Private Health vs Medicare

The Big Question Every Immigrant Asks

"Do I really need private health insurance if I have Medicare?"

It is one of the most confusing financial decisions immigrants face in Australia. Back home, you probably had one system — either government healthcare that was underfunded and overcrowded, or private clinics that you paid for out of pocket. The idea of a two-tier system where public and private healthcare operate side by side is new for many immigrants.

The short answer: Medicare alone is excellent for most everyday healthcare needs. But there are specific situations where private health insurance saves you significant money and gives you access to services Medicare does not cover.

This guide breaks down both systems clearly so you can make an informed decision based on your actual situation — not fear, confusion, or pressure from insurance salespeople.

What Medicare Covers (Recap)

If you are enrolled in Medicare, you already have access to: - Free GP visits (when the doctor bulk bills) - Subsidised specialist consultations (Medicare rebate applies) - Free public hospital treatment as a public patient - Subsidised pathology and imaging (blood tests, X-rays, etc.) - Mental health support (up to 10 psychology sessions per year through a Mental Health Treatment Plan) - Subsidised prescription medication through the Pharmaceutical Benefits Scheme (PBS)

What Medicare does NOT cover: - Dental (for adults) - Optical (glasses, contact lenses) - Most physiotherapy, chiropractic, podiatry, and other allied health (outside GP management plans) - Ambulance (in most states) - Private hospital rooms and choice of doctor/surgeon - Elective surgery wait times (public system has long waits for non-urgent procedures)

What Private Health Insurance Covers

Private health insurance in Australia typically comes in two parts:

Hospital cover: - Treatment in a private hospital (or as a private patient in a public hospital) - Choice of doctor and surgeon - Shorter wait times for elective procedures (e.g., knee replacements, hernia repair) - Private room in hospital - Some policies cover pregnancy and birth in private hospitals

Extras cover (also called ancillary or general treatment): - Dental — check-ups, fillings, crowns, braces - Optical — glasses, contact lenses, eye exams - Physiotherapy - Chiropractic - Podiatry - Psychology (beyond what Medicare covers) - Remedial massage - Acupuncture

You can purchase hospital cover only, extras cover only, or a combined package.

The Real Costs: What You Actually Pay

Private health insurance premiums vary widely depending on your age, state, level of cover, and insurer. Here are typical ranges:

Basic hospital + extras: $100-$180 per month (singles), $200-$360 per month (couples/families)

Mid-level hospital + extras: $180-$300 per month (singles), $360-$600 per month (couples/families)

Top hospital + extras: $300-$500+ per month (singles), $600-$1,000+ per month (couples/families)

On top of premiums, you may also pay: - Excess/co-payment: An upfront amount you pay when admitted to hospital (typically $250-$750). Higher excess means lower premiums. - Gap payments: The difference between what the surgeon charges and what your insurer covers. This can be hundreds or even thousands of dollars. - Waiting periods: Most policies have waiting periods before you can claim — typically 2 months for extras and 12 months for pre-existing conditions and pregnancy.

The Tax Factor: Medicare Levy Surcharge

Here is where it gets interesting for immigrants who earn above a certain threshold. The Medicare Levy Surcharge (MLS) is an additional tax of 1-1.5% of your taxable income that applies if:

• You earn over $93,000 as a single (2024-25 threshold)
• Your family earns over $186,000 combined
• AND you do not hold an appropriate level of private hospital cover

The MLS is designed to encourage higher earners to take out private health insurance rather than relying solely on the public system. For many immigrants earning above the threshold, taking out basic hospital cover is cheaper than paying the surcharge.

Example: If you earn $120,000, the MLS at 1% would cost you $1,200 per year. Basic hospital cover might cost $1,000-$1,400 per year — roughly the same or less, and you get actual health cover in return.

What about the Lifetime Health Cover loading?

If you do not take out hospital cover by the 1st of July following your 31st birthday (or within 12 months of registering for Medicare if you arrive after 31), you pay a 2% loading on top of your premium for every year you delay. This loading is permanent — it applies for 10 years of continuous cover before it is removed.

For immigrants: Your Lifetime Health Cover base day is typically 12 months after you first register for Medicare, regardless of your age. If you register for Medicare at 35, you have until 12 months later to take out hospital cover without penalty.

When Private Health Insurance Makes Sense

Scenario 1: You earn over $93,000 The Medicare Levy Surcharge makes basic hospital cover a financial no-brainer. You are paying roughly the same amount either way — might as well get cover.

