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How Private Health Insurance Works

09 October, 2014

It’s useful to know the basics of health insurance when shopping around for a package. Most private health insurance providers offer two main types of health cover: hospital cover and general treatment policies. Members can access packages - which offer a combination of the two - or opt for separate policies in the two categories for a ‘mix and match’ policy.

Hospital cover

Hospital cover is designed to assist policyholders with the expenses associated with in-hospital treatment. In-hospital costs can include medical treatment, accommodation and theatre costs.

While most medical services can be covered by private insurance, other services such as laser eye surgery or cosmetic surgery may not be covered at all or may only be covered to a limited extent. These are the four key types of hospital cover:

  • Top - This type of coverage includes all services for which Medicare pays a benefit.
  • Medium - This level of cover may restrict or exclude certain services such as pregnancy and birth services, joint replacement, hip replacement, sterilisation, cataract and eye procedures, dialysis, cardiothoracic, palliative care, bariatric care and more.
  • Basic - Basic cover generally restricts or excludes services such as palliative care, psychiatric services, cardiac services, non-cosmetic plastic surgery and more.
  • Public - Public hospital cover usually includes default benefits for treatment available in public hospitals. The covered items will vary depending on the insurer.

Ancillary and general treatment policies

Also known as “extras cover”, ancillary or general treatment policies cover additional services, such as optical, physiotherapy and dental treatment.

There are three key types or levels of ancillary policies:

  • Comprehensive - This level of cover will usually include general and major dental, physiotherapy, psychology, non-PBS pharmaceutical, optical, additional services such as hearing aids and other services.
  • Medium - Medium cover usually includes general and limited major dental. It may include additional services such as podiatry, chiropractic, optical, and more.
  • Basic - Basic cover will include a limited number of hospital-related services.

Packaged plans

Many funds include packages that combine different levels of hospital and general treatment services depending on lifestyle requirements. Others allow policyholders to pick and choose to suit their needs. CBHS offers a range of options, and members can choose packaged plans or individualised plans with hospital and extras components.


Important things to know

Waiting periods

A waiting period typically applies when cover is being purchased for the very first time, or when the member is upgrading their cover. This means that certain benefits cannot be claimed during the waiting period, which may be 2, 6 or 12 months.


Members should take time to understand what is and is not covered under their policy. This assists with financial planning and management of expectations for situations where the member may need to pay for some of the expenses.

Reviewing cover

Everyone should review his or her insurance policy on a regular basis. Lifestyle changes can mean changing healthcare and insurance requirements, particularly in regards to your family.

CBHS members are encouraged to review the CBHS website to ensure that they have the most appropriate cover for their needs.

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