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Private Health Insurance VS Medicare: What do they cover?

Medicare is Australia’s publicly-funded healthcare system, making healthcare accessible and affordable for all. But it’s by no means the only option when it comes to healthcare. Those residing in Australia also have the option to pay for private health insurance. This helps to cover some of the expenses that Medicare cover doesn’t include. This blog will help you compare private health insurance vs medicare cover and decide what is right for you.


Medicare cover provides essential medical services to all Australian residents and some visitors. It is funded through the Medicare Levy, an additional tax on the income of Australian taxpayers, and is payable by high-income earners without private healthcare insurance.

Medicare cover provides:

Hospital Treatment

Medicare Part A is a type of hospital insurance that covers patients for the costs of treatment in public hospitals. The coverage includes inpatient hospital services such as accommodation. Part B is a medical insurance that covers a portion of the costs associated with in-hospital care such as doctor’s services and pharmaceutical needs for inpatients.

The major downside to Medicare hospital treatment is that some elective procedures are subject to lengthy waiting times in the public system.

Medical Services

Under Medicare, individuals have access to a wide range of medical services. This includes consultations with general practitioners (GPs), specialist visits, diagnostic tests, and some surgical procedures. Medicare cover provides a rebate for these services, with the patient typically paying the difference between the Medicare rebate and the doctor’s fee.

Private Health Insurance

Private health insurance in Australia is an additional form of coverage. Individuals can purchase this to supplement the benefits provided by Medicare. 

It offers a range of advantages, including greater flexibility, shorter waiting times, and a wider network of providers. The coverage provided by private health insurance policies varies based on the level of coverage chosen. Typically higher levels offer more comprehensive benefits.

There are two types of private healthcare insurance:

1. Hospital Cover

Private health insurance with hospital cover includes accommodation, theatre operating fees and prescribed medication during inpatient stays. Therefore reducing the cost of treatment and services received in private hospitals.

All private health insurance plans are different and have varying levels of coverage. It is important to note that certain treatments – such as cosmetic procedures and trial-based treatments – may not be covered by private health insurance.

2. General Cover

Other private health insurance plans offer general coverage for services that are not included by Medicare. These include treatments like dental, physio, optical, chiropractic and more. Similar to hospital cover, extras cover varies depending on the policy, and different levels of coverage may be available.

Key Differences and Considerations

Australia ranked at the top of the Commonwealth Fund’s 2017 study for health outcomes, and for good reason: Medicare is a highly effective and efficient healthcare system that prioritises care, access and equity.

That said, private health insurance offers many additional benefits such as:

Reduced Waiting Times

Private health insurance often offers shorter waiting times for elective surgeries compared to the public system. If timely access to healthcare is a priority, private health insurance may be a beneficial option.

Comprehensive Care

Medicare doesn’t cover services like emergency ambulance call-outs, optical treatments or osteopathy care. Therefore, private health insurance makes it easy for Australian residents to access comprehensive care.

Extended choice

Private health insurance policies provide more flexibility in choosing healthcare providers, as they usually offer a broader network of specialists and private hospitals. With Medicare, individuals can access care from any doctor who participates in the Medicare system.

Tax savings

Though private health insurance is an additional expense, it presents a way for Australian residents and expats to reduce their tax contributions whilst receiving fantastic healthcare services at little or no cost. 

Plus, the federal government offers rebates for those who opt to invest in private insurance and earn below a certain threshold. Those that earn less than the income threshold and opt for a high level of hospital cover are entitled to a rebate that either:

  1. Reduces your insurance premium.
  2. Offsets your income tax bill.

Learn more about your tax obligations in Australia with this blog post on How to Save Tax in Australia or my 2 part podcast episode with Eire Consulting

Private health insurance vs medicare cover

Medicare cover vs private health insurance

Private health insurance and Medicare cover are designed to be used together. Those that have private health insurance can still benefit from Medicare services.

This allows privately insured patients to claim Medicare benefits to claim a portion of the accrued costs under Medicare, and the remaining balance from the insurer.

Is it Worth Having Private Health Insurance in Australia?

In Australia, both private health insurance and Medicare cover play significant roles in the healthcare system. Since almost 53% of all Australians have private healthcare insurance, there’s no doubt that there are significant advantages for those who opt in.

Though Medicare provides essential coverage for all residents, private health insurance offers additional benefits, such as shorter waiting times and access to a broader range of services. 

So, when deciding between private health insurance and Medicare, it is crucial to consider your healthcare needs, financial circumstances, and personal preferences. By understanding the coverage provided by each system, you can make an informed choice that best suits your individual circumstances.

Do Expats Need Private Healthcare?

It depends. 

If you’re currently residing in Australia on a permanent basis and hold a permanent visa you’re eligible for Medicare cover and you can choose whether private healthcare insurance makes sense for you.

If however, you’re visiting Australia on a temporary or working visa, you’ll need to take out an international private health insurance plan to qualify for any healthcare services.

Private Health Insurance vs Medicare: a summary

Private health insurance and Medicare cover work together to create the ultimate healthcare coverage for Australian residents. Private health insurance provides additional coverage beyond what is offered by Medicare, while Medicare is the publicly funded healthcare system accessible to all Australian residents. 

Here’s a summary of their key features:

Private Health Insurance

Offers flexibility, shorter waiting times for elective procedures, and access to a broader network of healthcare providers. Hospital cover includes accommodation, specialist fees, operating theatre costs, and prescribed medications during hospital stays. Extras cover provides benefits for services like dental care, optical services, and physiotherapy. Private health insurance may provide shorter waiting times for elective surgeries compared to the public system. The coverage is entirely flexible depending on your chosen package.


Medicare is funded through taxes and is available at no additional cost, so provides essential medical services to all Australian residents. Covers treatment in public hospitals, including accommodation and treatment by participating doctors. Offers rebates for medical services like GP consultations, specialist visits, diagnostic tests, and some surgical procedures. However, elective procedures in the public system may have longer waiting times.

Comprehensive Healthcare in Australia

Private health insurance and Medicare offer different levels of coverage and benefits in Australia’s healthcare system. Understanding their differences and considering individual needs can help individuals make informed decisions about their healthcare coverage.

When deciding whether to take out private healthcare insurance, it’s important to consider healthcare needs, financial circumstances, and personal preferences.

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