, psychologists and pain management specialists
- Ambulance cover*
*Not included in all hospital cover. Ambulance cover differs between states and territories, with some providing free cover to residents for transport within their state or nationally. Check with your state ambulance provider or health insurer for details of any cover offered.
What isn’t included under hospital cover?
Some of the items which are commonly excluded by hospital insurance include:
- GP visits (for which part of the cost is covered by Medicare, less any gap that is charged)
- Cost of visiting a public hospital emergency department (which is also covered by Medicare)
- Most x-rays, MRIs, CT scans and blood tests which are performed on outpatients
- Medical procedures not considered medically necessary (such as breast augmentation or liposuction purely for cosmetic purposes)
This may offer cover for treatments given outside of a hospital setting which aren’t covered by Medicare. Many preventative and remedial forms of treatment are covered by this type of insurance, which may include:
- Dentistry and major dental surgery
- Orthodontics (such as braces or aligners)
- Optometry (lenses, glasses and frames)
- Non-PBS pharmaceuticals (medicine and drugs not listed under the Pharmaceutical Benefits Scheme, so not subsidised by Medicare)
- Psychology (and other treatments for mental health conditions)
- Dietetics – including assistance with nutrition, diet and weight loss programs
- Gym memberships – offered by some health funds and subject to conditions
- Vaccinations – particularly if you’re travelling overseas and require less common vaccinations such as typhoid
- Supply and fitting of hearing aids
- Physiotherapy, other manual therapies and exercise programs
- Chiropractic treatment to assist with back or spinal issues
- Podiatry (treating any foot or ankle conditions)
What isn’t included under extras cover?
The treatments which aren’t routinely covered by extras health cover will vary between different health insurance providers and the level of cover chosen, but may include:
- Laser eye surgery
- Some alternative medicines and therapies
- Hypnotherapy
The amount of benefits or rebates available under extras cover will be limited to a set dollar amount per year. How much that limit is will depend on the level of cover you choose to purchase. For example, under a cheaper extras cover policy, you may be covered for up to $800 for major dental work, but if you choose a more expensive policy, you may be covered for up to $2,500 instead.
Private health insurance vs Medicare
Medicare, Australia's public health system, provides free or subsidised access to essential healthcare services, such as GP visits to general practitioners, hospital care and certain medical procedures, to citizens, permanent residents and select visa holders. However, it doesn’t cover everything.
This is where private health insurance comes in. It complements Medicare by providing access to additional services and treatments not available in the public system. It also allows you to be treated in private hospitals, choose your own doctor or specialist, and often experience shorter waiting times for elective procedures.
Other types of health insurance
Top 10 health insurance companies in Australia
The Australian health insurance market is dominated by two major providers, Medibank (including ahm) and Bupa, which together hold over 50% of the market. The top five insurers collectively account for 81.8% of the market, while smaller providers serve a more niche customer base.
Here’s a breakdown of the top 10 health insurers by market share:
Medibank (including ahm) – 27.1%
Bupa – 24.9%
HCF – 12.5%
nib – 9.6%
HBF – 7.7%
Teachers Health – 2.6%
Australian Unity – 2.2%
GMHBA – 2.2%
Defence Health – 2.0%
CBHS – 1.5%
While these large insurers dominate the market, smaller health funds often cater to specific groups, such as industry professionals or regional communities, offering competitive benefits tailored to their members.
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How to get health insurance
How much is private health insurance?
The cost of private health insurance in Australia depends on a range of factors, including:
- Level of cover: basic policies cost less but cover fewer services, while comprehensive policies cover more treatments at a higher price.
- Excess and co-payments: a higher excess can lower premiums, but you’ll pay more out of pocket if you need hospital treatment.
- Who is insured: policies for singles are cheaper than those covering couples or families.
- Government rebates: the Australian government provides a rebate up to 32.81% on private health insurance for eligible income earners, helping to reduce costs.
- Lifetime Health Cover (LHC) loading: if you don’t take out private hospital insurance before turning 31, you’ll be charged a 2% loading on top of your premium for every year you delay.
- Your insurer: premiums vary between insurers, so it’s always worth comparing policies to find the right balance between cost and coverage.
