Restricted cover and exclusions: what 'covered' really means on your policy

On an Australian hospital policy each clinical category is covered, restricted or excluded. Covered means the insurer pays benefits for a private patient in a private or public hospital, subject to excess and agreements. Restricted means the insurer pays only the minimum benefit set for a shared ward in a public hospital; in a private hospital this usually leaves you with most of the accommodation and theatre bill, though Medicare and the insurer still pay their shares of the doctors' MBS fees. Excluded means no hospital benefits at all, so you would be treated as a public patient or pay privately. Basic policies can restrict any category; Bronze and Silver can only restrict rehabilitation, psychiatric care and palliative care; Gold cannot restrict anything.

This guide is part of private health insurance mistakes.

The three states compared

Status	Private hospital	Public hospital as private patient	Doctors' MBS fees
Covered	Insurer pays accommodation and theatre per policy and hospital agreement	Covered	Medicare 75%, insurer 25%
Restricted	Insurer pays only the minimum public-hospital shared-ward benefit, leaving a large shortfall	Shared-ward costs covered; you may not get a private room	Medicare 75%, insurer 25%
Excluded	No benefit for hospital charges	No benefit; you can choose to be a public patient instead	Medicare 75% only if you are a private patient; nothing from the insurer

What restriction costs in practice (illustrative)

Suppose a three-night private hospital admission for a restricted category. The private hospital charges $2,100 a night for accommodation and $4,000 for theatre, a total of $10,300. The minimum restricted benefit is set by government and is far lower than private hospital charges; for illustration, suppose the insurer pays $1,800 in total.

Hospital bill: $10,300
Insurer's restricted benefit: −$1,800
Your shortfall: $8,500, plus any doctors' gaps and your excess

The same admission with the category covered at an agreement hospital would usually cost only your excess and any doctors' gaps. The actual minimum benefit rates are set by the Department of Health, Disability and Ageing; your insurer can tell you what it pays.

Where restrictions usually hide

Basic and Basic Plus policies, which often restrict many of the categories they list.
Rehabilitation, hospital psychiatric services and palliative care on Bronze and Silver policies.
"Accident override" features on cheaper policies, which may cover some excluded categories only after an accident; read the definition.

Exclusions beyond the categories

Some things are not covered by any hospital policy:

out-of-hospital GP and specialist services that attract Medicare benefits
cosmetic surgery that is not medically necessary
treatment not listed on the MBS, unless the policy says otherwise
treatment during a waiting period
treatment overseas

How to check your policy

Download the Private Health Information Statement for your exact policy and state.
Read the lists of covered, restricted and excluded categories.
For planned treatment, ask your doctor for MBS item numbers, then use the privatehealth.gov.au "does my policy cover" information or ask the insurer which category the item falls in.
Ask the insurer to confirm in writing whether you have served the waiting period and what benefit it will pay.

Mental health: a special case

Many Bronze and Silver policies restrict hospital psychiatric services. If you might need inpatient mental health care, look for a policy that covers it fully. You can use the once-in-a-lifetime waiver to upgrade psychiatric cover without the 2-month waiting period, if you have already served the initial 2 months on your current policy. See waiting periods.

Questions to ask your insurer before you rely on a category

Phone or message the insurer with your exact policy name and the MBS item numbers your doctor gave you, and ask:

Which clinical category does this item fall in, and is it covered, restricted or excluded on my policy?
Have I served the waiting period, and is any of it affected by a pre-existing condition?
Is the hospital my doctor uses an agreement hospital for this treatment?
What excess or co-payment will I pay for this admission?
If the category is restricted, what benefit will you pay per day in a private hospital?

Ask for the answers in an email or letter and keep it with your hospital paperwork. If the answer later turns out to be wrong, a written record makes a complaint much easier.

When to talk to a doctor

If you have a health condition, your GP or specialist can tell you which treatment you might need, and therefore which categories matter. Do not delay care because of uncertain cover: public hospitals treat Medicare-eligible patients at no charge. For mental health crisis support, call Lifeline on 13 11 14 or 000 in an emergency.

FAQ

Why would anyone buy a policy with restrictions?

Mainly to avoid the Medicare Levy Surcharge and the Lifetime Health Cover loading at the lowest premium. That can be a reasonable choice if you understand what it does not pay.

Can I be a private patient in a public hospital with restricted cover?

Yes. Restricted benefits are designed around public hospital shared-ward costs, so the shortfall there is usually much smaller than in a private hospital.

Do exclusions apply to emergencies?

Emergency treatment in a public hospital is free for Medicare-eligible patients regardless of insurance. If admitted, you can choose to be a public patient.

How do I compare categories between insurers?

privatehealth.gov.au lets you compare policies from all registered insurers using the same category definitions.

Sources

PrivateHealth.gov.au — clinical categories, product tiers and policy statements
Department of Health, Disability and Ageing — minimum benefits for restricted cover
Lifeline — 24-hour crisis support on 13 11 14
Commonwealth Ombudsman — complaints about how a policy was described