What Happens If I Don't Have Private Health Insurance? 

Learn about the implications and consequences of not having private health insurance here with Savvy. 

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, updated on July 10th, 2023       

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Many Australians wonder what will happen if they don’t have private health insurance. According to figures published by the Australian Prudential Regulation Authority (APRA) in March 2023, a record 14.42 million Australians (just over 55% of the population) now have private health cover, with its popularity increasing by 2% in 2022 with an additional 305,687 people taking out private hospital cover.  

But what happens if you don't have private health insurance in Australia? Find out what the implications are and if you’ll have to pay extra tax if you don’t have private health cover here with Savvy. 

What happens if I don't have private health insurance in Australia?

If you choose not to have private health insurance in Australia, there are several implications: 

  • you may have to pay 100% of the cost of ancillary health services such as dental, optical, physio and chiro treatments, as well as the full cost of hearing aids and other healthcare services that aren’t covered by Medicare 
  • you’ll have no choice about where you receive your health treatment or which doctor treats you 
  • you’ll have to receive all hospital treatment as a public patient, which may involve sharing a room or being treated in a public ward 
  • you'll have to join public health waiting lists to see specialists and to get non-urgent surgery, and these waiting lists can be lengthy 
  • you may have to pay more tax such as the Medicare Levy Surcharge depending on your income bracket 
  • if you decide to get private health insurance later in life, it may end up costing you more 

Because Australia has a universal health care system, the publicly-funded Medicare, you can still receive basic hospital treatment if you suffer an illness, accident or injury without private health insurance. An ambulance can take you to the nearest public hospital which can treat your medical condition, and treatment through an accident and emergency department will be free of charge. 

However, if you don’t have ambulance cover as part of private health insurance, that ride could end up costing you thousands of dollars depending on which state you live in.

Are there tax penalties if I don’t have private health insurance?

The Australian Government has a ‘carrot and stick’ approach to private health insurance. The incentive (or ‘carrot') to hold private health insurance is assistance with the cost of your premiums provided by the government. The private health insurance rebate offers a rebate on the cost of premiums which you can claim either through your health fund or annually on your tax return. It ranges from around 8% up to more than 38% for older Australians on a low income (as of April 2023).  

Medicare Levy Surcharge 

The ‘stick’ part of the equation is the Medicare Levy Surcharge. All eligible Australians pay the Medicare Levy, which is taken out of the pay packet by employers and paid straight to the government. This is partially how Medicare is funded.  

However, those who don’t have private health insurance have to pay an additional tax called the Medicare Levy Surcharge. This is a penalty imposed by the Australian Government on those who don’t have private hospital cover and earn above $90,000 p.a.  

The surcharge of between 1% and 1.5% is calculated based on your income and is payable by high income-earners in addition to the standard Medicare Levy. The purpose of the Medicare Levy Surcharge is to encourage higher-income earners to take out private health insurance and reduce the strain on the public health system. 

How can I avoid paying the Medicare Levy Surcharge? 

You can avoid paying the Medicare Levy Surcharge by having an appropriate level of hospital cover. This is defined by the government as hospital cover with an excess of $750 or less for singles or $1,500 or less for families.  

Basic hospital cover for a single person can start from as little as $20 per week, which can provide you with very basic hospital cover to avoid paying the Medicare Levy Surcharge. 

More questions about what happens if you don’t have private health insurance

What is the Lifetime Health Cover Loading?

The Lifetime Health Cover Loading is a government initiative which encourages people to take out private health insurance early in life and maintain it. If you don't take out private hospital cover before July 1 in the year you turn 31, you may be subject to an additional 2% loading on top of your health insurance premiums for each year you are aged over 30 when you join. This loading can significantly increase the cost of your private health insurance premiums and will last for ten years of successive payments once you decide to purchase life insurance down the track. 

Is private health insurance mandatory in Australia?

No – private health insurance isn’t mandatory in Australia, but it’s encouraged by the government to have additional coverage beyond the basic healthcare services covered by Medicare. 

Can I choose to be treated in a private hospital even if I don't have private health insurance?

Yes – you can choose to use a private hospital for your healthcare needs even if you don't have private health insurance. However, using private hospitals without private health insurance means you will be responsible for the full cost of your treatment, which can amount to thousands of dollars. The alternative is to be treated in a public hospital, which provides free healthcare services covered by Medicare. 

Can I still receive good maternity care without private health insurance?

You can still receive maternity care without private health insurance in Australia, as pregnancy and birthing services are covered by Medicare. However, having private health insurance during your pregnancy can provide you with additional options and choices, such as choosing your preferred hospital, midwife and obstetrician. 

Are there any waiting periods for private health insurance if I haven't had it before?

Yes – there’ll be waiting periods for certain services when you first take out private health insurance or upgrade your hospital cover or extras policy, especially if you haven't had private health insurance before. Waiting periods are the period you need to wait before you can claim benefits for certain services, and can vary from two months to 12 for hospital cover and potentially longer for extras. It's important to understand the waiting periods which may apply to your chosen private health insurance policy and plan accordingly. 

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