Need to know
- Basic health insurance policies are promoted as the best for tax, but they're so limited you’ll hardly ever be able to use them
- Bronze health insurance is better value as it provides cover for some serious diseases
- Bronze health insurance only costs a few dollars more than Basic health insurance
In early 2019 Australia introduced a tiered system of hospital cover with health insurance policies falling into one of four main categories: Basic, Bronze, Silver or Gold.
If you want to buy health insurance for financial reasons (because you earn more than $93,000 per year or to avoid being slugged with the Lifetime Health Cover loading, for instance), then a Basic policy is touted as the way to go. It'll prevent you from having to pay extra tax and it won't cost you a fortune.
Sounds simple, right? Well, not quite.
These Basic policies cover you if you have an accident, but in the event of a serious accident, you'll likely get taken by ambulance to the closest public hospital and be fully covered by Medicare for free.
And they're only a few dollars cheaper than Bronze policies, which cover you for serious diseases like some cancer surgeries and stroke and might actually come in useful if you get sick.
Since you'll very rarely be able to use Basic policies (and they're overpriced for what you get in health cover) they're what's known as junk insurance.
CHOICE tip: You only need hospital insurance to avoid tax and loadings. Extras insurance, which helps with the cost of visiting the dentist, for example, is not needed.
What is junk insurance?
Junk insurance is insurance that might seem worthwhile at a glance, but ultimately provides little value.
Examples include funeral insurance that charges more in premiums than your funeral is ever likely to cost, or disability insurance that has such a tough definition of 'disability' that many genuinely disabled people are not covered by it.
While junk health insurance fulfils one purpose – saving on tax – it does not do what health insurance is actually designed to do, which is cover your treatment when you're sick and relieve pressure on public hospitals.
Why are Basic policies junk insurance?
Basic policies are accident policies: they cover you for accidents. If you're young and healthy, accident cover sounds like it makes sense since it gives you the option to use the emergency departments of private hospitals.
But, if you check the fine print, you may get less cover than you think, as these policies have time limits and conditions.
For example, after a sports accident you might first ice the injury and later go to bed hoping things get better. Then, when you go to hospital the next day, you might have gone over the 24-hour time limit imposed by some policies so you're no longer covered.
Treatment in the emergency department of a public hospital is not covered by health insurance, it's covered by Medicare
If you break a leg and get pins and screws inserted to allow it to heal, you might not be covered if they get taken out six months later as only the initial treatment is covered by some policies.
And if you're brought to a public hospital and get treated in the emergency department without ever getting admitted to hospital, you won't be covered by health insurance, you'll be covered by Medicare.
It's helpful to remember that many accidents are already covered by other insurance, like work cover if you have an accident at work, or CTP insurance in the event of a car accident.
What else do Basic health insurance policies cover?
Basic policies usually provide emergency ambulance cover. While that can be useful, there are much cheaper ways to get ambulance cover. Read our advice about ambulance cover.
The government also requires all hospital insurance policies to cover rehabilitation, palliative care and psychiatric care in a public hospital. But you can already go to a public hospital with Medicare covering you for free.
As a private patient in a public hospital you may get a private room if one is available, as they're allocated based on medical reasons. And you can choose your own doctor in theory, but you'll often just have to use whoever is available, especially in an emergency.
Junk health insurance from Medibank, Bupa and HCF
The most restrictive Basic accident policy offered by the big funds is:
HCF Accident only Basic
It covers you if you get admitted to hospital via the accident and emergency department within 24 hours of the accident. The cover is limited to immediate treatment, so follow-up treatment after discharge isn't covered.
Accident policies from Medibank and Bupa also have conditions and time limits:
Medibank Basic Accident and Ambulance
This policy covers you for treatment after an accident for 12 months, but you need to see a doctor within seven days of the accident.
Bupa Basic Accident Only Hospital
You're covered for treatment after an accident for 180 days, but you need to see a doctor within three days of the accident.
NIB and HBF do not offer Basic accident policies.
What health insurance should you buy?
Bronze health insurance is good for tax purposes and gives you value for money.
Bronze policies cover 18 categories of services in private hospitals, giving you back-up cover for things like:
- broken bones and joint reconstructions
- endoscopy, colonoscopy and removal of gallstones
- breast, skin and prostate cancer surgery
- head injuries, stroke, epilepsy and Parkinson's disease.
Learn more about what Bronze and Bronze Plus policies cover.
How much does Bronze health insurance cost?
Bronze policies aren't that much more expensive than Basic policies but they're much better value for money. Here's a breakdown of the cost per month by state:
Australian Capital Territory and New South Wales
Basic policies range from: $100–108 per month
Bronze policies start at: $109
Victoria
Basic policies range from: $100–114 per month
Bronze policies start at: $118
Queensland
Basic policies range from: $98–113 per month
Bronze policies start at: $118
Western Australia
Basic policies range from: $76–86 per month
Bronze policies start at: $87
South Australia
Basic policies range from: $93–110
Bronze policies start at: $113
Tasmania
Basic policies range from: $99–114
Bronze policies start at: $109
Northern Territory
Basic policies range from: $38–67
Bronze policies start at: $54
Note: All premiums are per month for singles without the health insurance rebate.Source: data.gov.au, June 2021
Should you pay more for a Basic policy with a low excess?
The most expensive Basic policies have a $500 per person excess per year, the cheapest ones have an excess of $750 per person per year. The excess is what you pay if you get admitted to hospital.
You're unlikely to ever use the policy, so you're unlikely to ever pay it. Also, if you get admitted from the emergency department to a public hospital and use your private health insurance, they often don't charge you the excess. So paying more for a lower excess is a bad idea.
If you decide to take out Basic insurance, opt for a $750 excess per person, which is the highest excess allowed for policies that exempt you from paying extra tax (Medicare levy surcharge).
Stock images: Getty, unless otherwise stated.
