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07.How to save

You can save on your private hospital insurance premium by buying a policy:

  • with an excess (the excess is the amount of money you have to pay for a hospital stay, before the private health fund starts paying), or
  • where you pay a co-payment if you go into hospital (you pay an agreed amount each time a service is provided — usually a set amount per day for a set number of days per stay).

If you decide to go for one of these policies, check the fine print carefully. For example, with some policies the excess is applied once a year; other policies could apply the excess multiple times. If you want to take out hospital insurance to avoid paying the Medicare levy surcharge you need to be especially careful.

  • Some policies with a high excess (more than $500 for singles and $1000 for couples/families) are NOT exempt from the surcharge. This means you’d still pay the extra levy even though you’ve paid for insurance. Check with the fund before you buy.

As a general rule, it’s better to save money by choosing a product with a high excess or a co-payment rather than one that excludes treatment for some conditions.

 

 

Self insurance

  • It's important to remember that, under Medicare, all Australians are entitled to free treatment in a public hospital, regardless of their insurance status. Self-insurance involves meeting your own costs for private treatment. This may mean saving the money you would have spent on insurance in a separate account or an accessible investment.
  • The problem with self-insurance is you don’t know how much you’ll have to pay. If you’re in hospital for longer than you expected you could end up with a very large bill. If your money runs out, you may have to become a public patient in a public hospital, which could be unsettling and complicated partway through treatment.
  • One possible incentive for self insuring is you can claim a tax rebate on your medical costs after a cap. For more information check wiht the ATO.
Self insurance traps:
  • You can’t make use of any of the government incentives like the 30% rebate.
  • You may have to pay the Medicare levy surcharge if you’re above a certain income.
  • You may have to pay a higher premium if you decide to take up hospital insurance after you've turned 31.
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