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:
- 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|
Less than $90,000
$90,001 – $105,000
$105,001 – $140,000
$140,001 or more
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
This can help you pay for medical treatment if you need to be admitted to hospital. It can help cover the cost of your admission or accommodation and the fees charged by doctors, surgeons and anaesthetists. It can also cover other costs associated with a stay in a private hospital.
This helps cover the costs of health care treatments outside a hospital setting which aren’t covered by Medicare. This can include major and minor dental treatment, orthodontics, hearing aids, physiotherapy, glasses, contact lenses and podiatry (in most cases with annual limits).
This is a standard health insurance policy designed for a single person, rather than being tailored to cater to the needs of a couple or family. It may include hospital cover plus extras, or either of these types of insurance on their own, depending on what you're after for your health cover.
A family health insurance policy is designed for a family unit including dependent children who may reach up to 31 years of age with some insurers. It offers private health insurance suitable for the whole family and may include shared limits for all members included in your policy.
A health insurance policy aimed at seniors is designed to appeal to people who are in the second half of their life. These are often specific Silver Plus policies that offer the same cover as other health insurance policies, with the exception that pregnancy and childbirth cover may not be included.
Visitors who are in Australia on a temporary basis for travel, work or study may be able to take out Overseas Visitors Health Cover (OVHC). Many visas issued in Australia come with a requirement to take out this type of insurance, which covers visitors who may not be covered by Medicare.
Ambulance cover is generally available either packaged into your private health insurance or on its own as a separate policy or subscription. By having this protection, you could be covered for all eligible ambulance travel in Australia (subject to your insurer's terms and conditions).
The cheapest and most barebones form of private hospital insurance, this can include cover for rehab, in-hospital psychiatric services and palliative care. Having this policy will enable you to avoid paying the Medicare Levy Surcharge (MLS) and Lifetime Health Cover (LHC) loading.
Bronze hospital cover is a step up from basic insurance, including 18 further clinical categories such as ear, nose and throat, bone, joint and muscle, digestive system, joint reconstructions, gynaecology and chemotherapy, radiotherapy and immunotherapy for cancer.
Silver hospital cover is the second-most expensive type of policy and offers the second-most clinical categories. On top of what's offered by basic and bronze cover, it also includes heart and vascular system, lung and chest, blood, hearing device implantation and dental surgery.
The highest level of private hospital insurance available in Australia, gold policies can offer cover for pregnancy and birth, weight loss surgery, assisted reproductive services and insulin pumps on top of all the categories provided by silver, bronze and basic hospital insurance.
Why compare health insurance through Savvy?
Top tips for finding the cheapest basic health insurance policy
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.
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).
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.
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
Helpful health insurance guides
Looking for health insurance to cover your condition or treatment?
Read one of our helpful guides on a range of different ailments and potential hospital or extras treatments to help you find out if they're covered.
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