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What is Private Health Insurance

A simple guide to private health insurance and how it works.

Private health insurance helps cover the cost of your health care. With it, you can claim a sum of money (known as a benefit) from your health fund. That money helps cover the cost of your treatment.

Medicare is the Australian Government’s free public health care system. It covers most basic medical expenses, but not everything. Private health insurance helps cover the treatments Medicare doesn’t. Plus, it gives you more choice when it comes to your health care.

There are two types of private health insurance: hospital insurance and extras insurance. Hospital insurance helps cover costs when you go to hospital as a private patient. Extras insurance covers out-of-hospital treatments, like going to the dentist, optometrist or physio. You can buy hospital or extras insurance by themselves. Most funds also offer hospital and extras insurance as a package.

What is hospital insurance?

Hospital insurance helps cover costs of in-hospital medical treatment by a doctor. It also covers other hospital expenses like accommodation, prostheses and theatre fees. With hospital insurance, you can choose your doctor, stay in a private room (if it’s available) and book in treatment at a time that suits you.

View our hospital products

What is extras insurance?

Extras insurance helps cover costs of non-medical health services. These include dental, optical and physio. These services are not generally covered by Medicare. For example, if you go to a dentist without extras insurance you’ll pay the whole bill, rather than a subsidised fee.

View our extras products

What is ambulance insurance?

Ambulance insurance helps cover the cost of ambulance transport by road. In most states, Medicare doesn’t cover the cost of emergency transport and other ambulance services (except for Queensland and Tasmania). That means you could pay up to $1000 out of your own pocket if you need an ambulance in an emergency situation.

Most HBF health insurance policies include unlimited urgent ambulance for transport by road.

View our ambulance products

What is combined insurance?

Most health funds offer hospital and extras insurance as a package. These packages are called ‘combined insurance’ or ‘hospital + extras packages’. Combined insurance saves you time by bundling hospital and extras insurance into a simple, ready-to-buy package.

View our combined products

How does private health insurance work?

Imagine a giant piggy bank – this is a health insurance fund. When you make regular payments (known as premiums) as a health fund member, that money goes into the piggy bank. Everybody pays their premiums into the same piggy bank; it is a communal pool of money that can be accessed by the health fund’s members when they make an eligible claim.

What is a not-for-profit health fund?

There are two types of health funds: not-for-profit and for-profit.

A not-for-profit health fund, like HBF, uses the money it accumulates through premiums to pay for the cost of its members’ claims and to run the business. They don’t have shareholders to pay, so they can dedicate themselves to taking care of their members’ health. Not-for-profit funds use any surplus earnings to give their members a better health care experience, which can come in the form of lower premiums or new benefits.

A for-profit health fund must consider the interests of their shareholders. They will pay some or all their surplus earnings to those shareholders.

Of the not-for-profit health funds, there are those open to anybody and those only open to people who work in a specific industry. Restricted funds include Teachers Health and Police Health.

HBF is one of the largest not-for-profit health funds in Australia open to everyone. Unlike health funds that are only open to people who work in a particular industry, anybody can join HBF.

What is community rating?

Unlike other forms of insurance, health insurance in Australia is community-rated, not risk-rated. Health funds can’t stop someone from joining or change the price of health insurance based on risk factors like age, gender, lifestyle or physical condition. Community rating means regardless how likely you are to claim, everyone is entitled to pay the same base price for the same health insurance policies. It also means health funds must provide health insurance to anybody who wants it.