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Factors to consider when taking out private health insurance

The things that matter

Deciding which health insurance suits you can seem both daunting and challenging. And whether you’re choosing health cover for the first time or the tenth, it’s easy to be confused by the jargon, conditions, and fundamental differences between policies.

To make it easier for you, we’ve put together a list of things to be aware of when you’re making your decision. We think the best decisions are made when you have more information rather than less, which is why we have created this page.

These factors will have a different influence on you depending on your budget, lifestyle and life-stage, so make sure you think about them carefully.


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Choosing the right level of hospital cover

Hospital cover gives you more choice and control of your treatment in the event you need to go to hospital. If you’re injured in an accident or diagnosed with an illness, your hospital cover can help with the cost of your treatment and care. Just remember that not all policies are the same, and will offer different inclusions, restrictions, exclusions and excesses.

Keep in mind

When you’re weighing up different covers, remember it is likely that a low-end cover will often only make you eligible for treatment as a private patient in a public hospital or even offer no cover at all for many services. On the other hand, a top level of cover will typically ensure you’re covered as a private patient in a private hospital for every service included on the cover.

The key issue

Hospital cover doesn’t just offer you peace of mind. It could also save you from paying the Medicare Levy Surcharge, which – depending on your income – may cost more than what you would pay for a health insurance product.

The key questions to ask

When you’re selecting a hospital cover product, it’s important to ask yourself:

  • Given my age and life-stage, what services am I likely to need?
  • If I might need these services, am I happy to be treated in a public hospital, knowing there may be public waiting lists and less choice when it comes to treatments and/or selecting my preferred practitioner?
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Choosing the right level of extras cover

Your Extras cover looks after a range of important health related services that don’t fall under your hospital cover. This may include general and major dental, orthodontics, optical, dietary, physiotherapy, chiropractic, osteopathy, natural therapies, pharmacy and psychology, among others.

Keep in mind

Most of the services in Extras cover aren’t covered through the public system or are only covered in selected circumstances. This means if you need to or choose to use one of these services without extras cover, you will generally need to pay the full amount charged for the service. Extras cover allows you to claim back some or all of the cost, depending on your level of cover.

The key issue

Before you settle on a cover, ensure that all the services you may need are included in your package and that the benefit level you select meets your needs.

The key questions to ask

When you’re deciding on Extras cover, it’s important to work out which services are important for you. Most people look for dental, physio, chiro and optical when choosing extras. But if you are looking for other services, it’s important you make sure it’s included in your cover. Ask yourself – are you likely to need hearing aids or optical? Are you at risk of big dental bills?

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The importance of ambulance cover

Accidents do happen, and it’s important to know about variable state or territory-wide ambulance cover options. For instance, emergency ambulance services are state funded for residents of either Queensland or Tasmania. However, you won’t necessarily be covered while travelling interstate if you live in Tasmania.

Fortunately, most health insurance provides at least some emergency ambulance cover, meaning you will be covered in the event of a medical emergency for services provided by a state or territory government, or an organisation recognised by the insurer.

You may be able to purchase more comprehensive ambulance cover separately or in addition to your private hospital or extras cover.

Keep in mind

We all hope we’ll never need to call an ambulance in an emergency. But we can’t ignore the fact that accidents happen, and this cover helps ensure you or your loved ones won’t be hit with a nasty bill at the time you need it least.

The key questions to ask

When you’re researching ambulance cover, remember to check:

  • Whether your State or Territory provides you with emergency ambulance cover.
  • And if it doesn’t, how many services will your policy cover you for every year?
  • Whether state ambulance subscription services are available to you or not.
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What type of health cover best suits you?

Finding the right cover

With so many options on the market, it’s easy to feel overwhelmed. But the more knowledge you have about your own lifestyle and expectations, the faster you can narrow your choices.

Keep in mind

Depending on your health needs and at what life stage you are at, you might enjoy more peace of mind with a full package of hospital and extras cover, while another person might find it more cost-effective to tailor their own cover. Most insurers will allow you to take hospital only, extras only, or ambulance only cover. They’ll also let you create a combination that suits you. Make sure you take the time to think about what you expect to be covered for – as well as your budget – before you sign up for any policy.

The key questions to ask

Once you’ve done some initial research into your health cover, you need to take a moment to think about your own needs and expectations. Ask yourself:


  • Will I be more comfortable knowing that I have comprehensive cover? If I am considering accepting some restricted or excluded services on my hospital cover, what conditions am I willing to look at given my age, health and lifestyle? What trade off am I willing to make between having to pay, and the size of, an excess or co-payment when I go to hospital vs having a higher premium?
  • Does the hospital cover I’m considering include ambulance cover?


