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The Difference between Medicare & Private Health Cover

The Difference between Medicare & Private Health Care
Owen Pham
Owen Pham Updated: 04 March 2021
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Typically, you’ll have two options available to you when it comes to health care. You could opt for Medicare cover only, or you have the option to buy a private health insurance policy.

Generally, Medicare covers some of every Australian resident’s medical needs. This includes hospital treatment as a public patient as well as select non-hospital health services. On the other hand, private health insurance covers a broader range of medical services, like dental, optical and physiotherapy.

Deciding on the insurance scheme to take out can seem confusing, given the many different options offered. Keep reading to learn more about the differences between Medicare and private health insurance and learn how to make the right choice for your circumstances before the upcoming health insurance premium increase on the 1st of April.

Key differences between private and public health insurance

The question of public vs. private health care is an old one. As mentioned before, all residents have public health care coverage in Australia. However, not all of their medical needs are covered in this scheme. This is where private health care comes into play.

Medicare does not cover the costs of dental, physiotherapy, prescription pharmaceuticals (non-PBS), etc. You can get coverage for these items with private health insurance. Some Australians also prefer to have more say in their medical procedures: From choosing a doctor to shortening the waiting time for elective surgeries. A private health care plan can help them in this matter.

Private health insurance

With a private health care plan, you’ll typically be treated in hospitals as a private patient. To get your private health insurance, you will first have to buy a policy from registered insurers, and then agree to pay a regular premium. The coverage fees vary according to each policy.

Benefits of private health cover:

  • Broader medical coverage: When you opt for private cover, you’ll generally be able to access a wider variety of treatments, for instance, Dental.
  • More hospital and doctor options: As a private patient, you’ll typically be able to choose which service providers you see.
  • Avoid the Lifetime Health Care(LHC) loading: If you apply for private cover before the 1st of April before your 31st birthday, you won’t need to pay the LHC loading. This loading fee is a 2% loading added to your Hospital cover premiums for every year you didn’t have cover. 
  • Claim money back on non-Medicare health services: You’ll typically be able to claim rebates for Extras like chiropractic services, physiotherapy and optical.
  • Private care: If you have private health insurance, you’re more likely to be able to stay in a private room when you need to go to the hospital.

Public health insurance

With public health insurance, a wide range of medical services is available to you for free or at a lower cost. The public health care system in Australia applies automatically to all residents (and some foreign visitors).

Benefits of Medicare

  • Free health care services: If you have Medicare, you’ll typically be eligible for free healthcare in a public hospital.
  • Prescription medicines (PBS): With public health cover, your health cover should pay for certain essential prescription medications. 
  • Diagnostic imaging services: Medicare typically covers the costs for certain diagnostic services such as ultrasound, CT scans, X-rays, MRI scans. 

What does private health insurance cover that Medicare doesn’t?

Australian public and private health care systems both can cover necessary hospital treatment and medications. However, private health insurance also covers elective surgeries, dental, optical, physiotherapy, and prescription medications that are not covered by Medicare in Australia. Some state or territory governments don’t cover ambulance costs, which you can take out in your private health care policy.

Is private insurance better than Medicare?  
If you end up going to the hospital a lot during the year, or need out-of-hospital medical services most of the time, opting for a private health care plan seems like a wise choice. It can provide you with a more convenient health care experience, and benefit you financially in the long run. However, it’s best to compare your options to find the right cover for your requirements.

What if you change your mind?

Sometimes people decide to change their private health care policy to another one or cancel it altogether. It can be because of a rise in premium, alternations in the insurance company’s provider list, or personal reasons like relationship changes. As this happens a lot, insurance companies have a rather straightforward guideline regarding the issue.

If you are thinking about changing your health care plan, the first step is comparing different insurance schemas to make sure you end up paying for what you need, depending on your age, health, and budget.

Another thing to consider is the health insurance waiting period, i.e. the amount of time that you are not covered by any company when you switch insurance plans. This depends on whether you are downgrading your coverage, or moving to a higher level. In the first instance, your previous insurance company usually continues your coverage during the waiting period. But for changing to an improved plan, you have to wait out the required amount of time.

Frequently Asked Questions and Answers

  • What are the advantages of having private health insurance?

    Private health insurance covers many medical services that are not included in the government’s insurance schemes. You can get free services or reduced fees for dental, optical, physiotherapy, ambulance transitions, prescription medications (non-PBS), etc. With some policies, you will have to pay less premium after the age of 30.
  • How much does private health care cost in Australia?

    Different private insurance policies will require different premiums. Typically, coverage of some particular services will result in a higher fee, such as Extras or co-payments. Policies that make you eligible for health insurance rebates may reduce your tax payments and affect your insurance premiums.
  • What is the difference between private and public health care?

    Comparison of private vs. public health insurance shows that the most significant difference between these two lies in medical services coverage. Private health insurance can cover the additional costs and services that are not included in government insurance schemes. However, this typically depends on your specific policy.
  • How is private health care funded?

    Australian citizens mostly provide the funding for the private sector of health insurance. The premiums paid by customers go directly into supporting these companies financially. Governments also give incentives to private health insurance. Employers who choose a private health care scheme for their employees don’t have to pay taxes on the amount paid as premium, so the government effectively pays for these costs.
  • Does private health care cover dental?

    Private health care is supposed to cover the medical services that are not included in public health insurance. However, there are varieties of different policies, some of which do not cover dental. If you are eager to have your dental costs covered, make sure you take it out by contacting your insurer.

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