Basic Health Insurance

 Compare cheap basic health insurance quotes here through Savvy. 

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, updated on July 6th, 2023       

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Health Insurance Banner

We’ve partnered with Compare Club to bring you a range of health insurance policies to help you compare them side by side.

Did you know that taking out basic health insurance can save you money, as it may mean you don’t have to pay the Medicare Levy Surcharge? In addition, you could be covered for some basic health costs in case you are hospitalised. If you’re considering whether private health insurance is worth it, Savvy has you covered. 

We can help you find and compare a range of budget policies offering basic health insurance, sufficient to potentially save you dollars at tax time. Consider your private health insurance options here with Savvy by comparing free, no-obligation quotes for health insurance through us today. 

What is basic health insurance and is it worth it?

Basic health insurance is the lowest level and cheapest tier of hospital cover available in Australia. It offers very basic hospital insurance for three areas of treatment as a private patient in public hospitals: 

  • Rehabilitation 
  • In-hospital psychiatric services 
  • Palliative care 

However, there can be many restrictions in a basic hospital policy, so if you do need hospital treatment for any of the above services and choose to be treated in a private hospital, you may still find yourself with certain out-of-pocket expenses.  

A basic hospital cover policy won’t offer you the same level of protection as a bronze, silver or gold hospital cover policy. Such basic policies are commonly taken out by younger, healthy adults who wish to avoid paying more at tax time by fulfilling the government’s requirement to have private health insurance. 

However, by comparing a range of health insurance policies through Savvy, you’ll more clearly be able to see the variations between health funds. You’ll also be able to see how spending just a bit more per month could possibly buy you a higher level of cover, which would offer your far more coverage over a wider range of clinical conditions. 

What are the benefits of having private health insurance?

Private health insurance can help you pay for the cost of the medical treatment you need, either as an in-patient in hospital (hospital cover) or for the health care services you enjoy as a community member (extras cover) such as optical and dental services. The benefits of appropriate hospital cover may also include: 

  • Skipping public hospital waiting lists by seeking treatment in a private hospital
  • Being able to choose the doctor who treats you in hospital
  • Scheduling hospital treatment when it suits you 

It can also assist you with the cost of ambulance transport if you live in a part of Australia where the state government doesn’t provide free ambulance transport for its residents. 

In addition, private health insurance extras can help you with the cost of medicines which aren’t listed on the Pharmaceutical Benefits Scheme (PBS) schedule. These medicines aren’t subsidised by the government through the Medicare scheme. Finally, it can provide you with greater peace of mind that you can be at least partially covered financially if you have to undergo treatment which is deemed claimable by your insurer. 

However, the main advantage of having basic hospital cover is that the current health system in Australia encourages individuals to buy private health insurance to reduce the strain on the public health system. The government offers a rebate which helps to reduce the cost of private health insurance for eligible Aussies. You can either claim this rebate back at tax time as a lump sum or on an ongoing basis through reduced premiums from your health insurer. This assumes you’ve had health insurance for all of the previous financial year. 

However, the Australian Government has also designed a series of tax disincentives which apply to those who don’t hold private health insurance. 

Medicare Levy Surcharge  

The Medicare Levy Surcharge (MLS) is an additional tax you're required to pay on top of standard income tax and the Medicare Levy if you don’t have health insurance. It's based on your taxable income.   

If you're single, uninsured and earn over $90,000 p.a., you will be required to pay either 1%, 1.25% or 1.5% of your total taxable income at tax time. The more you earn, the more you’ll be required to pay to assist with the cost of Australia’s public health system. These are the MLS income tiers and surcharge rates:  

Base tier taxable income Tier 1 income Tier 2 income Tier 3 income
Single threshold
Less than $90,000
$90,001 – $105,000
$105,001 – $140,000
$140,001 or more
Family threshold
Less than $180,000
$180,001 – $210,000
$210,001 – $280,000
$280,001 or more
Medicare Levy surcharge rate

*Thresholds and amounts correct as of February 2023, but you should check with the ATO, as changes may occur. The family threshold increases by $1,500 for each child after the first. 