This means the cost of private health insurance can vary widely based on your circumstances. For example:
- A 30-year-old single person earning under $97,000 with basic hospital cover (no extras) and a $750 excess might pay around $20 per week.
- A family of four with gold hospital and top-level extras cover, a $500 excess, and a high claim-back rate (up to 90%), could pay $180 per week.
Health insurance price rises 2025
On 1 April 2025, health insurance premiums are set to rise by an average of 3.73% – the biggest increase since 2018. How much your premiums will change, however, depends on your insurer. While some premiums are increasing by as much as 9.56%, other providers are not increasing their prices at all.
Health insurance and tax in Australia
In Australia, having private health insurance can offer tax benefits in addition to providing extra healthcare coverage. While private health insurance is not tax deductible, holding an eligible policy can reduce your tax liability by avoiding the Medicare Levy Surcharge and claiming the private health insurance rebate.
Medicare Levy Surcharge (MLS)
If your income exceeds a certain amount set by the government, you may have to pay the Medicare Levy Surcharge, which is an extra charge on top of the Medicare levy. In the 2024 – 2025 financial year, the earnings threshold is $97,000 as a single person or $194,000 as a family; from July 2025, these limits will rise to $101,000 for singles and $202,000 for couple and families. The surcharge is 1% to 1.5% of your income, depending on your earnings.
However, you can avoid this surcharge by taking out basic hospital cover with an approved insurer with an excess of $750 or less (for singles) or $1,500 or less (for couples/families).
Private health insurance rebate
The Australian government’s private health insurance rebate is designed to make private health insurance more affordable. If you hold hospital or extras cover, you may be entitled to the rebate, which can be claimed either as an upfront reduction on your health insurance premiums or via your tax return. Eligibility depends on your income and age, with rebates up to a maximum of 32.812% available depending on your circumstances. As with the MLS, the 2024 – 2025 earnings threshold is $97,000 for a single person or $194,000 as a family, rising to $101,000 for singles and $202,000 for families in 2025.
Cheap health insurance
With an array of health insurance products available, it’s easy to find a policy that suits your needs and budget. If you're looking for the most affordable options, whether to save on costs or avoid extra tax, here are some of the cheapest types of cover available:
Cheapest to avoid tax
To avoid the Medicare Levy Surcharge, you need to have hospital cover – but this only needs to be the most basic level of insurance. These policies offer minimal health benefits but can help at tax time. The cheapest basic hospital cover can be as low as around $20 a week.
Cheapest dental cover
Dental insurance is typically included in extras policies. Basic cover for general dental (excluding major procedures) starts at $3–$4 per week, though it won’t cover more advanced treatments.
Cheapest ambulance cover
Emergency ambulance cover is often included in basic hospital policies available from around $20 per week. Alternatively, standalone ambulance-only cover is available, with prices starting at $60 per year (just over a dollar a week) for singles, depending on your state.
Note: Queensland and Tasmania provide free ambulance services for residents.
Pros and cons of health insurance
Having private health cover may give you the opportunity to skip public hospital queues and great the treatment or surgery you need when you want it.
As a private patient, you'll usually be able to choose the doctor you see or the surgeon who performs your operation (subject to availability).
The doctor or surgeon you've chosen may operate out of several locations, so you may be able to choose which hospital you're admitted to for your treatment or surgery.
There are many treatments and services that aren't covered by Medicare but may be covered by your hospital or extras cover, potentially saving you thousands of dollars.
Taking out even the most basic level of hospital cover will allow you to avoid paying the Medicare Levy Surcharge and save on your tax bill.
Health insurance is an additional cost to factor in to your finances, with higher-level policies potentially costing hundreds of dollars a month.
Insurance may not cover 100% of the cost of your medical treatment due to exclusions or limits on your policy or gap fees charged by your practitioner.
If you're taking out health insurance for the first time or are upgrading to a higher level of coverage, there may be waiting periods you have to serve before you can make your first claim.
You can reduce your premiums by electing to pay an excess and/or co-payment if you're hospitalised. Each time you make a claim, you may be required to first pay an excess or make a co-payment towards the cost of your hospital stay.
Is private health insurance worth it?
