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Is Private Health Insurance Worth It?

The costs associated with medical emergencies and personal health requirements can often add up very quickly. Health insurance is there to assist policyholders in lowering these overall costs and provide them with the necessary coverage to seek the assistance they require. The question of ‘Is it worth getting private health insurance in Australia?’ is one that many people find themselves asking.
Fact Checked

Updated: 24 May 2024

Private health insurance works hand-in-hand with both the private and public health sectors to deliver the procedures and necessities that one may need. This blog will discuss the great difference that private health insurance can make on the out-of-pocket costs that a policyholder may have, as well as the factors that affect the decision of private health insurance, such as costs, benefits, and personal health requirements.

Key facts

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Features of AIA Health Insurance

AIA Health insurance offers varying coverage levels. AIA does not provide Extras-only cover. Instead, policy holders will need to buy a combined hospital and extras policy if they require any extras cover. AIA provides eight main hospital coverage types:

Advantages of Private Health Insurance

Private Health Insurance provides policyholders with many interesting advantages. What makes the decision difficult is often the varying nature of advantages across insurers and policies. The most common advantages of Private Health Insurance in Australia are:

Costs and Considerations

The cost of Private Health Insurance varies based on provider, policy type, personal needs, policy tier, and coverage range. A policyholder’s monthly cost is referred to as the premium. This amount is deducted monthly and will directly relate to the costs associated with the chosen policy. Out-of-pocket costs will typically only happen when the chosen policy does not cover the required service or if the coverage cannot cover the entire cost of a procedure. Some insurers offer ‘gap cover’ that can assist in these scenarios.

It is also important to consider the difference between Australia’s three major policy types: Hospital, Extras, and Combined Cover. Hospital coverage provides coverage for in-hospital procedures, surgeries, and services. Extras cover covers out-of-hospital services such as optic, physio, dental, and others. Combined policies combine the previous two policies to create a more comprehensive package. It is important to understand your personal health requirements before making a final decision on a policy. Understanding your health requirements will allow you to make a more informed and greater decision on your policy.

Impact on Tax and Government Incentives

Understanding the tax implications and government incentives in Australia’s healthcare system is essential. The Medicare Levy Surcharge is a financial incentive for individuals with higher incomes to take up private health insurance, imposing an additional levy on those without high enough coverage. This surcharge alleviates pressure on the public system by encouraging individuals to contribute to their private healthcare. On the other hand, the Lifetime Health Cover loading is an initiative to encourage young adults to seek out health insurance. For every year before 31 that a young adult takes out a policy, their policies are lowered by 2% up to a maximum of 10%, and for every year above 31 that a young adult remains without coverage, the premiums increase by 2%. Understanding these tax implications and how they affect finances is a great way for all Australians to lower potential costs while receiving necessary coverage to avoid medical emergencies.

Private vs Public Healthcare

In Australia, choosing between private and public healthcare systems involves considering coverage, quality, and service availability. The public system, represented by Medicare, offers broad coverage for essential hospital and medical services, with expenses covered by the government. However, it may involve longer waiting times for elective procedures. 

Private health insurance provides additional benefits, including coverage for private hospital care, a wider range of medical services, and shorter waiting times for elective surgeries. While the public system ensures accessibility for all Australians, the private system offers a more personalised and faster healthcare experience, emphasising choice and additional services tailored to individual preferences.

Private Health Insurance

We have discussed the differences between private and public, as well as what private health insurance is. There are many different benefits that private health insurance provides. These benefits and options include:

Public Healthcare

Medicare is a fantastic health insurance system that is available to all Australians. Let’s have a look at some of the coverage that Medicare provides.

Tailoring Health Insurance to Individual Needs

Countless policies are available that are tailor-made to meet the needs of every different lifestyle. The most crucial decision to make is choosing the policy that directly meets the needs of you, your family, and your dependents. This means that when you are selecting a policy, it should be tailored directly to these health requirements. A policy should be able to provide coverage for everyone it, and that is how you will know if a policy is right for you and everyone involved.

How to Choose the Right Plan

Before making your final choice on the policy that is right for you, you must consider a few factors. Let’s have a look at some of these factors and why they are important.

Frequently Asked Questions and Answers

Private Health Insurance does not attempt to be a competitor to the Medicare system but rather to work together to improve Australians’ well-being. Private Health Insurance is able to provide coverage for additional services that policyholders may require which is not covered by Medicare. Additionally, private health insurance gives policyholders access to benefits such as private hospital rooms, choice of doctor, and shorter waiting times for elective surgeries.

Yes, there are tax advantages to having private health insurance in Australia. Depending on factors such as your income and age, you may be eligible for the private health insurance rebate, which can reduce the cost of your premiums. Additionally, having private health insurance can help you avoid the Medicare Levy Surcharge if you earn above a certain income threshold and don’t have adequate private hospital cover.

Before making your choice on a policy or insurer, the factors that you should consider are your personal health requirements, your budget, the rewards and benefits of the policy, the coverage range, and any exclusions or waiting periods that the policy may have. It is crucial that you do not rush the decision and rather compare policies to partner with an insurer and receive a policy that meets your personal requirements.

Yes. Private health insurance can cover services that are not included in Medicare. Some of these services may include dental, optical, physiotherapy, and alternative therapies. It is important also to double-check your policy to understand what is and what is not covered by the policy to utilise the full extent of the coverage better.

The decision to acquire a Private Health Insurance policy for a young adult completely depends on the individual themselves. Young, healthy individuals may not require a comprehensive policy, which can be costly. On the other hand, a young individual with personal health requirements may benefit from a health insurance policy in lowering their costs and assisting them in receiving the necessary services.



Megan has extensive experience writing about health and life insurance in Australia. Megan has a special interest in health and wellness. She relies on her background in counselling psychology to convey the latest findings in a manner that is most beneficial to ComparingExperts readers. In every article she writes, Megan aims to uphold the standards of the Private Health Insurance Intermediaries Association (PHIAA) which ComparingExpert is part of.

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