How Health Insurance works

On this page

1. Understanding who pays what
2. Medicare
3. Private health insurance
4. Hospital
5. Extras
6. Lifetime health cover
7. Medicare levy surcharge
8. Private health insurance rebate

Understanding who pays what

Australia's private health system operates under a community rating system. 

This means health insurers, like Emergency Services Health, are required to offer the same policy options and, with some exceptions, the same rates to everyone in a particular membership category.

Key aspects of community rating include;

• Guaranteed acceptance - we cannot refuse to cover you based on your age or pre-existing health conditions
• Choice - you have the freedom to choose the plan that best suits your needs, and we make it simple by only offering Gold Hospital, Rolling Extras, and Gold Combined
• Rights - you have the right to renew your policy, subject to policy terms and conditions

Exceptions to community rating may include Lifetime Health Cover loadings.

So what does Medicare pay for?

Understanding who pays for what, whether it’s your private health insurer, Medicare or a combination of both can be confusing. 

But to start, let’s talk about some of the most common things that Medicare covers.

Doctor visits

Medicare covers most consultations with GPs and some specialist consultations, but there’s a good chance you will have to pay out-of-pocket costs for each visit. 

Examples of specialists covered (depending on your specific plan) might include:

• Cardiologists (heart)
• Ophthalmologists (eyes)
• Oncologists (cancer)
• Obstetricians and gynaecologists (women's health and childbirth)
• Paediatricians (children)
• Psychiatrists (mental health)

It's always best to check with Medicare or your doctor to confirm coverage for a particular specialist consultation.

Hospital stays

Medicare covers you for inpatient hospital stays as a public patient in a public hospital for medically necessary procedures. 

These include surgery, anaesthesia, and accommodation in a public hospital room (most likely shared with other patients). However, you can expect long waiting times to access the public hospital system.

Emergency Services Health’s Gold Hospital cover and Gold Combined cover gives you the option to choose which doctor and which hospital you receive care at.

It also lets you avoid waiting times like in the public system.

Medical services

Medicare also covers tests and examinations by doctors needed to treat illnesses, such as x-rays, diagnostic tests, and pathology tests.

However, like doctor visits there’s a good chance you will have to pay out-of-pocket costs for each visit. 

Mental health care

Medicare offers some coverage for mental health services such as Psychologists and Psychiatrists. However, it’s important to note you typically need a referral from a GP to access Medicare-funded mental health care like appointments with Psychologists and Psychiatrists.

And like doctor visits, there’s a good chance you’ll need to pay out out-of-pocket costs for each visit with a Psychologist or Psychiatrist.

Emergency Services Health’s Rolling Extras cover pays benefits for Psychology visits, find out more about our Rolling Extras cover.

So what does private health insurance cover?

This is where Emergency Services Health’s private health insurance comes in, offering coverage for these extras and potentially reducing your out-of-pocket costs for some Medicare-covered services.

Another key benefit of private health insurance is hospital cover, like our, Gold Hospital cover. 

With private hospital cover, you may be able to choose your doctor and hospital for certain treatments. This can offer greater flexibility and potentially reduce waiting times for elective surgery. 

Additionally, private hospital cover often includes benefits like a private room in the hospital and additional services not covered by Medicare.

Private Health Information Statements (PHIS)

All Australian health funds are required by law to provide Private Health Information Statement (PHIS) for each product they offer. PHIS's are important tools to aid the consumers of health insurance to review their existing policy or compare private health insurance products when making a purchasing decision.

There are three types of Private Health Information Statements:

• Hospital - describes the features and limitations of hospital cover, including the type of accommodation, which medical services are covered in full, part or not covered, waiting periods and additional payments (excesses, co-payments and gaps),
• General Treatment - describes the features and limitations of general treatment cover, including which services are covered, waiting periods, benefit limits and example benefits for each type of service, and
• Combined - describes the features and limitations of a combined hospital and general treatment cover, with details as above.

