Do I need private health insurance?
Why do I need private health insurance?
Medicare doesn’t cover everything. Private health insurance works alongside Medicare, offering more choice, and access to additional services. It’s your decision, but with the right cover you may have more choice over your health care. Whether 'you need' private health cover may come down to your personal health needs, age, and budget.
Private health insurance and Medicare
Hospital cover works with Medicare by contributing towards the cost of hospital treatment as a private inpatient, and gives you more choice and flexibility around when you get treated, where it happens, and who treats you (depending on what’s included on your cover).
Extras cover helps pay towards things that aren’t usually covered by Medicare, like physio, dental and chiro.
Some people choose to get hospital cover for those ‘just in case’ moments. While higher-income earners may get it to avoid the Medicare Levy Surcharge (MLS).
Other people choose extras only cover to help with the cost of everyday health services, like physio or chiro. Other people choose to bundle covers and get the best of both.
Private health insurance with Frank
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Extras coverExplore extras coversExtras cover pays benefits towards services that aren’t generally covered by Medicare, like optical, chiro, physio and dental. So, you can stay on top of your everyday health.
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Hospital coverExplore hospital coversHospital cover means you can be treated as a private patient in any hospital, public or private. It gives you the freedom to choose your doctor and stay in a private room (when one’s available). Simply put, it gives you more control over your hospital care.
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Combined hospital and extrasExplore Frank BundablesYou can take out hospital or extras covers separately, or bundle them to get the benefits of both.
Why choose extras cover?
Four reasons to choose private health insurance hospital cover
1. You could get treated sooner – you may skip public waiting lists for elective surgery if you choose to be treated as a private patient (depending on your doctor and hospital).
2. Avoid the Medicare Levy Surcharge (MLS) – if you’re a higher income earner and hold hospital cover you may avoid paying the MLS (keep in mind you’ll need cover for the full financial year to avoid paying it in full).
3. Pick your doctor or specialist – and, depending on your cover and availability, your preferred hospital.
4. Peace of mind – you’ll have more choice over your care if unexpected health issues come up.
Hospital costs without insurance in Australia
Medicare covers both the accommodation and treatment for public patients in public hospitals, but if you choose to be admitted as a private patient in a public or private hospital and don’t have the right private health cover it can come with significant out-of-pocket costs.
In these cases, Medicare would help pay for part of your doctor’s fees for medical treatment, but the rest, including accommodation, theatre (operating room) fees and most of the hospital charges would be your responsibility to pay.
Medicare uses the Medicare Benefits Schedule (MBS) fee, a standard amount set for each medical service or procedure, to calculate what it will pay. There are no limits to what a doctor, surgeon, anaesthetist, or other specialist will charge for your treatment in hospital, but the most Medicare will cover for private patients is 75% of the MBS fee. You can still attend a private hospital without having private health insurance, but you will have to self-fund any costs not covered by Medicare yourself.
What Medicare doesn't cover in hospitals
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Accommodation and theatre feesMedicare doesn’t pay for the cost of your room or the operating theatre if you’re treated as a private patient in a private hospital.
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Most hospital chargesThings like medications provided during your stay, and other facility costs in private hospitals aren’t covered by Medicare.
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The “gap”Medicare pays 75% of the MBS fee. If you have hospital cover and the service is included in your policy (as long as you've served waiting periods) your insurer may contribute towards the remaining 25%. If your doctor charges above the MBS fee, you may need to pay the difference — that’s the gap.
Going private without the right hospital cover means you’d pay these remaining costs yourself.
If the medical treatment or service is included on your hospital health insurance, and all waiting periods have been served, your health fund will pay the remaining 25% of the MBS fee. Any costs above that, unless your doctor has a no-gap agreement, would still have to be paid out-of-pocket, and you may need to pay an excess depending on your hospital insurance policy.
Typical costs for common private procedures
The Australian Government’s Medical Costs Finder shows typical price ranges for common procedures across Australia, so you can get a rough idea of what you might pay out of pocket.
What you’ll actually pay depends on the procedure, the hospital, the doctors involved, and whether any devices or prostheses are needed.
If you have hospital cover and the treatment is included, it can help reduce some in-hospital costs. Extras cover may also help with services outside hospital, like physio, but only within your policy limits, waiting periods and inclusions.
Tax and health insurance
While you can’t claim private health insurance as a tax deduction, holding eligible hospital cover can still help at tax time through government incentives and rebates.
Medicare Levy Surcharge (MLS)
If you’re a higher income earner, you may need to pay the Medicare Levy Surcharge (MLS) which is an additional tax set by the Australian Government to encourage people to take out hospital cover and reduce pressure on the public health system. To avoid the MLS, if your annual taxable income places you above the base tier threshold set by the Australian Government, you, your partner and dependants need to hold eligible hospital cover for the full financial year.
