Australia is one of a variety of leading countries around the world that offer universal healthcare, with Medicare allowing Aussies to access free treatment as public patients at public hospitals. However, if you’re looking to be treated as a private patient or in a private hospital, it isn’t going to cover the full cost for you.
That’s why hospital cover is so crucial, as it helps you avoid being slugged during your private stay. However, according to figures reported by APRA from June 2025, only 45.4% of the Australian population is currently covered by a hospital insurance policy.
Finding out what exactly this type of insurance can offer will help you make an informed decision on whether to take out a policy or review your existing cover with a view to comparing what’s currently available with other insurers.
What is hospital cover?
As the name suggests, hospital cover is a type of private health insurance designed to help cover the costs related to being treated in hospital. This allows you to be treated in private hospitals (or public hospitals as a private patient) and have part of your medical expenses covered, have your choice of hospital and doctor and bypass public hospital waiting lists.
There are four different levels of hospital cover that you can choose from, each with its own set of inclusions. These are:
How it works is simple: you’ll take out your chosen policy, pay your premiums and receive insurance coverage in return. Premium payments can be made on a weekly, fortnightly, monthly, quarterly, half-yearly or yearly basis.
Waiting periods of two months apply to your covered treatments, meaning you’ll have to maintain your policy for at least two months before you can make a claim. Treatments relating to pre-existing conditions, pregnancy or birth-related services all come with a 12-month waiting period.
What does hospital cover include and exclude?
Below is a table from PrivateHealth.gov.au that outlines the clinical categories included and excluded from each level of hospital cover:
As you can see, the most basic hospital cover only requires that rehabilitation, psychiatric services within a hospital and palliative care be included in the policy. You’ll have to decide what inclusions you need when determining the best policy for your situation.
It’s important to note that what hospital insurance doesn’t always cover is the full cost of treatment. For example, private health insurance is required to cover at least 25% of the Medicare Benefits Schedule (MBS) fee, which is the dollar amount the Australian Government nominates for each type of treatment. Many health providers will charge more than the MBS fee, meaning you’ll have to pay an out-of-pocket cost, known as the gap.
How much does hospital cover cost?
The cost of your hospital cover depends largely on two main factors: the level of insurance you choose and your insurer. You can see how much of a difference these two things can make to the cost of your policy here:
| Cover level | Cheapest fortnightly premium | Most expensive fortnightly premium | Average fortnightly premium | Fortnightly difference | Annual difference |
|---|---|---|---|---|---|
| Basic | $37 | $43 | $39 | $6 | $149 |
| Bronze | $42 | $57 | $47 | $15 | $393 |
| Silver | $53 | $94 | $73 | $40 | $1,045 |
| Gold | $132 | $131 | $136 | $9 | $236 |
| Quotes based on a singles hospital cover policy with an excess of $750 and ambulance cover included. Quotes obtained through Compare Club on 27 November 2025. | |||||
It isn’t just these factors that can have a say in how much you pay for your hospital cover, though. Here are a few other variables that’ll impact your policy premium:
- Excess: the higher your excess, the less you’ll pay for your policy. It means you’ll have to pay more out of pocket when you make a claim, though.
- Location: the state or territory you’re living in will also have an effect, as medical costs can differ across the country.
- Type of policy: whether you’re buying a policy just for yourself, for you and your partner or your whole family will obviously impact its cost (though it’s worth checking if it’s cheaper per person).
- Your age when you first took out cover: if you took out hospital cover for the first time under the age of 29, you could receive a discount of up to 10% until the age of 41. However, taking out cover at 31 or older means you’ll have to pay Lifetime Health Cover (LHC) loading, which increases the cost of your policy by as much as 70%.
- Your income: you may be eligible to receive an Australian Government rebate based on your income, which could substantially reduce the cost of your policy.
Why compare health insurance policies through Savvy?
