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How Do Hospital Insurance Policies Work

Discover what’s covered, who’s covered and how costs work.

The government introduced a new tiered system for naming and categorising hospital insurance products: The Gold, Silver, Bronze and Basic system. Each tier has a minimum list of hospital treatment categories that they must include—these are requirements set by the Australian Government.

On a sliding scale of Basic to Gold, Basic covers the least and Gold covers the most. Each tier includes cover for everything in the tier below it, plus more (sometimes, a lot more). Health funds don’t need to stick to the minimum—they can offer more coverage than is required in each tier.

Explore our hospital products

Who is covered?

Health funds generally offer three categories of membership. These provide cover for individuals and family groups.

Number of people covered Usually listed as
1 adult Single
2 adults Couple
1-2 adults and any number of dependent children Family

What is a dependent child?

A dependant is a person who doesn’t have a partner and is under the age of 18.

At HBF, we choose to cover your children for free if they’re on your family policy. They’ll be covered until they reach 25, provided they’re not married or living in a de-facto relationship, and are either:
  • Not earning a taxable income of more than $24 500 pa; or
  • A full time student

What are waiting periods?

A waiting period is a set amount of time during which you can’t claim benefits. If you’ve never had health insurance or you’re upgrading your level of cover, you may need to serve a waiting period before you can claim. All health funds have waiting periods. They exist to stop people from signing up when they need hospital treatment, claiming and leaving without contributing premiums to the fund.

How much will it cost?

The factors that contribute to the cost of a hospital insurance policy vary from person-to-person. The base price of hospital insurance is the same for everyone thanks to community rating, but the final cost of your hospital insurance may be different to what your neighbour pays.

Here are six key factors that contribute towards the cost of your hospital insurance:

  1. Level of cover

    The base price of your premium depends on whether you choose to buy basic, medium or top level of cover. The price can change again depending on the specific policy you choose.

  2. Excess

    An excess is a sum of money you agree to pay upfront when you go to hospital. The higher your excess, the lower your premium.

  3. Lifetime Health Cover (LHC) loading

    The LHC loading is an additional cost applied directly to a premium. It only affects people 31 or older who have never had hospital insurance and decide to buy it after the deadline. It’s an Australian Government incentive designed to encourage people to take out hospital insurance earlier in life, and maintain it.

  4. Australian Government Rebate on Private Health Insurance

    The rebate is an Australian Government incentive designed to make health insurance more affordable. It’s calculated based on your age and income. It comes in the form of a refund, which can be applied directly to your premium to reduce its cost, or be claimed at tax time.

  5. Scale

    The price of hospital insurance changes depending on the number of people you’d like covered on a policy. Generally, as you add more people to a policy, the premium will increase.

    HBF shows prices based on a policy for a single person, but not all health funds display their pricing this way. That’s why it’s important to take note of how many people the listed policy price includes.
  6. Discounts

    Depending on your health fund and your health insurance policy, you may get a discount on your premium depending on when you pay.

    HBF frequency discounts
    Depending on how often you pay your premiums, you may receive a discount on eligible policies. This discount applies whether you pay by statement or by direct debit.
    Payment frequency Discount (%) Discount (weekly equivalent)
    Quarterly 0.48% 1/4 week per year
    Half yearly 1.92% 1 week per year
    Yearly 3.83% 2 weeks per year

Exclusions & Restrictions Explained

Depending on your health fund and the type of health insurance policy you buy, you may have exclusions and restrictions on certain procedures or services. They indicate procedures or services for which you’ll get a small benefit, or no benefit at all.

Exclusions and restrictions vary between health funds, levels of cover and between policies, so it’s important to understand what’s covered, not covered or covered to a limited extent before you decide on the level of cover or type of policy you need.

What is an exclusion?

An exclusion is a procedure or service for which you can’t claim a benefit. If a procedure or service is listed as an exclusion on your policy, your health fund won’t help cover the cost for that procedure or service in a private or public hospital.

For example, if your hospital insurance policy excludes assisted reproductive services like IVF, your health fund won’t pay anything towards the cost of that service.

What is a restriction?

A restriction is a procedure or service for which you’ll only receive the minimum default benefit, which is set by the government. If a procedure or service is listed as restricted on your policy, you’ll be covered for it, but only to a very limited extent, which will leave you with an out-of-pocket cost.

For example, if you need psychiatric care but it’s listed as a restricted service on your policy, your health fund will only pay the minimum default benefit for that service. That would leave you to pay the rest of the bill out of your own pocket.

When you see a procedure or service that’s listed as restricted on a policy, think about whether you’ll need that treatment in future. If the answer is yes, it’s a good idea to consider a higher level of cover that will pay better benefits.

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