How does health insurance work?

  • October 28, 2020 10:40 PM AEDT
  • Team Kalkine
    Team Kalkine
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How does health insurance work?


  • Health insurance can get expensive if not chosen in an intelligent manner.
  • While the Australian healthcare system is quite assorted and organised, a little mix of policies can ease your life.
  • The Australian healthcare system majorly has two parts – the public system and the private system.

The Australian healthcare system is one of the most comprehensive in the world. From offering a wide assortment of services featuring general and preventive health to even treating more complex diseases that may need hospital admission or a specialist, the Australian healthcare system majorly has two parts – the public system and the private system.

The public system

The public system is made up of components like public hospitals, community-based services and associated health organisations owned or run by the government. The Australians can access it all within the range of public health system for free or at much lower cost through a medical facility named Medicare.


Medicare delivers affordable, accessible, and high-quality healthcare for the people in Australia. Under the tutelage of Medicare, one can be treated as a public patient in a public hospital by a doctor appointed by the hospital. But one cannot choose his/her own doctor.

Medicare does not cover private patient hospital costs like theatre fees or accommodation, medical and hospital costs incurred overseas, services which are not clinically necessary or surgery for cosmetic reasons, examinations for life insurance, superannuation or memberships for which someone else is responsible and emergency department administration or facility fees.

Medicare offers benefit for consultation fees for doctors, including specialists; tests and examinations by doctors, X-rays and pathology tests, eys tests, surgical and even therapeutic procedures along with some specific treatment facilities under various schemes such as cleft lip and palate scheme, enhanced primary care programme and allied health services as part of the chronic disease management plan.

Besides, if one visits a doctor outside the hospital, Medicare will reimburse 100% of the fee for a general practitioner and 85% of the fee for a specialist.

Also, under the Pharmaceutical Benefits Scheme (PBS), one has to pay only a part of the cost of most prescribed medicines purchased via pharmacies across Australia. The remaining of the cost is covered by the PBS. One just needs to present the Medicare card to get this benefit.

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The private system

The private system features health service suppliers that are held and managed privately. Private hospitals, specialist medical and allied health and pharmacist services funded or run by private autonomous systems are involved in this segment. The services that are accessed through the public system are funded by local, state and federal governments while the private sector services are funded by a combination of government and private entities. This includes private health insurance premiums paid by customers, private health organisations, people paying directly for private treatment, government incentives on private health insurance and other government and private funding.

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Under the private system, one can choose to be treated as a private patient in either a public or a private hospital, choose their own doctor and hospital. If you opt to get treated as a private patient, Medicare will cover for 75% of the Medicare Benefits Schedule fee for associated medical costs. The remaining hospital and medical costs may be covered by private health insurance, depending on the policy. This, most of the times, involves hospital accommodation, theatre fees, intensive care, drugs, dressings and other consumables, prostheses, diagnostic tests, pharmaceuticals and additional doctors’ fees.

In addition to this, as per the medical insurance plan, benefits pertaining to dental examinations and treatment, most physiotherapy, occupational therapy, speech therapy, eye therapy, chiropractic services, podiatry and even psychology services can be availed. Also, there are insurance plans catering to special needs such as glasses, contact lenses, hearing aids and home nursing. One can ask the private health insurer to cover many of these services. Insurers usually have limits on how much can be claimed per service and per year. 

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When it comes to the pharmaceuticals side, one can arrange for the private health insurer to cover many prescription medicines which are not listed under the Pharmaceutical Benefits Scheme (PBS). Most of the insurers will ask you to make a co-payment towards the expense and will have cap on how much you can claim.

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Ambulance service

The cost of emergency transport or other ambulance services are not covered by Medicare. But one can organise the ambulance cover through a health insurer. In some states and territories, state ambulance authority takes charge of the same.

Health insurers can either pay for or reimburse all or part of the costs related to the transportation. This largely depends upon which state one belongs to. Depending on the state or territory of residence, one may be eligible for a discount or may not need a cover at all.

Also, ambulance cover can vary. Some plans provide cover all ambulance travel, while others may provide for ground travel only or may have other limitations. For instance, they may cover the insuree in his resident state only or they may just treat at the scene and would not transport to hospital. Before going for a particular health insurance plan, one has to keep in mind all this.  

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