There are two types of private health insurance cover available from registered health funds:
- hospital cover; and
- ancillary cover.
While hospital cover helps with the cost of treatment by your doctor and other costs like hospital accommodation, ancillary cover provides benefits for services such as physiotherapy, dental and optical treatment.
You are able to take out either one of these types of private health insurance cover on their own, or some health funds offer packaged products that provide cover for both hospital and ancillary services.
There are various types of private health insurance hospital cover that you can purchase. Some health fund policies will give you full cover against the costs of hospital and medical charges. Others, for which you will pay lower premiums, will require you to meet part of the costs. You can elect to pay a lower premium in return for agreeing not to be covered for some conditions, or to only receive limited benefits for a certain condition, or to pay a set amount towards the cost of your hospital treatment.
Private health insurance is different from TPD and critical illness or trauma insurance. These insurance options are ‘risk-rated’ and are not substitutes for registered health insurance.
In contrast, the premiums charged by health funds do not vary according to your age (other than age at entry), sex, state of health or the size of your family. However, the cost of premiums for similar cover may vary between funds.
The Government has various incentives in place to encourage the take up of private health insurance and the use of the private system where possible, to reduce the demand on the public system.
These include a Medicare Levy Surcharge and a 30% rebate scheme. The Medicare levy surcharge is an additional 1% surcharge of taxable income imposed on high income earners, who are eligible for Medicare but who do not have an appropriate level of hospital insurance with a registered health fund. This is in addition to the normal 1.5% Medicare Levy.
Under the rebate scheme, for every dollar that you contribute to your private health insurance premium, the Government will give you back 30 cents. Many health funds provide this as a premium reduction.