Australian Government Rebate on private health insurance
The Australian Government Rebate on private health insurance helps make private health insurance more affordable by contributing toward the cost of your hospital and extras premiums. It’s designed to encourage people to maintain health insurance long term. Your rebate percentage depends on your age and income tier, with higher incomes generally receiving a lower rebate. You can claim the rebate either by having it applied to your premiums throughout the year, or at tax time as part of your annual tax return.
What age do you need private health insurance?
Private health insurance is optional, but there are clear benefits to taking out hospital cover before you turn 31. Doing so can help you avoid Lifetime Health Cover (LHC) loading and may make cover more affordable over the long term.
You might also want to consider private health insurance for as life changes, like coupling up, or starting a family. The choice is yours!
What’s LHC loading?
After 1 July following your 31st birthday, for every year you don’t have hospital cover a 2% LHC loading is added to your premiums when you eventually take out cover. The longer you wait, the higher the loading, capped at 70%, or 65 years of age. You’ll have to hold hospital cover for 10 consecutive years before LHC is removed.
Age-based discount
If you’re under 30, you may also be eligible for an age-based discount on your hospital cover. That's a 2% discount each year you are aged under 30 from when you first purchase hospital insurance. This discount is up to a maximum of 10% for 18-25 year olds. This reduces your costs while you’re young and helps you get cover early. Discounts will be gradually phased out after you turn 41. After you turn 41, the discount declines by 2% of your premium each year until there is zero discount remaining.
Why choose Frank?
Frank makes health insurance easy! As a not-for-profit health fund we’re here for our members, not shareholders.
Frank’s an online health insurer, meaning lower overhead costs that lead to lower premiums for you! We’re local, our contact centre is in Victoria, Australia, so you’ll talk with someone who knows the ins-and-outs of the Australian health system.
Need more help? Contact us
FAQs about private health insurance
You may save money with private health insurance, but it depends on a few things like your income, the type of cover you choose, and how often you use health services. The key is to choose a policy to match your needs.
Hospital cover can help higher income earners avoid the Medicare Levy Surcharge (MLS). While frequent users of dental, physio, or optical services may save with extras cover.
Overall, it depends on your personal circumstances, needs, and preferences.
The choice is yours! Hospital cover and extras cover do different things, so it comes down to what suits your personal circumstances.
Keep in mind that if you’re doing it purely to avoid paying the Medicare Levy Surcharge (MLS) as a higher income earner, you’ll need to hold eligible hospital cover for the full financial year. Whether or not you have extras has no impact on MLS.
Similarly, Lifetime Health Cover (LHC) loading and any age-based discount only apply for hospital cover.
The Australian Government Rebate on private health insurance applies to both hospital and extras covers.
So, it comes down to what matters most to you — cover for hospital treatment, help with everyday health costs, or a bit of both.
Medicare is Australia’s public healthcare system. It gives eligible citizens, residents, and visitors on a reciprocal healthcare visas access to:
- Essential public hospital care
- Subsidised out-of-hospital services, like GP visits, tests (for example, X-rays) and specialist consultations
Private health insurance is optional and paid through premiums. It works alongside Medicare:
- Hospital cover helps pay benefits for private hospital treatment
- Extras cover helps with services not usually covered by Medicare, such as physiotherapy, chiropractic care, and dental
If you don’t take out private health insurance, you can still access public healthcare under Medicare (if eligible as a citizen, resident, or visitor on a reciprocal healthcare visa).
However, there are some things to be aware of:
- Medicare Levy Surcharge (MLS): If you’re a higher-income earner, you may have to pay the MLS — an extra tax applied if you don’t hold hospital cover.
- Lifetime Health Cover (LHC) loading: If you take out hospital cover after 1 July following your 31st birthday, you’ll pay a 2% loading on your premiums for each year you waited, up to a maximum of 70%.
Freedom limit, flex it your way
Because sometimes your needs might change a little, you have a $500 freedom limit to claim on your 7 included extras services.
And the longer you're with us, the more you can claim.
Get an extra $50 to claim on your freedom limit each full calendar year, with a maximum of $200 after 4 years of continual cover.
Freedom limit, flex it your way
Because sometimes your needs might change a little, you have a $700 freedom limit to claim on your 11 included extras services.
Plus an additional Optical limit. You can claim 100% back on optical up to your $150 annual limit.
And the longer you're with us, the more you can claim.
Get an extra $100 to claim on your freedom limit (excludes optical) each full calendar year, with a maximum of $400 after 4 years of continual cover. Your loyalty benefit will be available on 1 January after you've completed one full membership year.