  • What extras services are important to me? Will I actually access the services offered by the cover? And how much do I want to get back?
  • How much am I prepared to pay now to help reduce out of pocket costs when I need treatment?
  • Am I worried about large out of pocket costs on things like dental crowns, which will require a higher annual limit?
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Understanding waiting periods

All health insurance products have waiting periods, and this is the length of time you’ll have to wait after joining or moving to a higher level of cover before you can use and claim various services included in your cover. It’s important to note that different waiting periods apply for hospital and extras services, and can vary between insurers.

Keep in mind

Most waiting periods vary from between 2 to 36 months. So if you require cover for a particular health need or treatment, ensure you fully understand the waiting periods that may apply.

The good news is that if you’re switching to a new insurer on an equivalent level of hospital cover or lower, your new insurer must recognise the waiting periods that you’ve already served for your hospital cover. This is not the case with extras cover. While Bupa also provides continuity of cover for extras cover, insurers are not legally obliged to, so it’s worth checking their policy on waiting periods on this before joining. If however, you are switching to a higher level of cover (eg an increase in extras dental annual limits or a change from minimum benefits to full cover on a hospital service), waiting periods may apply to any increase in cover.

The key issue

If you use a product or service before you’ve served your waiting periods, it’s likely that your insurer won't cover you for it. This means you’ll have to pay the cost out of your own pocket.

Of particular importance for hospital cover, it is important to note that if you have any pre-existing conditions or are planning on having a baby, you'll have to serve a 12-month waiting period before you’re covered for these services.

The key questions to ask

If you’re planning to take out Hospital or Extras cover, make sure you ask about the waiting periods that apply – particularly in relation to the services you plan to use most.

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Understanding minimum/restricted benefits and exclusions

Understanding policy exclusions

It varies from insurer to insurer and cover to cover, but you’ll find that numerous health covers available today contain a certain list of exclusions. These are treatments or services that aren’t covered at all, and while this can help to reduce the cost of cover, you will need to weigh this up against your health needs.

Understanding Minimum and Restricted Benefits

Minimum benefits or restricted benefits are similar to exclusions, however with minimum benefits you will still be covered for the cost of treatment with your choice of doctor (subject to their availability) in public hospitals for the services that they apply to - exclusions mean you are not covered under any circumstances.

Keep in mind

Choosing hospital cover that includes minimum benefits or exclusions is a way to help keep your premium down. You will need to consider how likely you would be to need a service, and if choosing between a policy with exclusions and a policy with minimum benefits, you need to ask whether you will be comfortable having a limited range of choices in your treatment or no choice at all.

The key issue

If you choose to receive treatment for these services in a private hospital, remember that you could end up footing a significant bill.

The key questions to ask

Before you sign up for a policy with minimum or restricted benefits, make sure you ask yourself:

  • What services do I want full cover for?
  • What services do I feel would be ok to not have full cover for?
  • If I do need these services, am I happy to receive treatment in a public hospital?
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Policy excesses and co-payments

Understanding Excesses

When an excess is applied to hospital cover, it means you’ll have to contribute an agreed amount out of your own pocket if you are admitted to hospital. In most cases, if there is a choice of excess, the higher the excess you agree to pay, the lower the cost of your monthly premium.

Understanding Co-payments

Co-payments are payable when admitted to hospital, however unlike excesses the amount is not set as a single lump sum but is rather charged at a daily rate (normally a maximum co-payment per admission will also apply). A $50 co-payment per night capped at $250 per admission would mean an overnight stay in hospital would cost $50 in co-payments, a 5 night admission would cost $250 and a 10 night stay would also cost $250 due to the co-payment cap applying.

Keep in mind

Excesses and co-payments can seem confusing, but it’s important to understand how they work. In short, if you agree to pay an excess and/or co-payment with your cover and require hospital treatment, you’ll have to pay the agreed excess and/or co-payment when you claim your benefits.

The key questions to ask

Before you sign up for health cover with an excess, make sure you ask a few questions.

  • When will you be required to pay an excess?
  • For what treatment will you have to pay it?
  • And would you be better to pay a higher monthly premium in order to reduce the excess?
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Understanding annual limits

When you look at extras cover, you will see a lot of talk about ‘annual limits’. This is a dollar amount that you can claim up to each year for each of your extras services and is sometimes referred to as an ‘annual maximum’. This amount can vary based on your insurer, your level of cover and/or how long you have been with an insurer.

