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New to health insurance and not sure where to start? We explain hospital and extras cover, the benefits of health insurance and tips on finding the right cover.

Private health insurance explained

We break down the different types of cover available and explore how health insurance can benefit you.

What is private health insurance?

Health insurance typically refers to hospital, extras and ambulance cover. All of these products are designed to help cover your healthcare costs in Australia. You can buy hospital and extras cover individually or together.

Helps cover costs when you’re admitted to hospital, like doctors’ fees, accommodation and theatre fees.

Helps cover the costs of everyday healthcare, like dental, physio and glasses or contacts

If you’d like cover for hospital and extras, you can mix and match our products to create your own combined health cover.

Ambulance cover

You can get Urgent Ambulance cover on its own to help cover the cost of emergency and urgent ambulance transport by road.

Private health insurance explained

We break down the different types of cover available and explore how health insurance can benefit you.

Understanding hospital and extras

Important things to know

Hospital cover tiers - Gold, Silver, Bronze and Basic

The Australian government classifies hospital cover into four tiers - Gold, Silver, Bronze and Basic. Basic hospital is the lowest level of cover, while Gold is the highest and provides cover for all hospital treatment categories. This tiered system helps you easily compare covers provided by different insurance providers, including HBF, to help you find your best cover match.

Each tier has a minimum list of of hospital treatment categories that must be covered; the minimum requirements are set out by the Australian Government. Health funds can choose to offer additional coverage in the Basic, Bronze and Silver tiers. Products with additional coverage have a ‘Plus, or +” in the product name. For example, Silver Hospital Plus - this is a Silver tier product that includes more coverage than the minimum requirements for the Silver tier.

The good thing about HBF is that you can mix and match hospital and extras cover to suit your needs. This means that if you choose to get Basic Hospital Plus, you can match it with any level of extras cover.

Learn more about the hospital cover tiers.

What is a hospital excess?

An excess is a sum of money you pay upfront before you are admitted into hospital for treatment as a private patient. 

You choose how much your excess is when you first take out hospital cover, but you can adjust it any time. Generally, the higher your excess, the lower your premium.

Each member only pays excess once per calendar year (to a maximum of twice per couple or family policy) no matter how many times you may be hospitalised. Excess applies for day and overnight admissions.

If you’ve got family cover and your dependents (kids) need to go to hospital, they won’t have to pay an excess. This applies to most family and single parent covers*

*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 is a waiting period?

A waiting period is a period of time during which you must hold continuous membership under a particular health cover before you are entitled to receive a benefit at the level payable on that cover. You can claim benefits applicable on your level of cover for services or treatment you receive after you have served your waiting periods.

Waiting periods applicable on your level of cover are listed on the relevant product sheet.

What is the Medicare levy surcharge?

The Medicare Levy Surcharge (MLS) is a tax applied to people who earn above a certain income and don’t have an appropriate level of hospital insurance. The tax is designed to reduce the strain on the public system by encouraging people to go to private hospitals instead.

This means you could have to pay between 1% - 1.5% tax for every day you don’t have an appropriate level of hospital cover and you are:

  • a single with an income for MLS purposes that is greater than $97,000; or
  • a couple or family whose combined income for MLS purposes is greater than $194,000.

To reduce or avoid the MLS, you (and everyone in your family) must hold an appropriate level of hospital cover. If you or your family is only covered for extras, you will have to pay MLS if your income is over the thresholds noted above.

When you do get hospital cover, keep in mind that you’ll still pay the MLS for the part of the year you weren’t covered. You’ll only avoid the MLS completely if you’ve held hospital cover for a full financial year. Learn more about MLS.

This is a guide only. You should speak to a financial advisor or registered tax agent who will be able to take into account your income and personal situation, including any changes that occur during a tax year.

What is the Lifetime Health Cover loading?

The Lifetime Health Cover (LHC) loading is an extra cost applied to the price of hospital insurance for anyone who chooses to take out hospital cover later in life. The loading was designed by the Australian Government to encourage people to take out insurance earlier in life and maintain their cover.

The loading only applies if you choose to take out hospital insurance after your 31st birthday. Basically, for every year that you don’t have hospital insurance following your 31st birthday, an additional 2% loading will apply if you take out hospital cover later down the track (capped at 70%). For example, if you choose to take out hospital cover at 36 years old, a 10% loading will be applied to your hospital insurance premiums. The loading will only be removed once you’ve held hospital insurance for 10 continuous years.

To avoid LHC, you just need to take out hospital cover on or before 1 July following your 31st birthday.

Learn more about the Lifetime Health Cover loading.

Woman checking her Australian Government Rebate on private health insurance

Australian Government Rebate on private health insurance

The Australian Government Rebate is an initiative that helps make private health cover more affordable. The rebate applies to hospital, extras and urgent ambulance insurance and you can either get it back at tax time, or apply it to your premium now to make it cheaper.

What is the private health insurance rebate?

Depending on your income, the Australian Government may pay for part of your private health insurance costs. This helpful payment is called the private health insurance rebate.

Here’s how it works for singles under age 65:

Health insurance rebate for singles under 65

Couples/families and people over 65 can see a more detailed breakdown here.

Read more about private health insurance

Learn how health insurance can benefit you and how to find your best cover match.

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.

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.

Who does health insurance cover?

You can get health cover for yourself, you and your partner, or for your whole family. Generally, there are four categories of membership:

  • 1 adult (Single)
  • 2 adults (Couple)
  • 1-2 adults and any number of dependent* children (Family)
  • 1 adult and any number of dependent* children (Single Parent)
*A dependent is a child on a family or single parent policy who is under 25 years of age and not married or in a de-facto relationship. If this person is 21 years of age or over, they must either be studying full time or earn less than $24,500 per year.

Is there pregnancy and birth cover with no waiting period?

No, unfortunately there isn’t. Most health funds, including HBF, have a 12-month waiting period for pregnancy and birth cover. This helps stop people from signing up for health cover, claiming and leaving soon after, which drives up premiums for all other members of the health fund.

How long can my kids stay on my family policy?

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 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 of 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.

Does HBF use insurance comparison/broker websites to sell health cover?

As a member based, not for profit organisation, we are committed to providing quality, affordable cover to our members. From 2017 we discontinued our commercial affiliate arrangements with insurance comparison websites. This means that we do not pay commissions to insurance comparison websites to sell our health cover.

We prefer to do this through direct conversations, helping you choose the right cover for your life stage and individual needs. Not paying a third party also means that we can focus on giving as much back to our members as possible.


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