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Health insurance premium rates are rising in Australia

On 1 April, health insurance premium rates will jump by an average of 2.93% – here's what you need to know.

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The average price of private health insurance is set to go up once again in April, which means Australian families could be forking out an average of $100 more for their coverage every year.

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 2020?

Health insurance will go up by an industry average of 2.93% on 1 April. However, some policies will see a price jump as big as 5.63% while others will only rise by 1.98%.

According to health minister Greg Hunt, this means that, on average, singles can expect to pay an extra $35.36 per year, while families could pay $103.48 more.

The good news is that 2020's rate hike is actually the lowest increase seen in 19 years. You may also be able to reduce your own premium rise if you compare health insurance policies and see which providers are raising prices at a steeper rate than others.

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.

Average premium increases – how does your fund compare?

HBF reported the lowest average price hike of all insurers, at just 1.98%. In comparison, MyOwn will be applying a 5.63% 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.

Insurer2020
ACA Health Benefits Fund Limited3.94%
Australian Unity Health Limited2.79%
BUPA HI Pty Ltd3.26%
CBHS Corporate Health Pty Ltd2.37%
CBHS Health Fund Limited3.91%
Cessnock District Health Benefits Fund Limited3.96%
CUA Health Limited3.99%
Defence Health Limited3.49%
Doctors' Health Fund Pty Ltd3.29%
GMHBA Limited3.34%
HBF Health Limited1.98%
Health Care Insurance Ltd3.75%
Health Insurance Fund of Australia Limited5.58%
Health Partners Limited2.77%
health.com.au Pty Ltd3.94%
Hospitals Contribution Fund of Australia Ltd3.39%
Latrobe Health Services Limited3.49%
Medibank Private Limited3.27%
Mildura District Hospital Fund Ltd4.68%
MO Health Pty Ltd5.63%
National Health Benefits Australia Pty Ltd2.99%
Navy Health Ltd3.49%
NIB Health Funds Ltd2.90%
Nurses & Midwives Health Pty Ltd3.74%
Peoplecare Health Limited3.48%
Phoenix Health Fund Limited3.10%
Police Health Limited3.14%
Queensland Country Health Fund Ltd3.56%
Queensland Teachers' Union Health Fund Limited2.66%
Railway & Transport Health Fund Ltd2.91%
Reserve Bank Health Society Ltd3.08%
St Luke's Medical and Hospital Benefits Association2.90%
Teachers Federation Health Ltd3.24%
Transport Health Pty Ltd2.59%
Westfund Limited4.32%
Industry Weighted Average2.92%

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

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 (%)

Insurer2014201520162017201820192020
ACA Health Benefits Fund Limited5.78%4.96%6.19%4.70%2.72%3.23%3.94%
Australian Unity Health Limited6.62%6.26%5.05%4.46%3.89%3.35%2.79%
BUPA HI Pty Ltd6.35%5.59%5.69%4.90%3.99%2.99%3.26%
CBHS Corporate Health Pty Ltd2.98%2.38%3.68%2.37%
CBHS Health Fund Limited5.61%6.58%5.92%3.29%2.73%3.67%3.91%
Cessnock District Health Benefits Fund Limited5.36%6.99%6.19%6.57%6.40%3.90%3.96%
CUA Health Limited5.47%6.35%8.95%4.97%3.29%4.19%3.99%
Defence Health Limited5.34%5.62%5.48%5.51%5.97%4.50%3.49%
Doctors' Health Fund Pty Ltd4.23%3.98%3.76%3.54%2.28%2.94%3.29%
GMHBA Limited5.94%6.43%5.44%4.94%4.34%3.31%3.34%
HBF Health Limited3.72%5.96%4.94%5.96%3.75%1.94%1.98%
Health Care Insurance Ltd5.34%6.12%6.90%6.06%8.90%5.53%3.75%
Health Insurance Fund of Australia Limited2.98%4.49%6.55%7.99%5.35%4.77%5.58%
Health Partners Limited3.14%5.76%7.14%5.10%3.95%3.18%2.77%
health.com.au Pty Ltd6.13%6.81%8.81%8.53%5.87%3.96%3.94%
Hospitals Contribution Fund of Australia Ltd6.89%6.57%5.42%3.65%3.39%3.20%3.39%
Latrobe Health Services Limited5.98%6.15%5.52%4.49%4.25%3.85%3.49%
Medibank Private Limited6.49%6.59%5.64%4.60%3.88%3.30%3.27%
Mildura District Hospital Fund Ltd3.65%6.14%6.74%5.95%5.68%3.89%4.68%
MO Health Pty Ltd3.90%4.45%5.63%
National Health Benefits Australia Pty Ltd4.50%6.26%5.28%5.41%3.97%3.62%2.99%
Navy Health Ltd4.53%4.50%5.50%4.94%3.94%4.94%3.49%
NIB Health Funds Ltd7.99%6.55%5.55%4.48%3.93%3.38%2.90%
Nurses & Midwives Health Pty Ltd3.22%5.91%3.74%
Peoplecare Health Limited5.82%6.08%4.38%5.09%4.19%4.90%3.48%
Phoenix Health Fund Limited6.52%6.48%5.72%5.93%4.19%3.26%3.10%
Police Health Limited4.81%4.48%4.81%4.63%3.72%3.58%3.14%
Queensland Country Health Fund Ltd5.85%4.77%4.91%5.15%4.39%3.95%3.56%
Queensland Teachers' Union Health Fund Limited4.50%6.36%7.15%7.30%4.40%3.18%2.66%
Railway & Transport Health Fund Ltd4.80%6.17%5.61%5.54%4.47%3.36%2.91%
Reserve Bank Health Society Ltd4.39%4.88%5.37%5.00%3.97%3.73%3.08%
St Luke's Medical and Hospital Benefits Association6.33%6.27%5.89%4.99%4.23%3.56%2.90%
Teachers Federation Health Ltd5.42%6.86%4.97%4.96%2.84%3.94%3.24%
Transport Health Pty Ltd5.90%4.84%6.49%4.93%5.16%3.41%2.59%
Westfund Limited3.25%7.92%5.94%4.96%3.43%1.64%4.32%
Industry Weighted Average6.20%6.18%5.59%4.84%3.95%3.25%2.92%

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

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, then 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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