Compare Hospital Cover

Medical gap payments

In Australia, all in-hospital medical treatments have a standard fee, called the Medicare Benefits Schedule (MBS) fee.¹For more information, see Department of Health and Aged Care – MBS Online When you’re treated as a private patient, the government (Medicare) pays 75% of your MBS fees, and your insurer pays the other 25% if the treatment is included in your policy. But beware: doctors don’t have to stick to the MBS fee; they can charge more. The amount doctors charge above the MBS is called the medical ‘gap’.

Avoiding the gap

A medical gap means that you’ll need to pay for any charges above the MBS fee, even if you have private health insurance. If you want to try and avoid or reduce your gap fee, then make sure to choose a doctor and hospital that has a gap agreement with your insurer.

A gap agreement is when doctors charge nothing above the MBS fee or ‘no gap’, or limit how much extra they charge over this threshold (‘known gap’). It’s always worth double-checking whether your insurer has a gap agreement with your chosen doctor and hospital.

‘Plus’ policies, like basic plus or silver plus, offer the minimum standard coverage of each tier with added perks from higher-level policies. Think of it like a base model with a few upgrades thrown in. It’s a way to get more coverage without having to jump up into a whole new tier of cover.

The short answer is ’no’, but here’s why it’s worth considering.

Hospital cover isn’t mandatory. But if you don’t purchase it by 1 July following your 31st birthday and then get it later on, you’ll have to pay Lifetime Health Cover (LHC) loading. So, if you decide later on in life that it’s time for health insurance, you’ll end up having to pay a higher premium because of this loading amount.

For every year past your 31st birthday that you don’t have hospital cover, your premiums will increase by 2%. For example, if you wait until you’re 40, you’ll pay 20% more on your premiums. The maximum LHC loading that can be applied is 70%. But after 10 years of continuous cover, you won’t have to pay this loading fee anymore.

Excesses and co-payments can help lower your health insurance premiums, giving you some control over what you pay. The gist of it is the higher your excess, the greater the savings on your premium.

Most excesses are charged per person per year. But not all policies are the same, so it’s worth checking the fine print. The highest excess you can choose without paying the Medicare Levy Surcharge is $750 per year for singles and $1,500 per year for couples and families.

Co-payments work in a slightly different way. Rather than paying a lump sum, you typically pay a daily fee for your hospital stay. Some co-payments have a yearly cap or might have a limit on the number of days they apply. Just make sure to check how many times the co-payment applies per year.

All hospital cover policies have waiting periods. This means you’ll usually need to hold the policy for a few months before you can claim certain benefits. For most pre-existing conditions, plus pregnancy and obstetrics, there’s usually a 12-month waiting period. For other conditions, it’s capped at two months. The same two-month wait applies to palliative care, rehabilitation, and psychiatric care, even if it’s for a pre-existing condition. And some funds even offer accident-only cover with no waiting period. But if you’ve already served your hospital waiting periods with one insurer, you won’t have to start from scratch if you swap over since it’ll all transfer over (phew!).

It depends. From 1 July 2025, singles earning over $101,000 or couples and families earning more than $202,000 without hospital cover will need to pay the Medicare Levy Surcharge (MLS).²PrivateHealth.gov.au – Medicare Levy Surcharge To avoid this surcharge, you need to have hospital cover with a registered Australian health insurer covering at least some of the fees for any hospital stay. You also need a maximum excess of $750 for singles and $1,500 for families or couples for the exemption.

If you’ve got private health insurance then you’re most likely getting a rebate from the Australian Government to help cover your premiums. The Australian Government private health insurance rebate is income- and age-based, and available to most Australians with Medicare eligibility. If you qualify, you can have the rebate automatically taken off your premiums or claim it when you do your tax return.

Life changes all the time, so why shouldn’t your health insurance? For this reason, the Commonwealth Ombudsman recommends that you review your policy at least once a year to make sure it still meets your needs. Reviewing your policy is also a great way to see how your insurer stacks up against the rest – you could find a better fit or a more affordable policy.