And that isn’t all - some products also have combined limits across different services, which means, for example, your physio claims may reduce your ability to claim on natural therapies. Some also may limit the total amount you can claim across all extras services on your policy (eg: no more than $1,000 can be claimed for all services in one year). ‘Family limits’ can also apply that restrict how much everyone on a membership can claim – there is a lot that you need to keep in mind while doing your research!

Keep in mind

As they vary from insurer to insurer and cover to cover, make sure you understand how the annual limits work within your chosen health insurer. If you’re not on the right level of cover, you might find that you run out of your annual limit for an extras service faster than expected, leaving you unable to claim for that service until the following year.

If you use a particular service regularly, it’s good to have a high annual limit. So if you’re an active person who’s into sport, you might choose to take a policy with a higher annual maximum for physiotherapy. Just remember that it’s usually the case that higher levels of cover have higher premiums.

The key issue

With most insurers the annual limits will expire at the end of each calendar year, with some insurers, others dates may apply. Check this out before you sign on the dotted line.

The key questions to ask

When you’re researching different covers, make sure you think about the services you’re likely to use most. You should then find a cover with a higher limit for those things. Check whether your choice of insurer has per person or per membership limits on certain services, as this could affect its value to you.

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Product bonuses and special features

Making more of product bonuses and special features

Although they differ between insurers, product bonuses are included in a wide range of health covers. These can take the form of a selected range of gap-free extras services for kids, where you don't have to pay an additional amount for using a service. You might also see benefit bonuses which allow you to claim back more of your costs the longer you’re with an insurer; top up bonuses provide you with a pool of money to offset out-of-pocket expenses; health checks; and unemployment cover. These will be all subject to certain conditions and will depend on the level of cover.

Keep in mind

Bonuses are a way for insurers to inject extra value into their cover, especially if you have a family with kids. Bonuses can vary per insurer so it’s worth checking in advance what is on offer.

For example, Bupa’s Members First provider network offers gap-free dental on most general dental services for kids (contact us for details) which allows you to help keep their teeth healthy with no out-of-pocket expenses, while gap-free physio treatment can help get active kids up and about sooner if they suffer an injury. Ensure you do your research and check what other insurers offer.

The key questions to ask

When you’re researching health cover, make sure you include the value of any bonuses into your calculations. And remember to ask yourself whether these bonuses are for services you’re likely to use.

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It pays to join earlier in life

The cost of your hospital cover depends on the age you first take it out. That’s because the Federal Government’s Lifetime Health Cover (LHC) loading applies if you take out hospital cover after you turn 31. For every year after your 31st birthday your premium will increase by 2% a year to a maximum of 70% - that’s LHC.

Any LHC loading increase will apply for 10 continuous years.

Keep in mind

To avoid the loading, all you need to do is take out and maintain your hospital cover from 30 June following your 31st birthday.

If you are considering couples’ health cover, any LHC loadings will be shared across both adults on the membership.

LHC is only applied to hospital cover, not extras or ambulance-only cover.

The key questions to ask

  • Will my partner or I have LHC to pay if we take out hospital cover for couples?
  • What are the cost implications of waiting until after my 31st birthday to take out hospital cover?
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Tax: cover could be less than the cost of the Medicare Levy Surcharge (MLS)

If you choose a hospital cover that includes minimum or restricted benefits, you’ll only be covered for the cost of treatment in public hospitals for certain services.

Keep in mind

If you're single and earning over $88,000 a year (or you're a couple or family earning $176,000 in combined income*) and you don't take private health cover, the government will charge you the Medicare Levy Surcharge (MLS). You might be shocked to know that this can be more than the cost of some Bupa hospital covers. Have a chat to your tax adviser or visit for more information.

*Note: Thresholds are effective 1 July 2013 and are indexed annually. On a family membership this increases by $1,500 per child after the first child. The family thresholds apply to single parent families, couples including de facto couples. There are specific rules for calculating adjusted taxable income for Medicare Levy Surcharge and income testing purposes. For more information go to for more information.

Keep in mind

If you decide to drop your hospital cover, depending on your income you may have to pay the MLS, which could end up costing you more.

The key questions to ask

  • How much is the MLS that I am required to pay based on my income level?
  • Would the cost of my hospital cover be more, less or the same as the amount of MLS I am required to pay?