How to Compare Health Insurance in Australia

Do you need hospital cover, extras cover, or both? If your primary goal is avoiding the Medicare Levy Surcharge, you need hospital cover. If you mainly want dental and optical, extras may be sufficient. Most Australians with private health insurance hold combined cover.

Hospital cover is categorised into four tiers: Basic, Bronze, Silver, and Gold. Gold covers all clinical categories. Lower tiers may exclude or restrict certain treatments such as hip and knee replacements, cardiac surgery, or pregnancy. Consider which treatments you are likely to need in the coming years.

The excess is the upfront amount you pay per hospital admission. Common options for singles are $0, $250, $500, and $750. A higher excess means lower monthly premiums but more out of pocket if you go to hospital. To avoid the MLS, your excess cannot exceed $750 (singles) or $1,500 (families).

Look beyond the tier label. Within the same tier, different funds may have different inclusions. Check whether specific categories you care about (e.g., pregnancy, joint replacements, mental health, rehabilitation) are fully included or restricted. A restricted category means the fund pays a limited benefit and you may face large out-of-pocket costs.

Extras policies have annual limits per service category. Check not just the total annual limit, but also per-visit limits (e.g., $60 per dental visit) and item caps. A policy with a $1,000 dental limit sounds generous, but if the per-visit limit is $40 for a check-up, you may not get great value.

All new policies have waiting periods before you can claim. General hospital services typically have a 2-month wait. Pre-existing conditions, pregnancy, and certain mental health services have a 12-month wait. Dental check-ups usually have a 2-month wait, while major dental can be 12 months. These periods are standard but worth confirming.

After accounting for the government rebate (based on your income and age), compare the actual premium you will pay. Premiums are typically quoted fortnightly, monthly, or annually. Make sure you are comparing the same payment frequency. Also check whether the fund offers any discounts for paying annually upfront.

The cheapest policy often has the most restrictions. A $90/month Basic policy may exclude dozens of clinical categories. If you are admitted for a restricted treatment, you could face thousands in out-of-pocket costs. Always check what is included, not just the price tag.

Some funds have agreements with specific hospitals. If you go to a non-agreement hospital, you may need to pay the full cost of accommodation and theatre fees. Check whether your preferred hospitals are in the fund's network, especially if you live in a regional area.

Even with hospital cover, you can face "gaps" between what the fund pays and what the doctor charges. Funds with gap cover arrangements have agreements with doctors to limit or eliminate these out-of-pocket costs. Check whether the fund has a gap cover scheme and how extensive its doctor network is.

The government rebate can significantly reduce your premium. Make sure you are comparing after-rebate prices. A policy that looks expensive at the listed rate may be quite affordable once the rebate is applied. Your rebate percentage depends on your income and age.

Health insurance premiums increase each year (typically in April). Your needs also change over time. It is worth reviewing your policy annually to ensure you are still getting good value. Switching funds is straightforward, and waiting periods transfer for equivalent or lower cover.