What is Private Health Insurance?

Introduction to private health insurance

Private health insurance is an affordable way of being able to access private health care for you and your family. It provides peace of mind in the case of an accident or health incident that could see you at the end of a long waiting queue for treatment in the public health system, or otherwise cost you thousands of dollars to treat.

You will need to pay a premium (generally fortnightly, monthly or annually) to the health fund that you select, in exchange for an agreed level of cover for treatment in hospital or for ancillary (extras) services. To some extent, you can tailor your plan to include (or exclude) the services that you do or do not want cover for.  For example, if you're a young person with no health issues, you may elect not to be covered for hip joint replacement or cataract surgery.  If you and your partner are considering parenthood, you may want to include obstetrics to ensure that you have cover for hospital admissions related to your pregnancy.

What does private health insurance offer?

There are three types of private health cover – hospital cover, extras cover and combined cover.

Hospital cover allows you to be admitted as a private patient at the hospital of your choice (with some funds you may need to select from an approved list of hospitals) and be treated by the doctor of your choosing. You're more likely to receive a room of your own (depending on the level of your health plan), and have greater flexibility in scheduling elective surgery. If you're admitted to hospital, your health insurance can cover the costs of your accommodation, medical treatment and theatre fees. An excess may apply in some circumstances.

Extras cover provides benefits for ancillary services that take place outside the hospital, like dental, optical, physio, chiropractic and even remedial massage. By choosing an extras plan that covers the services you use most, you can claim benefits from your health fund to reduce the cost of your treatment.
When taking out private health cover, you should note that waiting periods will apply to benefits before you are able to claim. This will apply to you if you are taking out health insurance for the first time, upgrading to a higher level of cover, or if you are switching from another fund and have not already completed the necessary waiting period.

Why should I take out private health insurance?

Without private health insurance, you'd need to rely on the public health care system (Medicare) or self-insure, which could cause great financial strain.

Whilst the public health system may provide good health care, if you are being treated under this system you may need to wait until a public hospital bed is available, and you'll be seen by whichever medical practitioner is available at the time. If your situation is not life-threatening, you may need to wait extensive periods before you can be treated.

The alternative - private health insurance - ensures you have easy access to medical treatment by the doctor of your choice, and will be treated as a private patient in either a public or private hospital. 

These articles are provided as reference material to allow more informed decision making, but are not intended as being a complete source of information on any topic. All readers should make their own independent analysis on the topic to make sure they have considered the aspects that are important to them.