How to compare hospital cover policies
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Make sure you’re comparing apples with apples
Once you’ve decided on the level of cover you need, restricting your comparisons to policies of that level will ensure you’re looking at like-for-like offers. It’ll allow you to shine a spotlight on the areas that matter most to you and potentially pick out lenders that may not offer what you’re looking for.
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Compare the cost of the policy
Even if two policies offer cover for the same clinical categories, the cost of cover may vary considerably between insurers. Therefore, compare costs carefully, but not at the expense of the cover you require.
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Check the level of cover for pre-existing medical conditions
Naturally, you’ll want cover for any pre-existing medical conditions you currently suffer from. Compare exclusions carefully to determine whether any such conditions are included in the policies you’re looking at.
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Think about waiting periods
Although waiting periods are mandated, it’s important to think about what happens if you switch. If you upgrade to a higher level of cover, you’ll need to serve any waiting periods for new clinical categories, but not for anything you’ve already waited out.
The pros and cons of hospital cover
Pros
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Peace of mind
Plenty of people have hospital cover largely for the peace of mind it brings them knowing they won’t be smashed by hospital fees if life throws them a curveball.
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Dodge public hospital waiting lists
Waiting lists for the public health system can be months or years long. By taking out hospital cover, you can avoid these waiting lists and be treated promptly.
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Choose your hospital and doctor
You’ll also have more power over where you’re treated and who treats you. This can save you from being sent to the other side of town to a hospital you don’t want to go to.
Cons
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May be expensive
Depending on the level of cover and insurer you choose, you might be forking out quite a bit for your cover. Unfortunately, policy premiums are only going in one direction in Australia.
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May not feel worthwhile if you don’t make a claim
It’s easy to say that you’re doing it for peace of mind, but it might be eating away at you that you aren’t getting much return for your outlay.
Is hospital cover compulsory in Australia?
No, hospital cover isn’t mandatory in Australia. However, there are a few measures put in place by the Australian Government to disincentivise people from choosing not to take out hospital cover. These are:
Medicare levy surcharge (MLS)
The MLS is charged to Australians earning above a certain threshold who don’t have private hospital cover. The following table shows how much you can expect to pay in the 2025-26 financial year:
| Threshold | 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 |
| Medicare levy surcharge | 0% | 1% | 1.25% | 1.50% |
| Source: Medicare levy surcharge income, thresholds and rates, Australian Taxation Office | ||||
If your annual income before tax is in the base tier and/or you have a hospital cover policy, you won’t be required to pay the MLS. However, if you’re earning a salary of $105,000, you’ll have to pay an additional $1,050 per year until you take out adequate hospital cover.
Lifetime Health Cover (LHC) loading
LHC loading is an additional charge applied to your policy premiums for those purchasing hospital cover for the first time at 31 or older. This is calculated at 2% for every year over 30 you are before taking out hospital cover, meaning you’ll have to pay 20% extra if you take out your policy at 40 and 40% extra if you’re 50. You’ll need to pay this loading for ten continuous years before it’s removed from your premium.
How much does treatment at a private hospital cost without insurance?
The cost of treatment at a private hospital varies widely depending on where you’re being treated and what you’re being treated for. You can expect to pay for the following in a private hospital:
- Cost of doctors, surgeons, anaesthetists and other medical professionals
- Theatre and accommodation fees
- Medications prescribed as part of your treatment
- Medical imaging, such as x-rays
- In-hospital therapies, like physio
Medicare will still cover 75% of the cost of your medical fees regardless of whether you have private health insurance (your treatment must be listed on the MBS, though). Even with that, though, you’ll usually have to pay a minimum of a few thousand dollars for minor treatments or up to tens of thousands of dollars in more extreme cases. This highlights the importance of having health insurance to fall back on if you suffer a medical emergency.
In stark contrast, treatment at a public hospital as a public patient is free in Australia. As established, though, you’ll have less of a say over where you’re treated, when you’re treated and who treats you if you fall into this basket.
