Private health insurance term cheat sheet

With specialised terms, numerous acronyms, and seemingly never-ending jargon, it’s easy to feel overwhelmed when trying to understand your private health insurance options.

Whether you're considering private health insurance for the first time, are looking to optimise your existing cover, or just want to understand what your product sheet is talking about, having a clear understanding of the key terms can help you feel more in control and make more informed decisions.

We know this blog is a bit of a read, so grab a cup of coffee, bookmark it for later, and think of it as your handy go-to guide to navigating the world of private health insurance.

Accident cover: Accident cover helps pay for treatment you receive if you’re admitted into hospital as a result of an accident. At HBF, accident cover is included on Basic Hospital Plus and Basic Hospital Plus Elevate covers.

Ambulance Care: HBF Ambulance Care is an add-on that provides cover for non-urgent ambulance transport by road. This provides added protection for non-urgent situations, such as call-outs that don’t require a trip to the emergency department. This includes cover for transport from home to the hospital, and inter-hospital transfers.

Ancillary cover: Also known as extras cover, helps cover the cost of everyday health care services that Medicare doesn’t generally pay a benefit towards. These are things like a visit to the dentist or physiotherapist.

Annual limit: An annual limit is the maximum amount of money you can claim for a particular service within a year. Annual limits apply to Extras services and they generally reset on 1 January.

Appliance: Medical devices or equipment that are used to aid in the diagnosis, treatment, or management of health conditions, like hearing aids or a colostomy pouch.

Benefit: The amount you can claim from your insurer for a specific service. This may be listed as a dollar amount (maximum benefit) or as a percentage amount (percentage benefit).

Closed policy: A policy that is no longer available for sale but remains active for existing policyholders.

Co-payments: A fixed amount you pay before receiving benefits for some services or treatments under hospital or extras cover. For example, many health insurance plans require a co-payment for pharmacy items before you receive a benefit.

Combined limit: A combined annual limit is the maximum amount of money you can claim per calendar year, distributed across a group of services. For example, HBF's Flex 50 Extras has a combined annual limit of $800. You can choose to use it for chiro, physio, major dental or a selection of other services.

Combined policy: Cover that includes hospital and extras cover.

Cover: Another word for insurance; a form of financial protection, where you pay a premium to HBF, and in exchange, we pay a benefit towards agreed health services.

Covered: When a private health insurance policy states that a service is "covered," it means the policy provides financial support or reimbursement for that service, though there may be specific conditions or limits.

Day surgery: A medical procedure that is performed in a hospital or surgical centre without requiring an overnight stay. Patients typically go home the same day after the procedure, once they have recovered from anaesthesia and are deemed stable.

Default benefit: The default benefit is the lowest amount that a health insurer is permitted to pay for a hospital admission that is included on policy.

Dependant: A child on a family or single parent policy who is under 25 years of age and not married or in a de-facto relationship. If this person is 21 years of age or over, they must either be studying full time or earn less than $24,500 per year.

Elective surgery: Surgery which is medically necessary but can be delayed for at least 24 hours. Also known as non-emergency surgery.

Emergency surgery: Surgery which is medically necessary and requires attention within 24 hours.

Excess: A sum of money you pay upfront before you receive hospital treatment. Generally, the higher your excess, the lower your premium. Also known as a front-end deductable.

Gap: Medical gaps are a common type of out-of-pocket expense members sometimes face when going to a hospital for a procedure. This gap occurs when there is a difference between the fee charged by your doctor and the amount covered by Medicare and HBF. A medical gap is an amount you need to contribute to your treatment.

HICAPS: HICAPS stands for Health Industry Claims and Payments Service. It enables patients to process health insurance claims and receive immediate payments electronically at the point of service.

Hospital insurance: Also known as hospital cover, helps cover costs when you are admitted to hospital for surgery and other types of medical treatment. It helps cover the cost of doctors' and anaesthetists' fees, as well as other hospital costs like accommodation, prostheses and theatre fees.

Inpatient services: Treatments you receive when you're admitted to hospital for care (eg for surgery).

Informed Financial Consent (IFC): A quote by your specialist, which sets out any out-of-pocket costs you will be required to pay. If your specialist doesn't provide this upfront, you are entitled to request one.

Item number: A specific code used to identify and categorise medical services, procedures, or items for billing and coverage purposes.

Lifetime Health Cover (LHC): The Lifetime Health Cover (LHC) loading is an extra cost applied to the price of hospital insurance for anyone who chooses to take out hospital cover later in life. For each year a person delays taking out this cover, they will pay 2% more for their premium to a maximum of 70%. The loading was designed by the Australian Government to encourage people to take out insurance earlier in life and maintain their cover.

