Do I Need Private Health Insurance if I Have Medicare?

Health Insurance

Tammy George

A little girl with private health insurance sitting in her private hospital bed, smiling at the camera.

Medicare versus private health insurance, what do I need? It’s a common question. Some people believe they pay enough income tax to cover any public hospital admission they may need. However, it’s the non-urgent admissions that can greatly impact on your quality of life that you should worry about.

Private health insurance also provides a rebate on many important healthcare services that aren’t available under Medicare. If you need to attend appointments regularly such as the physio or have complex dental work done, it can become very expensive very quickly if you don’t have private health cover.

Find out what Medicare covers and what health insurance covers, then look at your personal circumstances to decide what’s right for you and your family.

What Medicare Covers?

Medicare is the universal health care scheme for Australia. It guarantees that all Australians have access to health care services provided by doctors, specialists, in-hospital treatment and prescription medicines.

Medicare covers all or part of the cost of these medical services:

  • GP visits

  • Specialist doctor visits

  • Emergency department visits

  • Blood tests

  • X-rays

  • Pathology tests

  • Cancer screening programs

  • Mental health treatment 

  • Children’s health care

  • Fertility treatments and assisted reproductive treatments

  • Admission to hospital as a public patient

  • Medications through the Pharmaceutical Benefits Scheme

Who is Eligible for a Medicare Card? 

Most people living in Australia are eligible for Medicare benefits including:

  • Australian citizens

  • New Zealand citizens

  • Australian permanent residents

  • Those applying for permanent residency

  • Temporary resident covered by a ministerial order

Citizens or permanent residents of Norfolk Island, Coos Islands, Christmas Island and Lord Howe Island are also eligible. People visiting from a country with a Reciprocal Health Care Agreement with Australia are also covered by Medicare. These countries include the United Kingdom, the Republic of Ireland, Belgium, Finland, Italy, Malta, the Netherlands, Norway, Slovenia and Sweden.

Calculating the benefits of private health insurance and Medicare with a calculator.

Medicare Cards

Most people in Australia are familiar with the green Medicare card. It’s issued to individuals and families who live permanently in Australia. The blue Medicare card is issued to people who have applied for permanent residency. For visitors from countries in which Australia has a Reciprocal Health Care Agreement, they receive a Medicare card printed with the words Reciprocal Health Care.

Why Take Out Health Insurance?

There are two types of health insurance cover - Hospital and Extras. Both levels of cover provide a rebate on services not covered by Medicare.

Extras Cover

Depending on the health fund and level of Extras cover, there are a range of health care services you can access that provide a rebate so you don’t pay the full fee.

Extras cover is for non-hospital health care, medical services and treatments that aren’t covered by Medicare. Services include dental, optical, physio, chiro, lifestyle programs (such as weight loss) and natural therapies (such as remedial massage and acupuncture).

Without Extras cover, you pay the full cost of treatment at the dentist, when you need a new pair of prescription glasses and visits to the physio. Most Extras policies will also cover the full cost of emergency ambulance transport.

An ambulance on a callout to someone with private health insurance.

Hospital Cover

The Medicare system provides emergency treatment in a public hospital, but there are many hospital care scenarios that aren’t covered.

Elective Surgery

If you need joint reconstruction surgery, it’s not considered an emergency - it’s elective surgery. People without private health insurance are placed on the elective surgery public waiting list. The wait time can be more than two years, even for conditions that are painful and negatively impact quality of life.

Private Room in Hospital

Public hospitals save money by placing multiple patients in one room. Most people would prefer to recover in the privacy of their own hospital room. Depending on your level of hospital cover, you may be covered for a private room in an HIF-contracted hospital.

Choose Your Doctor

Many people who need elective surgery will ask family and friends for the names of good surgeons. Private hospital cover allows you to choose your own doctor, specialist and surgeon, whereas public hospital patients aren’t given a choice.

Choice of Hospital

With hospital cover, you can choose the hospital you’re admitted to. Your choice may be based on location or the hospital your chosen doctor or surgeon works from. Public patients don’t have the choice of which hospital they prefer.

