Health insurance premium rates are rising in Australia

On 1 April 2021, health insurance premium rates will go up by an average of 2.74% – the lowest increase in almost 2 decades.

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The average price of private health insurance is set to go up once again in April, making it the second premium hike in around six months for many Australians, since the majority of funds delayed their 2020 increases until October last year because of coronavirus.

Fortunately though, the 2.74% increase is the lowest annual premium change since 2001. On average, a single person will pay an extra $1.14 per week and a family will pay $2.44 more a week, according to Minister for Health Greg Hunt.

This guide will explain why the price hike is happening, what it could mean for you and how reviewing your health insurance could help you get a better deal.

How much will my health insurance go up in 2021?

Health insurance will go up by an industry average of 2.74% on 1 April 2021 – the lowest premium increase since 2001. However, it's not all the same – some policies will see a price jump as big as 5.47% while others will only rise by 0.50%.

If your provider is planning to significantly increase its premiums, now might be a good time to compare health insurance policies and switch to a more affordable one.

Average premium increases – how does your fund compare?

You can find out how much your provider plans to increase its premiums in the table below.

Insurer2021
ACA Health Benefits Fund Limited3.54%
AIA Health Insurance1.62%
Australian Unity Health Limited1.99%
BUPA HI Pty Ltd3.21%
CBHS Corporate Health Pty Ltd5.47%
CBHS Health Fund Limited4.26%
Cessnock District Health Benefits Fund Limited4.14%
CUA Health Limited2.99%
Defence Health Limited3.93%
Doctors' Health Fund Pty Ltd2.85%
GMHBA Limited3.24%
HBF Health Limited0.94%
Health Care Insurance Ltd2.91%
Health Insurance Fund of Australia Limited3.78%
Health Partners Limited3.35%
health.com.au Pty Ltd0.83%
Hospitals Contribution Fund of Australia Ltd2.95%
Latrobe Health Services Limited3.42%
Medibank Private Limited3.25%
Mildura District Hospital Fund Ltd4.07%
National Health Benefits Australia Pty Ltd3.56%
Navy Health Ltd3.46%
NIB Health Funds Ltd4.36%
Nurses & Midwives Health Pty Ltd3.38%
Peoplecare Health Limited3.90%
Phoenix Health Fund Limited3.47%
Police Health Limited3.10%
Queensland Country Health Fund Ltd4.43%
Queensland Teachers' Union Health Fund Limited1.11%
Railway & Transport Health Fund Ltd3.19%
Reserve Bank Health Society Ltd3.74%
St Luke's Medical and Hospital Benefits Association0.5%
Teachers Federation Health Ltd2.88%
Transport Health Pty Ltd2.61%
Westfund Limited4.30%
Industry Weighted Average2.74%

Source: https://www1.health.gov.au/

St Luke's Medical and Hospital Benefits Association and HBF reported the lowest average price increase of all insurers, at just 0.5% and 0.94%. At the other end, CBHS Corporate Health will be applying a 5.47% average increase.

Remember, health funds won't increase all of their policies by the same percentage. For example, a health fund may increase its hospital cover by 4% and its extras cover by 1%. However, insurers haven't confirmed exactly how they will apply the increases yet.

How much should you be paying?

You may not realise it, but health insurance prices can really vary between tiers. For example, we found a difference of over $200 a year between two policies on the same tier. That's why it's important to compare your options.

To give you a benchmark to compare your current health insurance, here are the cheapest Basic, Bronze, Silver, Gold and Extras policies from each tier from Finder Partners. Switch and save on your health fund policy today.

Name Product Tier Hospital treatments Price Per Month Apply
Frank Entry Hospital (Basic+)
Basic
    • 8 hospital services
    • Hernia and appendix
    • Dental surgery
$73.85
Medibank Bronze Everyday
Bronze
    • 22 hospital services
    • Kidney and bladder
    • Gastrointestinal endoscopy
$86.25
ahm starter silver
Silver
    • 27 hospital services
    • Heart and vascular system
    • Lung and chest
$109.05
Medibank Gold Complete
Gold
    • 37 hospital services
    • Joint replacements
    • Weight loss surgery
$169.55
HCF Starter Extras
Extras only
    • Basic extras cover
    • Cover for a range of therapies
    • 100% back on a yearly dental check at participating providers
$12.70
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Compare up to 4 providers

Why does the cost of health insurance go up every year?

Health insurance is community rated. This means everybody pays the same price for the same policy, regardless of their age, health or how likely they are to lodge a claim.

For example, a healthy 30-year-old would pay the same as a chronically unwell 60-year-old – as long as they both had the same policy. It means that even if you're sick, injured or have a history of illness, you're not further disadvantaged by having to pay more for your health insurance.

However, the number of seniors in Australia is increasing, and because over-65s typically have higher healthcare costs, insurance companies are spending more money paying out claims.

Unfortunately, insurance companies aren't earning enough money from premiums to be able to comfortably cover the cost of claims. As a result, they have to raise their prices.

How much does health insurance increase every year?

Health insurance premiums increase by a different rate every year. The table below shows the annual averages since 2013.

