Private health insurance and Medicare: how they fit together in 2026
What Medicare covers, what private hospital and extras cover add, and how the surcharge, Lifetime Health Cover loading, rebate and waiting periods shape the price.
Private health insurance in Australia is an optional layer on top of Medicare, not a replacement for it. Medicare already pays for treatment as a public patient in a public hospital and subsidises GP and specialist visits. Private hospital cover lets you be treated as a private patient, which usually means choosing your specialist, using a private hospital and often waiting less for planned surgery. Extras cover pays benefits towards services Medicare mostly ignores, such as dental, physio and glasses. Whether it is worth buying depends on four government rules as much as on the policy: the Medicare Levy Surcharge, the Lifetime Health Cover loading, the income-tested rebate and the waiting periods.
This is the overview guide for the Costs, Tiers and 2026 Rules section. Each rule has its own detailed guide linked below.
What Medicare pays for, and what it does not
Medicare is funded partly by the 2% Medicare levy most taxpayers pay. For an Australian resident it covers:
- free treatment as a public patient in a public hospital, with doctors appointed by the hospital
- a benefit for out-of-hospital GP and specialist visits, tests and scans, based on the Medicare Benefits Schedule (MBS) fee
- 75% of the MBS fee for doctors' services if you are admitted as a private patient
Medicare does not pay for:
- ambulance transport (each state and territory has its own arrangements, see ambulance cover by state)
- most dental care for adults, glasses and contact lenses, or most physio, chiropractic and psychology outside specific Medicare plans
- private hospital accommodation and theatre fees
- the part of a doctor's fee above the MBS fee
What private cover adds
| Cover type | What it pays | What it does not change |
|---|---|---|
| Hospital cover | Private patient costs in hospital: accommodation, theatre, intensive care, the 25% of MBS fees Medicare leaves, devices on the government's Prescribed List | GP visits and other out-of-hospital Medicare services cannot be covered |
| Extras (general treatment) | A benefit per service for dental, optical, physio, chiro, podiatry and similar, up to annual limits | Does not avoid the surcharge or the loading |
| Ambulance | Emergency ambulance fees in states where residents are charged | Not needed by Queensland and Tasmanian residents in their own state |
Hospital policies are sorted into four tiers. Basic must cover only rehabilitation, hospital psychiatric services and palliative care, and may restrict them. Bronze adds 18 categories, Silver adds 8 more and Gold covers all 38 clinical categories without restriction. A "Plus" policy meets one tier's minimum and adds some categories. The hospital tiers guide lists them.
The four rules that change the price
Medicare Levy Surcharge
If your income for surcharge purposes is above $105,000 as a single or $210,000 as a family in 2026–27 and you do not hold appropriate private hospital cover, you pay an extra 1%, 1.25% or 1.5% on top of the Medicare levy. For many people on middling to higher incomes, a cheap hospital policy costs less than the surcharge. See the surcharge thresholds guide and the cover versus surcharge worked example.
Lifetime Health Cover loading
If you do not hold hospital cover by the 1 July after your 31st birthday, you pay a loading of 2% of the hospital premium for every year you are over 30 when you join, up to 70%, for 10 continuous years. See Lifetime Health Cover loading.
Private health insurance rebate
The Australian Government pays a percentage of your premium, depending on your income and the age of the oldest person on the policy. From 1 April 2026 it is 24.118% at the base tier for under-65s and falls to zero at tier 3. See rebate tiers.
Waiting periods
New cover, or an upgrade, comes with waiting periods of up to 12 months for pre-existing conditions and pregnancy, and 2 months for most other hospital treatment. See waiting periods and pre-existing conditions.
A quick illustrative picture
Imagine a single person aged 34 earning $112,000 in 2026–27, with no hospital cover.
- Surcharge: income is in the 1% band, so $112,000 × 1% = $1,120 a year.
- Lifetime Health Cover: they are past their base day. Joining now, with age 33 on the preceding 1 July, means (33 − 30) × 2% = 6% loading.
- An illustrative Basic hospital policy priced at $1,100 before rebate and loading: loading $1,100 × 6% = $66; rebate at tier 1 = $1,100 × 16.079% = $176.87 (the rebate is not paid on the loading). They pay $1,100 + $66 − $176.87 = $989.13.
- Result: the policy costs about $131 less than the surcharge in the first year, and stopping the loading from growing has value of its own. But a Basic policy may cover almost nothing they would actually use.
The figures in steps 3 and 4 are illustrative; your quote will differ. The rebate calculator and surcharge calculator let you try your own numbers.
Extras: a separate decision
Extras cover is judged on its own maths: the premium against the benefits you will realistically claim. It does nothing for the surcharge or the loading. The extras cover guide explains annual limits and benefit percentages, and the extras worth-it calculation shows how to test it.
Who oversees private health insurance
- The Department of Health, Disability and Ageing sets policy and approves premium changes, which usually take effect on 1 April.
- APRA supervises insurers' financial soundness.
- The ATO administers the surcharge, the rebate reconciliation and the Lifetime Health Cover information on your tax statement.
- The Private Health Insurance Ombudsman, part of the Commonwealth Ombudsman, handles complaints and runs privatehealth.gov.au, where every policy's Private Health Information Statement is published.
- The ACCC deals with misleading conduct under Australian Consumer Law.
FAQ
Can private health insurance pay for my GP visits?
No. Insurers are not allowed to pay benefits for out-of-hospital services that attract a Medicare benefit, such as GP and most specialist consultations. Extras cover may pay towards allied health services like physio, which are not Medicare services unless under a specific plan.
If I have private cover, do I have to use it in hospital?
No. You can choose to be a public patient in a public hospital even if you are insured. The public or private patient guide explains the trade-offs.
Is private cover compulsory for visa holders?
Some visas require Overseas Visitors or Overseas Student Health Cover, which are different products from the resident policies this site covers. Check your visa conditions with the Department of Home Affairs.
When do premiums change?
Insurers' premium increases are approved by the Health Minister and usually start on 1 April. The rebate percentage also changes on 1 April and the income tiers on 1 July.
Sources
- PrivateHealth.gov.au — tiers, surcharge, rebate, Lifetime Health Cover and policy statements
- Australian Taxation Office — Medicare levy, surcharge and rebate in your tax return
- Services Australia — Medicare enrolment and benefits
- Department of Health, Disability and Ageing — private health insurance policy and premium changes
- Commonwealth Ombudsman — Private Health Insurance Ombudsman complaints