A Private Health Information Statement gives a summary of the key product features only, it is a description of your cover.

You should not fully rely on the dollar amounts of premiums on the Statement as they are there for comparison purposes only, but are indicative. The actual premium may vary depending on your circumstances, for example, your age and your age when you first got health insurance. Benefits will vary depending on the details of your policy, the treatments you are having, the health service provider and the payment option you choose.

A government leaflet containing further information is available by clicking on the below pdf downloads

Government Brochures

• Guide to Hospital Private Health Information Statement
• Guide to General Treatment Private Health Information Statement
• Guide to Combined Private Health Information Statement

Private Health Information Statements are available on all private health insurance products in Australia. These are designed to assist you in reviewing and comparing different health insurance policies. This is a Federal Government initiative and all health insurers are required to provide such statements by law. Police Health Private Health Information Statements are available on request. For further information on Private Health Information Statements and other detailed information on private health insurance in Australia visit the Federal Government's private health website.

How do you pay for private health insurance?

You'll pay a fee called a premium to your insurer like Emergency Services Health, which can be paid either;

• Fortnightly
• Monthly
• Quarterly
• Half yearly
• Yearly

This premium goes into a giant pool of money along with everyone else's payments.

This pool is then used to cover medical expenses for all policyholders. In short, you pay a bit each to share the cost of healthcare with others.

Premium increases

Each year the Minister for Health and Aged Care reviews and approves new private health insurance premiums across the industry, to take effect from 1 April.

Usually the premiums go up and health insurance costs more, but it’s important to know why.

Annual Private Health Insurance premium changes are necessary to ensure health funds have adequate capital and income to pay for what they will be expected to fund in the next 12 months. 

The amount needed to cover costs continues to climb due to a number of factors, including:

• The increased cost of an episode of hospital treatment
• The increasing cost of a service provided by health professionals which may be reflected as higher benefits paid for services
• Increases in the number of services claimed against an insurer relative to the number of policies
• Introduction of new medical technology and equipment
• Consumer expectations (e.g. seeking better quality care, more thorough testing etc.)
• Ageing population

Other factors that may impact your premium include changes to the Australian Government Rebate on private health insurance and the application of the Lifetime Health Cover Loading (LHC).

What types of cover are there?

In Australia, there are two types of cover – Hospital and Extras, with many funds like Emergency Services Health offering Gold Hospital, Rolling Extras, and a combination of both.

We only specialise in top-level cover for complete peace of mind. We don't overload you with options, or opt-ins or opt-outs.

Learn more about our cover

Hospital cover

With hospital cover you have the right to choose your own doctor, and decide whether you will be treated at a public or a private hospital that your doctor attends. 

If you are a private patient at a private hospital, you may also have more choice as to when you are admitted to hospital.

Emergency Services Health specialises in Gold Hospital cover. Australia’s highest tier hospital cover – to be a classified as Gold the policy must provide cover for all 38 mandated clinical categories.

On top of that, our Gold Hospital covers much more than the 38 mandated clinical categories. Learn about our Gold Hospital cover.

Extras

Extras provides cover for all or some of the costs of many common health service providers, including;

• Dental
• Chiropractic
• Podiatry
• Physiotherapy
• Optical - glasses and contact lenses

Our Rolling Extras cover lets you roll over unclaimed Annual Maximums from one calendar year to the next on most Extras services, but no more than the Rollover Maximum.¹

For example, if you go a year without claiming Optical benefits (such as new prescription glasses and/or contact lenses) your $350 Annual Maximum becomes $700 12-months later (subject to Waiting Periods).

Find out about how you can benefit from our Rolling Extras cover.

¹ Rollover Benefit is available on the majority of extras services and is subject to Waiting Periods, Annual Maximums and other conditions. Rollover Benefit is available after 12 months membership with Extras cover, except major dental which requires 2 years of membership.

Government rules

The Australian Government offers a few incentives and penalties to encourage responsible management of private health cover. These pages explain the key government rules you should be aware of.