Scenario 2: You need dental work Dental is the biggest gap in Medicare coverage. If you need regular dental work (check-ups, fillings, crowns), extras cover typically saves you money. A single dental crown can cost $1,500-$2,000 without insurance.

Scenario 3: You want shorter wait times for surgery Public hospital wait times for elective surgery can be months to years in some categories. If you need a procedure like a knee replacement, hernia repair, or cataract surgery, private hospital cover can reduce your wait significantly.

Scenario 4: You are planning a pregnancy Private obstetric care gives you continuity of care with a chosen obstetrician and birth in a private hospital. However, there is a 12-month waiting period for pregnancy-related claims on most policies, so plan ahead.

Scenario 5: You or your family use allied health services regularly If you regularly see a physio, chiro, or psychologist, extras cover can pay for itself quickly.

When Private Health Insurance Does NOT Make Sense

Scenario 1: You earn under $93,000 and are healthy If you are young, healthy, and earning below the MLS threshold, Medicare alone covers your essential needs. Paying $150+ per month for insurance you rarely use is money that could go toward savings, visa fees, or remittances.

Scenario 2: You are on a tight budget Premiums are a fixed monthly cost. If you are juggling multiple jobs and sending money home, this expense may not be sustainable. Medicare provides excellent base coverage — use it fully before adding private insurance.

Scenario 3: You do not understand what you are buying Insurance companies use confusing terminology and complex policy documents. If you do not understand the exclusions, waiting periods, and gap payments, you may end up paying premiums for cover that does not actually help when you need it. Never buy insurance under pressure.

How to Compare Private Health Insurance

The Australian government runs an independent comparison website: privatehealth.gov.au. This is the best starting point because it: - Compares policies from all insurers side by side - Shows exactly what each policy covers and excludes - Is free and has no commercial bias - Allows you to filter by your specific needs

Key things to compare: 1. Premium cost — monthly and annual 2. Excess amount — what you pay upfront when admitted to hospital 3. Inclusions and exclusions — which procedures and services are covered 4. Waiting periods — how long before you can claim 5. Gap cover arrangements — does the insurer have agreements with doctors to minimise out-of-pocket costs? 6. Annual limits on extras — how much you can claim per year for dental, optical, physio, etc.

The Smart Immigrant Strategy

Here is a practical approach based on your situation:

Phase 1: New arrival (Year 1-2) Rely on Medicare. Focus your money on settling in, building emergency savings, and managing visa costs. Use bulk-billing GPs and Medicare-covered services.

Phase 2: Established and earning (Year 2-4) If your income approaches or exceeds $93,000, take out basic hospital cover to avoid the Medicare Levy Surcharge. Consider extras cover if you have specific dental or allied health needs.

Phase 3: Settled and planning ahead (Year 4+) Upgrade your cover if you are planning a family, anticipating surgery, or want broader allied health access. Review your policy annually — switching insurers is easy and there are no penalties for changing.

Frequently Asked Questions

Can I have both Medicare and private health insurance?

Yes. Most Australians who have private health insurance also have Medicare. Medicare covers your everyday GP visits and public health needs. Private insurance covers the gaps — dental, optical, private hospital, shorter wait times.

What if I am on a temporary visa and cannot get Medicare?

If you are on a visa that does not qualify for Medicare, you are typically required to hold Overseas Visitor Health Cover (OVHC) or Overseas Student Health Cover (OSHC) as a visa condition. These are not the same as standard private health insurance, but they cover essential healthcare needs.

Do I need ambulance cover?

It depends on your state. In Queensland and Tasmania, ambulance is free for all residents. In other states, a single ambulance trip can cost $1,000-$5,000+. Ambulance cover is very cheap ($50-$100 per year) and is included in some private health policies or can be purchased separately through your state ambulance service.

Can I claim my health insurance premiums on tax?

No. Private health insurance premiums are not tax-deductible for individuals. However, having private hospital cover exempts you from the Medicare Levy Surcharge, which is effectively a tax saving if you earn above the threshold.

Your Decision Framework

Ask yourself these four questions:

1. Do I earn over $93,000? If yes, get at least basic hospital cover to avoid the MLS.
2. Do I need dental, optical, or allied health services? If yes, extras cover likely saves you money.
3. Am I planning surgery or pregnancy in the next 1-2 years? If yes, take out hospital cover now (12-month waiting period for pre-existing conditions and pregnancy).
4. Can I comfortably afford the premiums? If no, stick with Medicare and reassess when your financial situation improves.

The right answer is different for every immigrant. Do not let insurance salespeople pressure you into cover you cannot afford or do not need. Use privatehealth.gov.au to compare, and make a decision based on your actual circumstances.