What to look for when choosing a health insurance policy
Written and accurate as at: Apr 14, 2025 Current Stats & Facts
Whether your premiums have gone up or your needs and circumstances have changed, it's always a good idea to review your health insurance and see if it’s still up to scratch. But private health insurance, with its various tiers and complicated fine print, can be tricky to navigate. Here are a few things to keep in mind if you’re looking to update yours.
Extras cover
There are two types of private health insurance: hospital cover and extras cover.
Extras cover provides coverage for ancillary services (like dental, optical, physiotherapy and podiatry), and while it might be nice to have it’s by no means necessary.
Take a look at the benefits on offer and ask yourself if you intend to use them (or if you already have extras cover, see how much of your claim limit you used up last year). Even if there are one or two services that seem like they could come in handy, you might save money by paying for them out-of-pocket instead.
Waiting periods
When you sign up for a policy, you typically won’t be able to use your health insurance straight away. Waiting periods are put in place so people aren’t able to game the system by signing up, making expensive claims and then immediately cancelling their policy — essentially leaving other members to foot the bill.
While waiting periods for hospital cover are set by the government and apply to all insurers, things aren’t so standardised when it comes to extras cover. Make sure to look over the details of the policy carefully so you’re clear on which waiting periods apply to which benefits.
You'll also need to be careful if you’re switching insurers or changing your level of cover. If you’re switching to a comparable or lower level of cover, any waiting periods you’ve already completed generally won’t need to be re-served. But if you’re upgrading your policy, your insurer might impose new waiting periods for treatments or services that weren’t covered previously.
Restrictions, exclusions and limits
If you’re looking to save money on premiums, keep in mind that cheaper policies tend to exclude or restrict certain services. While these policies might seem attractive in the short term, they could leave you with significant out-of-pocket costs if you wind up needing to make a claim.
And if you’ve selected extras cover, remember that there are annual and lifetime limits on the benefits provided. Lifetime limits, which tend to apply to things like laser eye surgery, carry over between insurers. So if you’ve already used up your lifetime limit for a particular service, it won’t reset if you switch policies.
The cost of not having insurance
It’s also worth mentioning the Medicare Levy Surcharge (MLS), which applies if you earn above a certain income and don’t have private hospital cover. This is between 1% and 1.5% depending on your income and is on top of the Medicare Levy most Australians pay.
Right now, the income thresholds for the MLS are $97,000 for single Australians and $194,000 for families. So if you or a family member are thinking of giving private cover a miss, keep in mind that you might be looking at a higher tax bill.
And if you wait until after you turn 31 to sign up for hospital insurance, you’ll have to pay a surcharge known as the Lifetime Health Cover loading (LHC) on top of your premium. This is calculated at an extra 2% for every year you delayed joining, up to a maximum of 70% of your premium.
The bottom line
Health insurers offer packages to suit most budgets, so you should have options available to you if money is a concern. But it pays to remember that price and value aren’t necessarily the same thing. Yes, saving on premiums is important, but you don’t want to select a cheaper policy only to find it doesn’t cover you for procedures or specialists you might eventually need.
Make sure to read over the policy documents carefully, and don’t hesitate to ask your insurer questions if something seems unclear.