What does private health insurance actually cover?

Between hospital tiers, extras categories, waiting periods and exclusions, it’s no wonder many Australians feel overwhelmed.

Alfie’s here to simplify it. In this guide, we’ll break down what private health insurance typically includes (and what it doesn’t), so you can make confident, informed decisions about your cover.

Private health insurance in Australia is made up of two main components:

Hospital cover

This pays benefits towards your treatment as a private patient in hospital. It can help you:

• Skip long public hospital waitlists

• Choose your own doctor or specialist

• Stay in a private room (if available)

• Access a wider range of treatments

Extras cover

Also known as general treatment cover, extras helps with the cost of everyday healthcare services outside of hospital, things like:

• Dental

• Optical

• Physiotherapy

• Chiropractic

• Psychology

• Remedial massage

You can take out hospital cover, extras cover, or a combined policy, it all depends on your needs and budget.

Hospital policies are grouped into four tiers: Basic, Bronze, Silver, and Gold. Each tier must cover a minimum list of hospital treatments, set by the government. The higher the tier, the more services are included.

Here’s a quick breakdown:

Each policy must clearly list what it covers. Some insurers also offer “Plus” policies (e.g. Silver Plus) which include a few treatments from the higher tier.

💡 Tip from Alfie: If you want cover for pregnancy or joint replacements, make sure you choose a Gold policy or a Silver Plus that includes those treatments, they’re not covered in standard lower tiers.

Depending on your tier and insurer, hospital cover may include:

• Surgery (orthopaedic, cardiac, gynaecological, etc.)

• Private room accommodation

• Anaesthetist and specialist fees (partially or fully)

• Day procedures (e.g. endoscopy, colonoscopy)

• Rehabilitation services

• Psychiatric care

• Palliative care

But beware. If a policy lists a treatment as restricted, you may only be covered for treatment as a private patient in a public hospital, or get only minimal benefit.

Extras policies vary a lot more than hospital cover. There’s no government-mandated minimum, so each insurer creates their own package. However, most extras policies cover some mix of the following:

Each service will usually have a claim limit, either per visit (e.g. $40 per physio session), annually (e.g. $300 per year for dental), or both.

💡 Tip from Alfie: If you mainly use the dentist and optometrist, look for a lower-cost extras policy that focuses on just those, no point paying for services you’ll never use.

Private health insurance isn’t a blanket policy that covers every health cost. Here’s what usually isn’t included:

Out-of-hospital specialist consults

Seeing a specialist like a cardiologist or dermatologist in their rooms is generally covered by Medicare, not your health fund.

Emergency treatment

In a medical emergency, you’ll usually go to a public hospital, where Medicare covers most of the cost. Private cover typically isn’t relevant in emergencies. The exception is ambulance cover which you may have the option of purchasing depending where in Australia you live.

Cosmetic surgery

If a procedure is for purely cosmetic reasons (and not medically necessary), it won’t be covered by hospital or extras cover.

Overseas medical treatment

Most Australian health funds don’t cover treatment overseas. You’ll need travel insurance for that.

Medications not listed on the PBS

Hospital cover may include pharmaceuticals used during admission, but not all prescription meds outside hospital are included unless they’re on the government’s Pharmaceutical Benefits Scheme.

When you first take out health insurance, or upgrade to a higher level of cover you’ll usually need to serve a waiting period before you can claim on certain services.

Here are some common ones:

• Hospital admission: 2 months (12 months for pre-existing conditions and pregnancy)

• Major dental / orthodontics: Up to 12 months

• Optical / physio / chiro: 2 months

If you’re switching funds at the same level of cover, waiting periods are usually waived. But if you’re upgrading your policy, you may need to serve new ones for the added services.

💡 Tip from Alfie: Some funds run promotions where they waive extras waiting periods, great if you need dental or physio soon.

The right policy depends on:

• Your age and stage of life

• Your budget

• How often you use health services

• Whether you want to avoid tax surcharges

A young, healthy person might just want Basic Hospital cover (to avoid the Medicare Levy Surcharge) and skip extras. A family planning to have a baby might need Gold Hospital. Someone with regular physio or dental needs might want mid-tier extras with generous annual limits.

🧠 Not sure what you need? Alfie can ask a few simple questions and show you the policies that actually make sense, no upselling, no guesswork.