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What is the difference between Medicare and private health insurance?

A guide to the differences between Medicare, the Australian public health system and private health insurance.

What is Medicare?

Medicare is the foundation of Australia's healthcare system. Under Medicare you can be treated as a public patient in a public hospital by a doctor appointed by the hospital and generally for no charge. As a public patient, you can't choose your own doctor and you may not have a choice about when you are admitted to hospital.

What is private health insurance?

Private health insurance generally consists of Hospital cover and general treatment cover, also known as Extras cover. There are different types of cover that offer different benefits.

With Hospital cover, if you're an Australian resident with private health insurance, you can choose to be treated as a private patient at either a private or public hospital (provided the services is included under your cover and you have served your waiting periods) or a public patient at a public hospital.

If you are a private patient at a private hospital, you may also have more choice as to when you're admitted to hospital. If you are a private patient in a public hospital, the hospital waiting lists still apply for elective surgery.

Extras cover helps with the cost of services generally not covered by Medicare and focus on keeping you on top of your health. Extras include things like dental, glasses, physiotherapy and a range of other services.

You may be able to select a basic Hospital cover and a comprehensive Extras policy to create your own combined package. You can get packaged cover where Medibank has created a package of Hospital and Extras together, or you can mix-and-match a Hospital and Extras cover – the choice is yours.

What is the role of private health insurance?

Private health insurers such as Medibank can assist people with the costs of accessing private hospital treatment. The private healthcare system complements the public healthcare system.

Is private health insurance worth it?

Private health insurance gives you flexibility when it comes to your healthcare.

With Hospital Cover you can choose your own doctor, and decide whether you will go to a private or a public hospital.

You may also have more choice as to when you're admitted to hospital. As a private patient in a private hospital you'll be treated as soon as you and your doctor are ready, and you may get a private room depending on hospital resourcing, availability and clinical need.

There may still be out-of-pocket costs depending on things like the hospital you're admitted to and what services are included or restricted under your cover. With private health insurance it's always best to contact your private health insurer before arranging treatment to find out what they pay towards the treatment, and whether there will be out-of-pocket expenses related to your treatment.

Private health insurance also helps you stay on top of your health with Extras cover, which helps with the costs of treatment by health service providers like dentists. The extent of your cover depends on the type of policy you select and may include: dental, glasses, physio and more. A yearly trip to the dentist is an example of one of the most commonly used treatments.

There are limits that may apply, for example: a limit per service, per year, or lifetime limits. Some services may not be included at all. Get familiar with your policy so you know what your cover includes.

Government surcharges and incentives

The Australian government provides the Australian Government Rebate on private health insurance to encourage people to take out private health insurance. 

If you don't have Hospital cover with an Australian registered health fund by 1 July following your 31st birthday and then decide to take out hospital cover down the track, you could pay the Lifetime Health Cover loading on top of your hospital premium. The loading increases for every year you are over 30.

If you are not covered by an appropriate private hospital insurance policy and you earn above a certain income threshold, you may have to pay the Medicare Levy Surcharge when you lodge your tax return.

Read more: Government incentives for taking out health insurance

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Useful resources 

Icon Hospital

What are the common hospital procedures for someone like you?

Our interactive tool reveals the common procedures, what you might pay out-of-pocket and how health insurance could help manage the costs.

Icon Pre Existing

How much extra tax could you pay without hospital cover?

Use the Medicare Levy Surcharge Calculator to find out if you're eligible, or discover how much extra tax you may be paying by not having Hospital cover for a full tax year.#

Icon Information

Understanding Health Insurance

Health insurance can be tricky to understand. To help, we have put some handy guides together to get you started.

Things you need to know

# Where annual income for Medicare Levy Surcharge purposes is over $90,000 as a single (or $180,000 as a couple/family).

Medibank Private Limited cannot advise on financial or tax matters. Any information provided to you is general in nature and does not take account of your individual circumstances. You should obtain your own independent financial advice.

Things you should know

~ Limited to two dental check-ups on all extras annually. Maximum two bitewing x-rays per check-up, where clinically needed. Not available in all areas.

^Waiting periods apply. Up to annual limits, Some lens coatings excluded.

# For Accidents that occur after your cover starts and for which treatment is sought within 7 days. Excludes claims covered by third parties such as WorkCover and our Private Room Promise. Out of pockets may apply.

+ Not available in all areas. Must have eligible hospital cover, all relevant waiting periods must have been served and treating doctor must consider it appropriate. Out of pocket expenses may apply.

* Some claims, like paper based, may take longer to update. If you have Visitors Health Insurance, Working Visa Health Insurance or Overseas Student Health cover, you may not be able to use all the features.

‡ For new members on new memberships who join and start eligible combined hospital and extras from 1 August to 31 August 2020 and who have not held Medibank health cover in the previous 60 days (unless dependents coming off their parents cover). Must quote promo code 4FREE and set up direct debit when joining. Must maintain direct debit and hold eligible product for 28 continuous days from the policy start date to get the next four weeks free. 2&6 month waits waived on extras: 2&6 month waiting periods on extras waived. Other waiting periods apply (including 12 months on some dental services). If you’ve reached your limits from a previous fund you may not be able to claim straight away. Offer excludes Corporate covers, Accident Cover, Ambulance Cover, Overseas Visitors Health Insurance, Overseas Students Health Cover (OSHC), Working Visa Health Insurance, ahm covers and other selected covers. Not available with any other offer.

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