Average increase (%)

Insurer20142015201620172018201920202021
ACA Health Benefits Fund Limited5.78%4.96%6.19%4.70%2.72%3.23%3.94%3.54%
AIA Health Insurance3.90%4.45%5.63%1.62%
Australian Unity Health Limited6.62%6.26%5.05%4.46%3.89%3.35%2.79%1.99%
BUPA HI Pty Ltd6.35%5.59%5.69%4.90%3.99%2.99%3.26%3.21%
CBHS Corporate Health Pty Ltd2.98%2.38%3.68%2.37%5.47%
CBHS Health Fund Limited5.61%6.58%5.92%3.29%2.73%3.67%3.91%4.26%
Cessnock District Health Benefits Fund Limited5.36%6.99%6.19%6.57%6.40%3.90%3.96%4.14%
CUA Health Limited5.47%6.35%8.95%4.97%3.29%4.19%3.99%2.99%
Defence Health Limited5.34%5.62%5.48%5.51%5.97%4.50%3.49%3.93%
Doctors' Health Fund Pty Ltd4.23%3.98%3.76%3.54%2.28%2.94%3.29%2.85%
GMHBA Limited5.94%6.43%5.44%4.94%4.34%3.31%3.34%3.24%
HBF Health Limited3.72%5.96%4.94%5.96%3.75%1.94%1.98%0.94%
Health Care Insurance Ltd5.34%6.12%6.90%6.06%8.90%5.53%3.75%2.91%
Health Insurance Fund of Australia Limited2.98%4.49%6.55%7.99%5.35%4.77%5.58%3.78%
Health Partners Limited3.14%5.76%7.14%5.10%3.95%3.18%2.77%3.35%
health.com.au Pty Ltd6.13%6.81%8.81%8.53%5.87%3.96%3.94%0.83%
Hospitals Contribution Fund of Australia Ltd6.89%6.57%5.42%3.65%3.39%3.20%3.39%2.95%
Latrobe Health Services Limited5.98%6.15%5.52%4.49%4.25%3.85%3.49%3.42%
Medibank Private Limited6.49%6.59%5.64%4.60%3.88%3.30%3.27%3.25%
Mildura District Hospital Fund Ltd3.65%6.14%6.74%5.95%5.68%3.89%4.68%4.07%
National Health Benefits Australia Pty Ltd4.50%6.26%5.28%5.41%3.97%3.62%2.99%3.56%
Navy Health Ltd4.53%4.50%5.50%4.94%3.94%4.94%3.49%3.46%
NIB Health Funds Ltd7.99%6.55%5.55%4.48%3.93%3.38%2.90%4.36%
Nurses & Midwives Health Pty Ltd3.22%5.91%3.74%3.38%
Peoplecare Health Limited5.82%6.08%4.38%5.09%4.19%4.90%3.48%3.90%
Phoenix Health Fund Limited6.52%6.48%5.72%5.93%4.19%3.26%3.10%3.47%
Police Health Limited4.81%4.48%4.81%4.63%3.72%3.58%3.14%3.10%
Queensland Country Health Fund Ltd5.85%4.77%4.91%5.15%4.39%3.95%3.56%4.43%
Queensland Teachers' Union Health Fund Limited4.50%6.36%7.15%7.30%4.40%3.18%2.66%1.11%
Railway & Transport Health Fund Ltd4.80%6.17%5.61%5.54%4.47%3.36%2.91%3.19%
Reserve Bank Health Society Ltd4.39%4.88%5.37%5.00%3.97%3.73%3.08%3.74%
St Luke's Medical and Hospital Benefits Association6.33%6.27%5.89%4.99%4.23%3.56%2.90%0.5%
Teachers Federation Health Ltd5.42%6.86%4.97%4.96%2.84%3.94%3.24%2.88%
Transport Health Pty Ltd5.90%4.84%6.49%4.93%5.16%3.41%2.59%2.61%
Westfund Limited3.25%7.92%5.94%4.96%3.43%1.64%4.32%4.30%
Industry Weighted Average6.20%6.18%5.59%4.84%3.95%3.25%2.92%2.74%

How will I know if my premiums are increasing?

Your health fund won't increase the price of your policy without letting you know, so expect a letter or an email notifying you about any changes.

From there, it's worth checking the updated policy information, so you can make an informed decision about what to do next.

What should I do if the price of my health insurance is going up?

If you don't do anything, it's highly likely that the cost of your health insurance will go up on 1 April. However, you may be able to save money if you compare providers and switch to a policy that suits you better.

Here are some handy tips to consider, which could save you money:

  • Change tiers. Hospital cover comes in four tiers: basic, bronze, silver and gold. Dropping down a level could save you money, but you'll get fewer overall benefits.
  • Look for discounts. Young Australians can save up to 10% on their hospital insurance, so if you're between 18 and 29, be sure to ask your insurance company how they can help.
  • Compare policies. Finder's online tool lets you compare health insurance policies side by side, so you can see what benefits you're getting and for how much.
  • Switch and save. Don't pay for the benefits you're not using. If you can get the cover you need elsewhere, for a price you're happy to pay, consider switching health insurance policies. Remember, if you switch from one health fund to another, you won't have to serve your hospital waiting periods again. For your extras, contact the insurer directly to check.
  • Pay in advance. If you want to avoid this year's premium increase, pay in advance before 1 April and you'll still get your policy for last year's prices. Some insurers will also give you an additional discount if you set up a direct debit or pay for your policy in a lump sum.
  • Avoid tax. The Medicare levy surcharge is a tax of between 1% and 1.5% of your income. Anyone who earns over $90,000 and doesn't have an approved level of hospital cover has to pay it. However, if you take out hospital insurance, you won't have to pay it.
  • Avoid lifetime loading. Lifetime health cover loading is an extra levy that is applied to health insurance policies if you only take one out over the age of 31. It's designed to encourage young people to buy health insurance – if you don't, you'll end up paying more for your premiums down the line.

Ready to compare your health insurance options?

Use our free tool below to compare options from over 30 Australian health funds in just a few steps.

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