Health Part 4: Private Health Insurance – hospital, extras

 Private Health Insurance

Like any other form of insurance, you pay a premium (commonly fortnightly or monthly).


You will then try to claim against the insurance, although of course, it needs to be covered.

And you might need to pay an excess if you make a claim.

One reason for signing up for private health insurance is to avoid paying the 1% Medicare Levy Surcharge. Each year in July you should receive a private health statement which provides information to include in your (and your spouse and children’s) tax returns. See private health statement below.

See more on the surcharge below and how to avoid it.


Private health insurance comes in two categories

Hospital cover – For your stay in hospital the health insurance company would cover your hospital costs (up to a certain amount like $500,000) less the excess (maybe $200-$1,000) which you pay.

A certain level of hospital cover is all that is needed to be ‘covered’ so that you aren’t required to pay the 1% Medicare Levy Surcharge.

However a high excess (say $1,000) might mean that you are not ‘covered’ and   

Ancilliary or Extras cover- non-hospital costs like dental, physio, optical, etc.

Combined cover (both hospital and ancilliary) – most people have combined cover


Tip – Pay a 30% lower premium upfront from Private Health

30% private health insurance rebate

While we are on private health insurance –there is a 30% government rebate which reduces the cost of private health insurance.  You can either receive this as a reduced premium (pay less upfront) or as a tax offset (get a refund when you lodge your tax return).

So for example although the full cost is $1,000 a year, you pay $700 a year ($300 discount being 30% of $1,000).


If you are a person who pays a higher premium ($1000) and receives an offset ($300 in this example) to include in your tax return – I recommend changing to pay a lower premium upfront.  (unless you like to pay extra and receive the money back in your tax refund).


Rookie error – assuming your trip to hospital is covered by your private health insurance

However don’t make the mistake as some of our friends did, when they assumed that their elective surgery was covered under their private health insurance. 

Although it was fairly common surgery, it wasn’t covered under their private health policy and they had a day to decide whether to pay the costs themselves, or wait under the Medicare system to be allotted a time. They decided to pay themselves, given they had already organised time off work and were planning to travel in the next 6 months as well.

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