Lifetime limit: The total benefit you can receive for a specified service (e.g Orthodontics) in your lifetime. If you change your cover at HBF or transfer from another health fund, any lifetime limits that have been used under your previous level of cover will be carried over and considered when determining any lifetime limit available on your policy, even if you leave and re-join.

Medical Devices and Human Tissue Products List: Medical devices and human tissue products, such as pacemakers and artificial joints, are items that may be provided during hospital treatment. HBF will only pay a benefit towards items that are listed on the federal government-prescribed list. If your doctor uses an item that isn’t listed on the prescribed list, HBF will not pay a benefit and you’ll have an out-of-pocket expense. How to manage out-of-pockets: We suggest you discuss the choice of medical device or product and the associated costs with your doctor prior to receiving any treatment. (Formerly known as Prostheses.)

Medicare Benefits Schedule (MBS): A list of fees for medical services set by the Australian Government for eligible hospital treatment as a private patient. For in-hospital medical services, Medicare pays 75% of the MBS fee and HBF pays the other 25%. Doctors may charge more than the MBS fee.

MBS payable item: Services listed under the Medicare Benefits Schedule. Some services are not covered by the MBS, such as elective cosmetic surgery.

The Medicare Levy Surcharge (MLS): A tax applied to people who don't have an appropriate level of hospital cover and: earn over $97,000 as a single or earn over $194,000 as a couple/family. Single parents and couples (including de facto couples) are subject to family tiers. If you have more than one child, your family income threshold increases by $1,500 for each child after your first.

Medicare: Medicare is the Australian Government’s free or subsidised healthcare system. It covers most basic medical expenses, but not everything. Private health insurance helps cover the treatments Medicare doesn’t. Plus, it gives you more choice when it comes to your healthcare.

Minimum benefit: See default benefit.

Outpatient services: These are treatments you receive when you haven't been formally admitted to hospital, for example, tests and examinations (e.g. x-rays and blood tests). In most cases, Medicare will help cover these services. Your hospital insurance doesn’t cover ‘outpatient’ services.

Out-of-pocket cost: The portion of a bill that you pay from your own pocket for which you won't be reimbursed – by either HBF or Medicare. Depending on what you're covered for on your hospital or extras policy, you might have to pay some of your bill out of your own pocket.

Pharmaceutical Benefits Scheme (PBS): Provides a government subsidy to reduce the price of some prescription medicines.

PHI: This one’s easy! PHI is an acronym for Private Health Insurance.

Pre-existing condition: An illness or condition which, in the opinion of an independent medical practitioner (appointed by HBF), was known to exist, or where signs or symptoms were evident during the six-month period before you became an HBF member, including on the day you joined.

Preferred provider: Known at HBF as a Member Plus provider, it is a network of providers that offer reduced or no out of pocket expenses to HBF members.

Premium: The amount you pay for your health insurance. Depending on your circumstances, your premium will be calculated based on the Australian Government Rebate you're eligible for and if applicable, any Lifetime Health Cover Loading. Any discounts your eligible for, such as the discount for paying via direct debit, will also be factored into your premium calculations.

Provider: A person or business qualified to supply medical services, such as dentist, physiotherapist, medical doctor. We will only pay benefits for treatment or goods provided by an HBF recognised provider.

Rebate: The Australian Government Private Health Insurance Rebate is an initiative that helps make private health cover more affordable. The rebate is income tested and applies to hospital, extras and urgent ambulance insurance and, if eligible, you can either get it back at tax time, or apply it to your premium now to make it cheaper.

Restriction: A restriction is a treatment or service for which your health fund will only pay the minimum default benefit (this is set by the government). If a procedure or service is listed as restricted on your policy, you'll be covered for it, but only to a very limited extent, leaving you with an out-of-pocket cost to pay.

Sub-limit: The maximum amount of money you can claim for a specific service, which is deducted from a larger annual limit. For example, a policy might have a combined annual limit of $500 for dentures, crowns and bridges, with a sub-limit of $300 for each service.

Suspension: Eligible HBF Health policies can be suspended for a minimum period of 2 months up to 3 years due to travel overseas (in addition to Australian Defence Force or imprisonment). To be eligible to suspend, members must have served a minimum of 12 months paid membership with HBF.

Urgent Ambulance: HBF Urgent Ambulance provides unlimited ambulance cover for emergency and urgent ambulance transport by road. This includes on-site attendance not requiring transportation and where the approved ambulance provider has classified the service as urgent or emergency.

Waiting period: A set amount of time from the day your policy starts during which you can't make a claim from HBF. Waiting periods apply when you have: never had health insurance; upgraded your level of cover; or rejoined after a break from cover.