They cover different things, and most working holiday makers want both. Travel insurance covers emergencies, repatriation, cancellation and theft. Overseas Visitors Health Cover is an Australian health product covering treatment inside Australia.
What does travel insurance actually cover?
The risks of travelling, with medical emergency treatment attached. A comprehensive policy covers emergency hospital and doctor treatment in Australia, repatriation home if you are seriously ill or injured, trip cancellation and interruption, lost or stolen baggage, personal liability, and emergency evacuation from remote areas.
Cover periods are usually capped at twelve to eighteen months with renewal options. The exclusions are where the detail sits: pre existing conditions commonly, high risk activities frequently, and work related injury very often.
What does OVHC cover?
Treatment in Australia, structured like Medicare cover but bought from a private fund. A typical policy covers public and private hospital admission, emergency department visits, GP consultations usually with a gap, specialist consultations, subsidised pharmaceuticals, imaging and pathology, with optional extras for dental, optical and physiotherapy.
It is renewable indefinitely while you are in Australia. What it does not do is anything outside Australian treatment: no repatriation, cancellation or baggage, and nothing on a side trip to New Zealand or Bali.
Why do both usually make sense?
Because each is the wrong product for what the other handles, and a twelve month working holiday reliably produces both kinds of event.
- An emergency in Sydney: both respond, and OVHC usually claims faster with lower gaps
- Repatriation to Germany after a serious injury: travel insurance only
- A stolen laptop and phone in a hostel: travel insurance only
- A routine GP visit for a chest infection: OVHC, or travel insurance with a high excess that often exceeds the bill
- A lost passport in Cairns: travel insurance only
- A trip to Bali partway through the year: travel insurance only
What is the work related injury gap?
The largest and least understood problem here. Most travel insurance is written for tourists rather than for people earning wages, and many policies exclude injury sustained while working.
A fall on a farm, a burn in a kitchen or a cut on a construction site can be declined by the travel policy. Workers compensation through your employer covers it instead: compulsory in every state, and applying regardless of visa status or length of service, with OVHC picking up treatment it does not.
So the answer to whether you are covered at work is almost never the travel policy. Our guide to workplace injury rights sets out how the workers compensation claim actually runs.
Where does Medicare fit?
Only for people entitled to it, and entitlement follows the passport. Nationals of the eleven Reciprocal Health Care Agreement countries, which include the United Kingdom and Ireland, are generally entitled to Medicare and can enrol.
Everyone else, including German and Japanese passport holders, generally is not, and for them insurance is the entire safety net outside workers compensation. The same entitlement decides the 2% Medicare levy: being entitled makes the levy payable, not being entitled makes the exemption available. Our guide to the Medicare levy covers that side.
What should you actually check in a policy?
The exclusions rather than the headline cover, because the headline cover is broadly similar across products and the exclusions are not.
- The excess, and whether it exceeds the cost of the events you are likely to have
- Waiting periods for pre existing conditions, pregnancy and mental health
- Whether work related injury is excluded, and in what terms
- Activity exclusions, particularly farm work, working with animals and adventure sports
- Geographic scope, since some policies cover Australia only
- Repatriation limits, and whether they are realistic for the distance home
- The claims process and how long payment actually takes
Does any of it affect your tax?
Very little. Premiums are not deductible against working holiday income, and claim payouts are generally not taxable.
The Medicare levy surcharge, which pushes higher earning Australians toward private hospital cover, does not usually apply to working holiday makers, and the private health rebate does not apply to OVHC for this group. What affects your return is the 2% Medicare levy and whether an exemption is claimed, which turns on entitlement rather than on whether you bought insurance.
When should you buy each one?
Travel insurance before you fly, because cancellation cover only works if it existed before the reason to cancel did. OVHC can be arranged once you have arrived and know how long you are staying, though waiting periods mean earlier is better.
The common sequence is a twelve month travel policy bought at home, then OVHC added once the stay turns into a year of working and living somewhere.
Where are the gaps in your own cover?
The products are the same for everyone. Which gaps matter is decided by your passport and your year, and the work related exclusion is the one most people discover too late.
- Which passport you hold, since that decides Medicare entitlement and the baseline.
- Whether you will be working, which is where the travel insurance exclusion bites.
- What kind of work, since farm and adventure activity exclusions are common.
- How long you are staying, since travel policies cap at twelve to eighteen months and OVHC does not.
- Whether you will leave Australia during the visa, which OVHC does not follow you on.
- Whether you have a pre existing condition, the exclusion most likely to matter in practice.
Your insurance status does not change the tax, but your Medicare entitlement does, and that is resolved in the working holiday tax return. You can estimate your tax refund to see what the 2% is worth against your own income.