Private health insurance helps cover medical costs you’d otherwise pay out of pocket, offering a financial safety net and greater peace of mind. It also gives you more control over your healthcare, including shorter wait times for elective procedures and access to private hospitals.
Even if you're young and healthy, it can still be worthwhile. Taking out hospital cover before turning 31 helps you avoid the Lifetime Health Cover (LHC) loading, which increases premiums if you take out cover later. It can also reduce your tax bill by helping you avoid the Medicare Levy Surcharge if you earn above a certain threshold.
However, whether it’s worth it depends on your needs and budget. Before making a decision, consider:
- What you’ll use: think about the health care treatment you have needed in recent years and choose a level of cover that offers inclusions you may need. For example, if you have 20:20 vision and are relatively young, you’re unlikely to want laser eye correction surgery cover.
- What’s excluded: check the exclusions on any policy you’re considering to make sure nothing vital you need is left out. For example, if you live with Type 1 diabetes, a health insurance policy that excludes cover for the cost of an insulin pump or blood glucose monitoring devices may not be the best option.
- Cost: your earnings and expenses will determine the level of health cover that you’re able to afford. Not everyone can afford gold hospital cover, which is why there’s a range of policies available to suit different budgets.
- Availability: people living in rural and remote areas of Australia may have fewer options for their health care than others who live in a major city. If you have a choice of several private hospitals nearby, private hospital cover may allow you to choose where you receive your treatment. However, if you live in a remote area where there aren’t any private health facilities, this type of cover may be less useful if you wish to have your medical treatment close to home.
More of your frequently asked questions about health insurance
The “medical gap” is the difference between what Medicare or health fund covers and what your doctor charges – in other words, the out-of-pocket costs you must pay for medical care. While health insurance can help reduce the costs of medical treatments, it may not cover the entire gap. Some insurers offer a “gap cover” scheme, which can limit or eliminate these extra costs. However, if your doctor charges above the gap cover limit or isn’t signed up to the scheme, you may have to pay the difference yourself.
No – excess policies vary between insurers, but in many cases, you’ll only need to pay the excess once per calendar year for each person covered under the policy. This means that if you’re admitted to the hospital multiple times in a year, even for different reasons, you typically won’t have to pay the excess again.
Private health insurance for seniors isn’t mandatory, but it can help cover costs Medicare doesn’t, such as dental, hearing aids and physio. Many insurers offer policies designed for seniors, providing more choice and shorter wait times for treatments. The government also offers a rebate to help with costs, which increases to 28.7% at 65 and 32.8% at 70, helping to make health insurance more affordable as you age.
You can change your health insurance at any time, whether it’s the start, middle, or end of the year, especially if your circumstances change. You can switch to a different policy with your current provider or change to a new insurer. If you switch to a new insurer, they can handle the transition for you by obtaining your details from your previous insurer (with your consent), or you can manage it yourself. If you switch to a policy with the same level of cover, you won’t need to re-serve waiting periods for the same treatments, but any new services in the new policy will require waiting periods.
You can cancel your private health insurance at any time. The process is usually straightforward – you’ll need to contact your insurer by phone or complete the cancellation online. When you do, your insurer should refund any contributions you've already paid, though an administration fee may apply. However, it’s important to remember that cancelling could lead to gaps in coverage, higher costs if you rejoin later and potential tax implications from the Medicare Levy Surcharge.
Treatment for pre-existing conditions can be covered, although there may be waiting periods you have to serve before you can claim for the cost of treatment of pre-existing conditions if you’re buying a new policy or upgrading to a higher level of cover. Such waiting periods can range from two months to a year.
Hospital insurance can offer cover for pregnancy, but this is usually only included with more expensive policies. In addition, if you are planning an addition to your family, it is important to plan in advance, as there may be a 12-month waiting period before obstetrics services can be claimed on a new policy.
You can stay on your parents' health insurance as a child dependant until you turn 21. After that, you can typically remain covered on their policy as a student dependant or adult dependant (provided you are not married or in a de facto relationship) until you turn 31 or 32, depending on the insurer. If you're not studying full-time, your parents may need to pay an additional fee, though this will be cheaper than taking out a separate health insurance policy. Insurer rules vary, however, so it’s important to check your policy for specific conditions.
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