Medicare Levy Surcharge (MLS)

The Medicare system works by charging higher income earners a higher Medicare surcharge. If your annual income is above a certain level, you may need to pay an additional 2% tax. If you have an appropriate level of hospital cover as part of a private health insurance policy, you can avoid paying the Medicare Levy Surcharge.

A nurse looking after an elderly lady in a wheelchair for a walk through a private hospital.

Private Health Insurance Rebate

The Federal Government wants to encourage Australians to take out private health insurance to reduce the burden on the overstretched public hospital system. It does this by encouraging people to take up private hospital cover through offering a rebate on the cost. Your eligibility for the rebate depends on your income, so if you have a higher income, the rebate entitlement may be reduced or you may not be entitled to a rebate at all.

Peace of Mind

Some people take out private health insurance hospital cover because they want the peace of mind knowing they can receive treatment should they or their immediate family members require it. Our health is what matters most and if you can’t access the best quality level of treatment quickly, it can make an already stressful time even more stressful.

Lifetime Health Cover Loading (LHC)

Even if you’re relatively young and healthy, taking out hospital cover may save you money in the long run. Lifetime Health Cover is a Federal Government initiative that started in 2000 to encourage young people to take up hospital cover earlier in life rather than waiting until they were older. A 2% loading is charged on top of your hospital premium for every year you are aged over 30 based on your age on 1 July prior to joining. So, if you know you want private health insurance hospital cover later in life, it may be worth taking it up by the age of 30.

Pre-Existing Condition

Some people decide to take out private health hospital cover when they eventually need it. However, there are pre-existing condition waiting periods to serve. A pre-existing condition is when there were signs or symptoms of an illness, ailment or condition at any time in the period of six months ending on the day on which the person became insured under the policy. Some health funds have a two-to-12 month waiting period before being able to claim, depending on the reason for hospitalisation.

There’s no doubt Australia has one of the best healthcare systems in the world. Having access to high quality, free hospital care is what many people, including in wealthy countries, can only wish for. However, like any system, it has its shortcomings. The pandemic has only exacerbated many of the problems. Lockdowns and sick or isolating hospital staff have caused public hospital waiting lists to grow. Even if you had the tens of thousands of dollars needed for treatment in a private hospital, some hospitals will only take private hospital patients.

A GP checking an elderly lady’s blood pressure to ensure she has no pre-existing conditions before she takes out private health insurance.

Frequently Asked Questions About Private Health and Medicare

There are many questions that our members and readers ask in relation to private health, particularly before individuals and families choose the level of cover that’s right for them. That’s why we’ve answered some of the most commonly asked questions below.

Where Can I Find Out How Much a Medical Procedure Costs?

The Australian Government provides the Medical Costs Finder online tool that helps you understand the cost of common medical services provided by specialists out of hospital, in hospital as a privately insured patient and in a public hospital as a public patient.

Does Hospital Private Health Insurance Cover the Full Cost of Treatment in Hospital?

There may be out of pocket expenses and an excess payment when using private health cover to pay for medical costs.

What Do You Mean by Out of Pocket Costs?

Out of pocket is the gap fee that is paid by the patient if the doctor or surgeon charges you a higher fee than you’re covered for.

Is There Any Way of Reducing the Cost of Private Health Insurance Hospital Cover? 

Yes, you can opt to pay a higher excess payment to reduce the cost of your health insurance premium. If you don’t need to go to hospital that year, you won’t pay any excess payment and you will have a smaller premium.


Can Hospital Cover Save You Money?

For those people who are on a high single or combined family income, they can pay a Medicare levy surcharge of as much as 1.5 percent of their income if they don’t have private hospital cover.

What Percentage of Australians Have Private Health Insurance?

Around 53% of Australians have private health insurance, with 44% of those having private hospital cover.

Whether you're looking for hospital, extras, dental, optical or ambulance cover, HIF can help. With the flexibility to choose healthcare cover that suits, and the peace of mind to choose their own hospitals, doctors and specialists, we help make and keep our members happy. Take a look at your options with HIF today.

Tammy George

Please note: Tammy's blog is general advice only. For further information on this topic please consult your healthcare professional.

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