Lifetime Health Cover loading 

If you don’t have at least basic private health cover in your 20s, but decide you need it once you’re over 30, you'll be required to pay an additional amount for your private health insurance on top of your standard premiums. This is known as the Lifetime Health Cover (LHC) loading. It works as follows: 

  • You’ll be required to pay an additional 2% loading for every year you aren’t covered by hospital cover and aged over 30, up to a maximum loading of 70%. 
  • The LHC loading is applicable for a period of ten years.  
  • It’s calculated by the ATO starting on the 1st July following your 31st birthday
  • If you were born before 1st July 1934, you do not have to pay the LHC loading. 

As an example, if you first take out private health insurance at the age of 40, and haven’t previously had a policy, you might have to pay an additional 20% on top of the cost of a standard health policy. This is calculated as a 2% addition for each year over 30 you haven’t had insurance, which is 2% x ten years = 20% extra. 

Types of health insurance

Why compare health insurance through Savvy?

Top tips for finding the cheapest basic health insurance policy

Compare through Savvy

Find the cheapest health insurance policy from our panel of insurers by comparing a range of health cover policies through Savvy. By comparing policies side-by-side, you’ll be able to see which ones offer the best value.  

Check excess levels

An excess is an amount you’ll have to pay if you make a claim on your hospital cover policy. The higher the excess you choose, the lower your monthly premiums will be. The maximum excess a single person is permitted to choose is $750 (or $1,500 for family policies). 

Apples with apples

Make sure you’re comparing the cost of similar policies. For example, if you’re looking for basic cover, compare the cost of a basic hospital cover policy with a similar basic policy, not with a bronze or silver-tier policy. 

Compare co-payments

A co-payment is an amount you may be required to contribute if you do need to be admitted to hospital. Co-payments vary between insurers, ranging from zero to upwards of $100 a night. They may be capped at between $500 and $700. Higher co-payments may also lead to lower premiums.   

Frequently asked questions about basic private health insurance

Is there a basic level of extras cover health insurance too?

Extras cover is often available in a range of levels too, ranging from cheaper policies to more expensive ones. The basic level of cover will be the cheapest policy on offer from any particular health fund, which will offer the least in the way of inclusions. However, there aren’t any clearly defined tiers in the same way as hospital cover, so you can partially judge the level of cover on the cost of the policy. 

Are there benefits to taking out basic private health insurance at a younger age?

Yes – if you take out health insurance when you’re a young adult under 30 years of age, you may be entitled to an age-related discount of 2% per year you’re under 30, capped at a maximum of 10%. This discount will be taken off the basic cost of your premiums and can stay in place until the age of 41 in some cases.  

If I don’t have basic health insurance, will I have to pay out-of-pocket expenses if I’m admitted to hospital?

In Australia, the Medicare system covers basic health treatment for all eligible Australians. In the event of an accident which results in you being admitted to hospital, you’ll be taken to the nearest accident and emergency department and treated as a public patient in a public hospital at no cost. However, if an ambulance was called to transport you to hospital and you don’t have any private health cover, you may have to pay the full cost of your ambulance transport. Not having private health insurance also means you won’t be eligible for cover for treatment in a private hospital or as a private patient. 

Is ambulance insurance available on its own?

Ambulance cover can be provided with basic hospital cover. However, some health funds offer ambulance cover as part of their extras cover, while it’s also available as a separate type of insurance on its own. If you’re looking to only take out ambulance cover, look for policies which enable you to access it on its own. 

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Savvy’s comparison service is provided by Compare Club. Compare Club compares selected products from a panel of trusted insurers and does not compare all products in the market.

Any advice presented above or on other pages is general in nature and doesn’t consider your personal or business objectives, needs or finances. It’s always important to consider whether advice is suitable for you before purchasing an insurance policy.

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