How to choose a health fund

Getting the right cover can be tricky.


There are approximately 40 private health insurers in Australia, each offering a variety of different products, each with different inclusions and exclusions. When deciding on a policy, there are a few things you need to consider.

Who qualifies for cover?

Almost anyone can get some form of private health cover, even those with pre pre-existing medical conditions. If you have a pre-existing condition, contact the insurer to see if you’re covered and what conditions there may be on your coverage.

If you’re a parent, you can get cover for your kids who will be covered under your policy until they turn 21.

Who are you?

Seems like a silly question, but it does help determine which membership category you fall under. The four categories are:

  • Single
  • Family
  • Couple
  • Single-parent family

If you have older children, check with your provider to see if you qualify for a family membership.  Some funds state a ‘child’ can be aged up to 22 years and working, while others may have an age limit of 18.

Levels of cover

As with any type of insurance, there are different levels of cover to choose from. You can opt for 'top' or ‘full’ hospital cover that covers most things hospital related including pharmaceuticals, versus cheaper hospital cover that doesn’t include things such as joint replacements.

When choosing the level of cover, think about what you really need. If you’re not planning on having any more kids or kids at all, don’t get birth or pregnancy related cover.

However, be aware that if you are planning on having kids – that there is, in most cases a waiting period of 12 months or more before you can claim benefits.

In fact, any kind of private hospital stay may have a waiting period – it is important to be aware of this when selecting your health insurance.

If you're in your 20s, you probably won’t need coverage for a hip replacement. It’s always a good idea to talk to your doctor before you choose, to make sure you don’t get cover that excludes something you may need.

Partial hospital cover covers you for a certain percentage of your medical treatment. You might be treated as a private patient in a public hospital, and you may have to meet any charges that exceed the Medicare schedule. You might also not get cover for pharmaceuticals.

Again, as with any insurance, you can get a cheaper premium on hospital cover choosing a higher excess. It’s all about weighing up how often you think you might be in hospital and how often you might need to pay the excess!

Extras cover

While basic cover helps you out with surgery or hospital stays, ancillary or 'extras' cover is optional and as you’d expect, will cost more. Extras cover can include a wide range of services such as physiotherapy and dental and optical benefits, alternative therapies,  health club memberships and much more.

When getting extras cover, be mindful that waiting periods often apply so if you need a root canal, it’s better to get in early, otherwise you could be in for some pain.

Take the time to think about what cover you need before buying extras cover. If you play a lot of sport and need physio regularly it might be worthwhile, or if you wear glasses and like changing your look regularly, you should definitely consider it.

However, if you only go to the dentist twice a year, don't wear glasses and never visit a chiropractor, you might want to reconsider paying for extras cover. Think about how much your occasional visits would cost and then work out whether it’s more beneficial to you to pay for the additional premium of having extras cover.

Some funds also cover alternative therapies such as iridology, aromatherapy, acupuncture and homeopathy, as well as therapies for quitting smoking and gym memberships. Check with the insurer to see if these are covered.

Mind the gap

One thing you should really be aware of is that even with top hospital cover you might still need to pay the difference between what your specialist charges and the rebate from Medicare and your private health insurer.

Medicare pays 75 per cent of the Government Schedule Fee, while private insurance pays the other 25 per cent. If your doctor or specialist charges above the schedule fee, you will find yourself having to shell out some more coin. This is called the gap.

Many funds have 'gap' schemes that help with this. Prior to surgery or consultations, it’s always a good idea to check with your hospital, specialist and/or anaesthetist whether you'll have to make a gap payment.