Australia Health Insurance
The complete guide!

How does the state health insurance system work?

Medicare was founded in 1984 and operates on two guiding principles: it aims to be free at the point of delivery, and provide universal coverage for Australian citizens. In practice, patients must bear part of some costs under the public system. Healthcare is of a high standard; it is considered by the OECD to be one of the best in the world.

WHO statistics currently estimate life expectancy in the country to be on average around the ages of 81-85, and infant mortality is low. Both statistics have improved over the last few decades. Australia spends around 9.4% of its GDP on healthcare.

However, reports suggest that Medicare faces two main problems: (a) resource allocation, and (b) performance and patient outcome improvements. An ageing population is placing an increasing strain on the system, with a corresponding load on existing sources of funding. The system faces workforce shortages, and there are calls for a focused review on resources.

Australians can also sign up for private cover, either to top up any gaps between their medical needs and public treatment, or as a complete alternative in order to speed up access.

Around 50% of Australian citizens have subsidized cover: the government may subsidise your insurance premium if you are subscribed to private health insurance. The amount of your rebate depends on your income, and most people claim the rebate as an upfront reduction to their health insurance premium. If you do not do this, you can claim it as a tax offset in your annual income tax return. The amount will depend on your income and circumstances, and there are a number of online calculators to enable you to work this out.

If you are relocating to Australia as an expat and want access to the public system, you will need to apply for residency first, then register with Medicare, then sign up with your local GP, as outlined below.

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Who is eligible for state healthcare?

Australia aims at universal healthcare coverage and Medicare applies to:

  • all Australian citizens
  • all New Zealand citizens
  • Australian permanent residents
  • anyone who is applying for permanent residency
  • anyone who is from a country with a reciprocal healthcare agreement (currently Australia has agreements with 11 countries, including the UK and Ireland)

How do you apply to join the state health insurance system?

In order to sign up with Medicare, you will need to fall into one of the categories listed above. If you are eligible, you will need to visit a Medicare office within 7-10 days of your arrival.

If you are a resident or have applied for residency, you will need to bring the following documentation (original or certified copies):

  • a current passport or Immicard
  • a valid visa
  • proof from the Department of Home Affairs that you have applied for permanent residency or proof of permanent residency from the DHA

You will then need to complete a Medicare enrolment form.

As soon as you have enrolled, you will be given a Medicare number immediately, and a card which should be with you within 2-4 weeks. However, you can apply for a digital version of the card at once, if you have set up a Medicare account online. This card will be valid for five years, unless you change address or have another child. Your dependents will be listed on your card.

You can backdate your Medicare registration to the date of your arrival in Australia, but if you need treatment before the card arrives and do not have a digital version, you will need to pay for any medical treatment in full and then put in a claim for reimbursement later on.

You are not obliged to sign up with a particular GP, but are free to visit any doctor. However, if you are covered by Medicare, make sure that your GP is also registered with the scheme. If they are, check first if the practice will bill Medicare or whether you need to make out-of-pocket payments. The practice of direct, or ‘bulk’, billing (where your GP bulk bills Medicare) is becoming less popular with Australian GPs, but you still might find that you have to cover part of the cost.

What is covered by the state health insurance system?

Once you have registered, you will be entitled to care that is free at the point of delivery for the following:

  • visits to GPs and specialists
  • examinations and tests required by your doctor
  • surgical procedures
  • 75% of the fee of a government-approved list of doctors’ services in a hospital, if you are a private patient
  • eye tests

You will also be entitled to discounted prescriptions under the Pharmaceutical Benefits Scheme, an Australian government program that subsidises medicines to make them more affordable, which is designed to ensure that you can access lifesaving medication.

If you are expecting a baby, most of your maternity costs will also be covered, including doctor’s consultations and hospital care. Medicare will cover you throughout the antenatal period, labour itself, and post-natal care.

Are retirees covered by state medical insurance?

Medicare will cover you if you come from a country with a reciprocal health insurance agreement, or if you have been resident in the country and making national insurance contributions. If you apply to come into Australia on an investor Retirement Visa, however, you will need to provide proof of existing private healthcare coverage.

If you are a retiree expat who has a temporary residency visa, Medicare will not cover you and you will need private health insurance. However, you may be able to apply for a Commonwealth Seniors’ Health Card, which will entitle you to discounts on prescriptions.

Are students covered by state medical insurance?

If you are an international student studying in Australia, you will need to check with Medicare as to whether you will have coverage or not. If you are on a student visa from the UK, Sweden, the Netherlands, Belgium, Slovenia, Italy, or New Zealand, you will be covered by Medicare, as these countries have reciprocal healthcare agreements with Australia.

