This article details services and costs that are generally not covered by Australian private health insurance, drawing information from the official Australian Government Department of Health.
Applies to Medicare holders with domestic cover only, which excludes visitors OVC and students OSHC.
1. Services Not Covered by Law (Out-of-Hospital Medical Services Covered by Medicare):
By Australian law, private health insurance does not offer cover for out-of-hospital medical services that are already covered by Medicare. These include:
•GP visits
•Consultations with specialists in their rooms. For example: If you have purchased the highest level of health insurance to cover pregnancy services, it only covers the costs incurred while you are in the hospital but not the visits to your pre-natal visit to your obstetricians and the management fee your specialist charged before your delivery in the hospital. The management fee of an obstetrician could range from $3000-$6000 in general, depending on how much your specialist charges. However, a small part of the fee is reimbursed by Medicare, e.g., $600 from $4000 of the management fee; $57 from $100 each visit is reimbursed by Medicare.
•Out-of-hospital diagnostic imaging and tests
Medicare covers these services, and private health insurers are legally prohibited from providing benefits for them.
2. Services Not on the Medicare Benefits Schedule (MBS):
Medicare generally does not pay a benefit for out-of-hospital services that are not listed on the MBS. Consequently, private health insurance typically does not cover these either, unless they fall under a specific ‘Extras’ policy. Examples include:
•Physiotherapy (unless part of an ‘extras’ policy)
•Podiatry (unless part of an ‘extras’ policy)
•Other allied health services not on the MBS (unless part of an ‘extras’ policy)
3. The ‘Gap’ in Doctor’s Fees:
While private health insurance may cover a portion of in-hospital medical services, doctors and other health providers often charge more than the Medicare Benefits Schedule (MBS) fee. This difference is known as the ‘gap’. You may have to pay this gap out of your own pocket unless the doctor has a ‘gap arrangement’ with your insurer that reduces or eliminates this payment.
4. Hospital Charges (Potentially Leading to Out-of-Pocket Costs):
Even with private hospital insurance, you may incur significant out-of-pocket costs for certain hospital charges, especially if your policy only pays minimum benefits or if the hospital does not have an agreement with your insurer. These can include:
•Accommodation costs
•Operating theatre fees
•Medical device and human tissue product costs (e.g., plates, screws, artificial joints)
•Medicines and dressings administered in hospital
•Physiotherapy and other therapies received in hospital
5. Policy-Specific Out-of-Pocket Payments:
Many private health insurance policies incorporate direct out-of-pocket payments as part of their terms. These are costs you must pay before your insurer contributes:
•Excess: A total agreed amount you pay per admission before your insurer pays benefits.
•Co-payment: An agreed amount you pay per day you are in hospital, up to a specified cap.
6. Common Exclusions by Policy Tier and Specific Procedures:
Private hospital cover is categorized into Gold, Silver, Bronze, or Basic tiers, with lower tiers having more exclusions. Generally, the following procedures and services are commonly excluded or restricted, particularly in lower-tier policies:
•Joint replacements (often excluded from Basic, Bronze, and Silver plans)
•Pregnancy and birth-related services (often excluded from Basic, Bronze, and Silver plans; if excluded, you would be treated as a public patient in a public hospital via Medicare)
•Cardiac and cardiac-related services (e.g., heart investigations and surgery)
•Cataract and eye lens procedures (eye surgery)
•Assisted reproductive services or infertility services (IVF) eg. Most steps in the IVF process are not actually covered by private health insurance, but patients can receive coverage if their procedures are performed in a day hospital.
•Rehabilitation and psychiatric services
•Plastic and reconstructive surgery (e.g., skin grafts following burns, skin flap repair, breast reconstructions following cancer), unless medically necessary.
7. Natural Therapies:
Private health insurance policies cannot cover some natural therapies. It is essential to check with your insurer for specific details on what is excluded.
8. Cosmetic Surgery and Experimental Treatments:
•Cosmetic Surgery: Procedures that are purely cosmetic in nature and not medically necessary are generally not covered.
•Experimental Treatments: Treatments that are still considered experimental or unproven may not be covered.
9. Services Received Outside of Australia:
Private health insurance typically only covers treatment received within Australia. Medical expenses incurred overseas are generally not covered.
10. Pre-existing Conditions During Waiting Periods:
For pre-existing conditions, there are usually waiting periods (e.g., 12 months for hospital treatments, 2 months for psychiatric care, rehabilitation, and palliative care) before you can claim benefits. Treatment for pre-existing conditions during these waiting periods will not be covered.
11. Non-PBS Medicines (Unless Explicitly Covered):
While the Pharmaceutical Benefits Scheme (PBS) subsidizes many medicines, private health insurance generally does not cover non-PBS medicines unless explicitly stated in your policy, e.g. some insurers offer a certain amount of limit to cover “Pharmacy” items under Extras policy, which can potentially cover some non-PBS medicine (not already covered by PBS) you purchase in the pharmacy. You must confirm with your insurer regarding coverage for any non-PBS medicines.
Important Note:
It is crucial for individuals to thoroughly understand their specific private health insurance policy, including its inclusions, exclusions, restrictions, and any applicable waiting periods, to avoid unexpected out-of-pocket expenses. Always consult your insurer and healthcare provider for detailed information regarding your coverage.
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Author Profile: Jeffrey Liu, JP, is the founder and principal adviser of Hippo Insurance (aka: Hippo Wealth), with a deep expertise in wealth protection. His extensive experience includes roles in the wealth management divisions of Westpac, ANZ, and a local multi-family office. As the host of “Riches Talk,” a podcast dedicated to cultivating personal and business growth, Jeffrey has established himself as a thought leader in developing life riches. His insights have been featured on SBS, The Australian, and Channel 7. Notably, he was a semi-finalist on Australia’s Got Talent in 2010. Learn more at http://www.hippoinsurance.com.au
