Basic hospital cover health insurance explained

If you’re not overly familiar with how private health insurance works or if you’re looking into switching funds, you might want to know more about the different tiers of private health cover. So let’s get started at the bottom of the ladder: Basic hospital cover.

Basic cover is the bare minimum level of private health insurance – and that’s not necessarily a bad thing! It’s a way to get cheap, entry-level protection for unexpected medical expenses. Most Basic policies include essentials like hospital stays, surgery and intensive care. However, there's plenty that Basic doesn’t cover, so read on to learn everything you need to know.

Basic hospital cover is – as the name suggests – the most basic level of private health insurance. That means it offers minimal-level protection, primarily for accidents and injuries. In other words, think of it like a ‘starting point’ for private healthcare. You can take it out for very cheap premiums and get instant protection, which is particularly attractive to everyday Aussies who are generally healthy.

One of the biggest benefits of taking out Basic health insurance is to get exemption from the Medicare levy surcharge (MLS). Plus, maintaining Basic hospital cover will help you avoid the lifetime health cover (LHC) loading, which is a ‘fee’ that raises your premiums and is imposed on people who don’t take out private hospital cover before the age of 31.

Basic hospital cover is the most affordable tier available, so it has a few limitations. While you’ll usually get cover for hospital psychiatric services, rehabilitation and palliative care as a private patient in a public hospital, the cover itself is limited, and you’ll usually foot the bill with out-of-pocket expenses for many medical services.

If you want to get a little more bang for your buck, then it might be worth looking into other policies that won’t substantially increase your premiums, like Basic Plus and Bronze-tier policies.

As the lowest tier of private health cover on the market, Basic hospital policies are designed as affordable protection against unexpected medical costs. These policies typically include cover for treatment in public hospitals for three main clinical categories:

1. Hospital psychiatric services
2. Rehabilitation
3. Palliative care

Hospital psychiatric services include care for things like psychiatric, mental, addiction or behavioural disorders, including depression and addiction therapy. Rehab cover includes hospital treatment for physical rehabilitation related to surgery or illness, such as stroke recovery or cardiac issues. Palliative care makes sure you’ll get hospital treatment to improve the quality of life if you have a terminal illness (e.g. pain management).

Some Basic health insurance options might include a few additional benefits – things like ambulance cover in some parts of Australia, which can help offset the cost of emergency ambulance travel if you’re not already covered by your state/territory government. It’s important to reiterate that Basic policies have lots of limitations and exclusions, which translates to much less cover compared to higher-tier policies.

Ultimately, while Basic policies are a way to get your foot in the door of private health insurance, they might not provide enough cover to meet all your medical needs. It’s a good idea to consider your budget and healthcare requirements and compare health insurance policies.

That really depends on a number of different factors. If you’re only looking for the cheapest deal possible, you might be able to get Basic health insurance for around $20 a week. However, you won’t really get covered for much and it might end up being less cost-effective than you imagined – especially if you require specialist treatment in the near future.

It will also depend on the state or territory where you live, as well as your annual income. For example, while in New South Wales you can get very cheap Basic hospital cover for just over $900 annually, you’ll need to be earning $93,000 or less per annum to score that deal. If you make over $144,000 a year, those annual premiums for the same Basic policy will jump up by almost $300.

This is a slight step up from Basic health insurance where you’ll get all the essentials, as well as a few extras – without breaking the bank.

Basic Plus cover is one rung higher than the most basic level of private health insurance, but still relatively affordable for most Aussies. Think of these policies as being ideal for those who prioritise value and practicality. Basic Plus cover is especially attractive for young people.

Many Basic Plus policies have something called ‘accident inclusion’. This means you’ll be taken care of in a private hospital for treatments typically excluded or restricted under Basic policies. So if you have an accident, you can rest easy knowing you’ll receive comprehensive private medical care without worrying about the limitations of your policy.

Basic Plus policies also tend to include lots of great extra services – think dental surgery, treatments for hernias and appendicitis, joint reconstructions, as well as procedures for tonsils, adenoids and grommets. Many Basic Plus options also include unlimited ambulance cover for medically necessary events.

While Basic Plus might be the perfect fit for your needs right now, bear in mind that this level of health insurance still comes with a whole host of restrictions. If you want more cover, you’ll need to fork out for a higher-tier policy.

It’ll depend on the individual, but generally speaking Basic hospital cover is best suited for people who are only really concerned about meeting the minimum requirements for private health insurance, or those on a tight budget who still want a bit of essential cover.

If you’re generally healthy and don’t anticipate needing any extensive medical treatment in the next few years, it might be a good fit. It might also be a decent option for young adults who are just starting out with private health insurance and want the most budget-friendly policy.

Basic hospital cover could also be the best health insurance if you want to avoid the Medicare levy surcharge and LHC loading penalties.

Again, it depends on your situation.

The reality is that Basic hospital cover does indeed provide protection (however minimal), but it won’t be sufficient for everyone’s healthcare needs. While it gives you the bare essentials and can help you avoid certain penalties and loading fees, it also often comes saddled with big limitations.

Because it excludes most services and treatments, you’ll have to come to terms with the fact that you’ll still be on the hook for out-of-pocket expenses for any extensive medical care.

No matter the tier of health insurance you end up choosing, what’s most important is that you consider your own unique healthcare needs – this includes your budget! That goes for everything from Basic right up to Gold.

The bottom line? If you think you need more comprehensive cover or have specific health concerns, it might be wiser to go for a higher tier of cover than just a Basic policy.