However, if you come from Norway, Finland, Malta, and the Republic of Ireland, which also have reciprocal agreements with Australia, you will not be covered and, like overseas students from other parts of the world, you will need to purchase Overseas Student Health Cover (OSHC) from Medibank or another private insurance provider.

Will your family be covered by your insurance?

Your family will be covered by your Medicare insurance. Note that you will need to register any family members, including babies. Children under 15 will be put on their parents’ Medicare card. Your dependents, as defined for the Medicare levy surcharge exemption — a surcharge which is placed on high earners who don’t have private cover — are:

  • your spouse
  • your child under 21 years old
  • your child, 21–24 years of age, receiving full-time education at a school, college or university

Is dental treatment covered by state health insurance?

Basic dental care is free if you are treated at your local hospital.

Dental treatment out-of-pocket is 50-70% cheaper than in the UK.

What are the contribution rates for state health insurance?

If you are a taxpayer, you will find that you have to contribute 1.5% of your taxable income, or 2.5% if you have a high income and are subject to the Medicare surcharge. Most of the remainder of the funding will be paid for by the government. However, you will find that you are paying for your healthcare in two ways:

  • out of your taxes
  • out-of-pocket co-payments for some treatments and prescriptions

Even if you are registered with Medicare, not all of your treatment will be free at the point of delivery. Medicare will cover 100% of your costs at your GP’s surgery; 85% of the costs for specialists; and 75% of hospital costs.

Why buy private health insurance?

Although Medicare will still cover 75% of your costs in a private hospital, you may wish to take out full private cover, for peace of mind and speed of access to diagnosis and treatment.

It is very important to note that although a substantial amount of hospital treatment is covered by Medicare, you may still find yourself having to pay out-of-pocket expenses, from a few hundred dollars to tens of thousands, especially if you do not have top-up insurance. These are known as ‘gap fees’: the difference between what Medicare or your private health insurance provider will cover, and the amount charged by the medical profession. In 2017, 72% of patients faced out-of-pocket fees for hospital costs.

Some healthcare providers operate on a “no-gap” principle, where doctors charge the amount that the health insurer has agreed to pay. And some operate on a “known-gap” principle, which means that a doctor will charge a set fee above your insurance payout, which you must then pay out of pocket.

The Australian government is currently revising its policies with regard to privately funded healthcare, and there is a dispute between some private insurers over hospital fees. State health ministers are demanding a substantial increase, for example, to the fee charged to private health funds when patients choose to be admitted privately to single rooms at public hospitals, which receive more than $1 billion a year from insurers. There are fears that this could drive up the cost of private premiums and even warnings of a market failure.

Certain visas, such as the ‘skilled’ 457 visa, require proof of adequate health insurance before you can be issued with your visa, thus making private insurance a necessity, at least initially.

You may find that, except in cases of emergency, there is a waiting period between signing up for health insurance and being able to make a claim, so you may wish to consider taking out private cover before you enter the country.

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What is covered by private health insurance?

You will be given a choice of hospital or ancillary cover: the former will cover you for hospital treatment, and ancillary policies will cover the aspects of treatment that Medicare currently does not cover. This includes advanced dental and eye care, physiotherapy, patient transport, and some alternative treatments. You should also take out private cover if you want elective surgery, such as cosmetic treatments or bariatric aids such as a gastric band.

By law, private health insurance is not able to pay for out-of-hospital specialist fees.

How much does private health insurance cost?

In terms of the actual cost of private insurance, for families hospital cover premiums are around AUS $1,600; ancillary premiums will be a little less, around $1,500. For individuals, you would be looking at around $700 – 800 for hospital cover and around $575 for ancillary care. All costs are per annum and you can choose to split payments or have them deducted on a weekly or monthly basis from your salary.

If you are a private patient and need to visit your GP, you will need to pay around AUS $50 for a consultation. Note that you may also have to pay a contribution even if you fall under the national healthcare system.

Which companies offer private health insurance?

The big international providers cover Australia, such as:

  • AXA
  • BUPA
  • Cigna
  • Foyer
  • Pacific Prime

There are some local insurers as well, including Medibank Private, which is allied to Medicare: this used to be part of the national healthcare system but was privatized some years ago.

Always request quotes from as many insurance providers as possible.

Glossary of health insurance terms

Health Insurance Commission (HIC) - the regulatory healthcare authority

Medicare - the Australian public healthcare system

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