How to compare health insurance policies in Australia

But making the right choice can save you hundreds of dollars a year and mean you get cover that actually works for you when you need it.

That’s where Alfie comes in. Think of Alfie as your smart, helpful (and very patient) sidekick for making sense of private health insurance.

In this guide, we’ll walk you through the key things to look for when comparing policies, whether you’re switching health funds or buying cover for the first time.

In Australia, private health insurance is divided into two main types: hospital cover and extras cover. You can choose one or the other, or bundle both together, it all depends on what you need.

This helps cover the cost of treatment as a private patient in a hospital. It can include things like surgery, overnight stays, and specialist care, depending on the level of cover you choose. With hospital cover, you can often avoid public waiting lists and choose your own doctor.

Policies are grouped into four tiers: Basic, Bronze, Silver and Gold.

Each tier covers a different set of hospital treatments, with Gold being the most comprehensive.

Extras (also called general treatment cover) pays benefits towards out-of-hospital services like dental, physio, optical, chiro, and more. These are services Medicare doesn’t usually cover, and benefit limits apply.

You can get extras cover on its own, or add it to hospital cover for a combined policy.

💡 Tip from Alfie: If you’re healthy and rarely go to the dentist or physio, extras cover might not be as valuable. But if you use these services regularly, it could save you money in the long run.

When you start comparing policies, it’s not just about price. The cheapest option might leave you underinsured, while the most expensive doesn’t always mean it’s better. Here’s what to look out for:

What’s covered (and what’s not)

Hospital policies vary in what procedures they include. For example, a Silver policy might cover joint long and chest treatments, but not joint replacements. Make sure you check:

• Inclusions: what’s listed as covered in the policy.

• Exclusions or restrictions: some treatments might be only partially covered or not included at all.

Extras cover also varies widely. One policy might include major dental and orthodontics, while another doesn’t.

Waiting periods

Most policies have waiting periods before you can claim certain services, especially for things like pregnancy, optical, and major dental. If you’re switching policies, you usually won’t need to re-serve waiting periods for equivalent cover.

Premiums

Premiums are the monthly (or annual) payments you make. These can vary depending on your cover level, your age, and the state you live in. It’s also worth checking if you’ll receive a government rebate based on your income.

Excess and co-payments

• An excess is an amount you agree to pay upfront if you go to hospital, often $250 to $750.

• A co-payment is a daily fee you pay for hospital stays.

A higher excess usually means lower premiums, but only take this option if you can afford to pay the excess if you need to.

Benefit limits (for extras)

Extras policies come with:

• Annual limits: how much you can claim per year on a category (e.g. $500 for physio).

• Sub-limits: smaller caps within a broader category (e.g. $300 of your $500 physio limit might be for remedial massage).

• Per-service limits: a max claim amount per visit (e.g. $40 per chiro appointment).

Comparing these side by side is key to understanding the true value of an extras policy.

Provider networks and gap cover

Some funds have preferred provider networks where you can get higher rebates for things like dental or optical. Others provide gap cover for hospital visits, helping reduce or eliminate out-of-pocket costs.

Tip from Alfie: Ask your dentist, physio or optometrist which funds they have preferred provider agreements with. It could mean better benefits for you.

Private health insurance comes with a few government incentives (and penalties) to be aware of:

Private Health Insurance Rebate

Most people get a rebate from the government to help cover the cost of premiums. The amount depends on your age and income. If you earn under $151,000 as a single (or $302,001 as a couple), you’ll likely qualify for a rebate. The highest rebate of 24.6% is for people who earn $97,000 or less as a single or $194,000 or less as a couple (if the oldest person is under 65 years old).

Medicare Levy Surcharge (MLS)

If you earn above the MLS threshold ($97,000 for singles, $194,000 for families) and don’t have hospital cover, you may have to pay an extra 1%–1.5% in tax. Having even a basic hospital policy can help you avoid this.

Lifetime Health Cover (LHC) Loading

If you don’t take out hospital cover by 1 July following your 31st birthday, you’ll pay a 2% loading on your premium for each year you delay, up to 70%. The longer you wait, the more you’ll pay.

It’s easy to fall into these traps when comparing cover:

• Choosing the cheapest policy without checking what it covers

• Overpaying for extras you rarely use

• Not reviewing your cover regularly, especially after big life events like having a baby or turning 31

• Thinking all policies are basically the same (they’re not!)

You can compare health insurance in a few ways:

• Government site (privatehealth.gov.au): Independent and unbiased, but not the easiest to navigate.

• Alfie: A smarter, simpler option.

Alfie isn’t a comparison site in the traditional sense. I’m designed to understand what you actually need, explain it in plain language, and guide you to the best available options, without the hard sell.

Tell me a bit about yourself, and I’ll help you find cover that suits your needs.