Understanding how private health insurance in Australia reimburses prescription medications can help you manage out-of-pocket costs effectively. Below is a comprehensive overview.
1. Two Main Reimbursement Channels
(1) Hospital Cover
Covers medications administered during hospital stays (excludes take-home medicines).
- PBS-listed medications: Fully covered (direct settlement between hospital and insurer) when used in a contracted private hospital.
- Non-PBS high-cost medications: Partially reimbursed if approved by the TGA (Therapeutic Goods Administration) for specific treatments.
(2) Extras Cover
Covers prescription medications purchased from pharmacies outside of hospitals, including unopened take-home medicines after discharge.
Requirements:
- Must be TGA-approved Schedule 4 or Schedule 8 prescription medications.
- Must not be on the insurer’s exclusion list.
- Typically covers non-PBS medications or the out-of-pocket portion exceeding the PBS co-payment (since PBS-subsidised drugs are already partly covered by Medicare and cannot be double-claimed).
Note: In both cases, claims are valid only if waiting periods are completed and premiums are up to date.
2. Required Documents for Claims
When applying for medication reimbursement, you need to submit a pharmacy receipt containing:
- Medication name, dosage, and quantity.
- Dispensing date and prescription number.
- Pharmacist’s details and pharmacy address.
- A clear note stating “Not PBS subsidised” or “Private”
- Patient’s personal details.
3. Medications Not Covered
Private health insurance will not reimburse the following:
- Non-TGA-approved medications.
- Over-the-counter (OTC) medicines.
- Compound medications (except under special conditions).
- Bodybuilding/enhancement drugs (e.g., steroids).
- Non-essential hospital-supplied medications.
- Drugs listed on the insurer’s exclusion list.
4. Reimbursement Calculation
- PBS medications: Only the portion above the PBS co-payment is claimable.
- Non-PBS medications: Reimbursed according to your policy’s percentage cover.
- Annual limits: Reimbursement caps depend on your extras cover level.
5. Practical Tips
- Confirm if your hospital is contracted with your insurer before admission.
- Seek pre-approval from your insurer before purchasing high-cost medicines.
- Keep all pharmacy receipts for at least 2 years.
- Review your policy regularly to track changes in medication reimbursement limits.
Important Note
Reimbursement policies vary across insurers and may change with healthcare reforms. For special or high-cost medications, always confirm the latest rules directly with your insurer. We recommend reviewing your policy every 6 months to stay updated.
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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
