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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.
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.
| Insurer | 2020 |
|---|---|
| ACA Health Benefits Fund Limited | 3.94% |
| Australian Unity Health Limited | 2.79% |
| BUPA HI Pty Ltd | 3.26% |
| CBHS Corporate Health Pty Ltd | 2.37% |
| CBHS Health Fund Limited | 3.91% |
| Cessnock District Health Benefits Fund Limited | 3.96% |
| CUA Health Limited | 3.99% |
| Defence Health Limited | 3.49% |
| Doctors' Health Fund Pty Ltd | 3.29% |
| GMHBA Limited | 3.34% |
| HBF Health Limited | 1.98% |
| Health Care Insurance Ltd | 3.75% |
| Health Insurance Fund of Australia Limited | 5.58% |
| Health Partners Limited | 2.77% |
| health.com.au Pty Ltd | 3.94% |
| Hospitals Contribution Fund of Australia Ltd | 3.39% |
| Latrobe Health Services Limited | 3.49% |
| Medibank Private Limited | 3.27% |
| Mildura District Hospital Fund Ltd | 4.68% |
| MO Health Pty Ltd | 5.63% |
| National Health Benefits Australia Pty Ltd | 2.99% |
| Navy Health Ltd | 3.49% |
| NIB Health Funds Ltd | 2.90% |
| Nurses & Midwives Health Pty Ltd | 3.74% |
| Peoplecare Health Limited | 3.48% |
| Phoenix Health Fund Limited | 3.10% |
| Police Health Limited | 3.14% |
| Queensland Country Health Fund Ltd | 3.56% |
| Queensland Teachers' Union Health Fund Limited | 2.66% |
| Railway & Transport Health Fund Ltd | 2.91% |
| Reserve Bank Health Society Ltd | 3.08% |
| St Luke's Medical and Hospital Benefits Association | 2.90% |
| Teachers Federation Health Ltd | 3.24% |
| Transport Health Pty Ltd | 2.59% |
| Westfund Limited | 4.32% |
| Industry Weighted Average | 2.92% |
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 (%)
| Insurer | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 |
|---|---|---|---|---|---|---|---|
| ACA Health Benefits Fund Limited | 5.78% | 4.96% | 6.19% | 4.70% | 2.72% | 3.23% | 3.94% |
| Australian Unity Health Limited | 6.62% | 6.26% | 5.05% | 4.46% | 3.89% | 3.35% | 2.79% |
| BUPA HI Pty Ltd | 6.35% | 5.59% | 5.69% | 4.90% | 3.99% | 2.99% | 3.26% |
| CBHS Corporate Health Pty Ltd | 2.98% | 2.38% | 3.68% | 2.37% | |||
| CBHS Health Fund Limited | 5.61% | 6.58% | 5.92% | 3.29% | 2.73% | 3.67% | 3.91% |
| Cessnock District Health Benefits Fund Limited | 5.36% | 6.99% | 6.19% | 6.57% | 6.40% | 3.90% | 3.96% |
| CUA Health Limited | 5.47% | 6.35% | 8.95% | 4.97% | 3.29% | 4.19% | 3.99% |
| Defence Health Limited | 5.34% | 5.62% | 5.48% | 5.51% | 5.97% | 4.50% | 3.49% |
| Doctors' Health Fund Pty Ltd | 4.23% | 3.98% | 3.76% | 3.54% | 2.28% | 2.94% | 3.29% |
| GMHBA Limited | 5.94% | 6.43% | 5.44% | 4.94% | 4.34% | 3.31% | 3.34% |
| HBF Health Limited | 3.72% | 5.96% | 4.94% | 5.96% | 3.75% | 1.94% | 1.98% |
| Health Care Insurance Ltd | 5.34% | 6.12% | 6.90% | 6.06% | 8.90% | 5.53% | 3.75% |
| Health Insurance Fund of Australia Limited | 2.98% | 4.49% | 6.55% | 7.99% | 5.35% | 4.77% | 5.58% |
| Health Partners Limited | 3.14% | 5.76% | 7.14% | 5.10% | 3.95% | 3.18% | 2.77% |
| health.com.au Pty Ltd | 6.13% | 6.81% | 8.81% | 8.53% | 5.87% | 3.96% | 3.94% |
| Hospitals Contribution Fund of Australia Ltd | 6.89% | 6.57% | 5.42% | 3.65% | 3.39% | 3.20% | 3.39% |
| Latrobe Health Services Limited | 5.98% | 6.15% | 5.52% | 4.49% | 4.25% | 3.85% | 3.49% |
| Medibank Private Limited | 6.49% | 6.59% | 5.64% | 4.60% | 3.88% | 3.30% | 3.27% |
| Mildura District Hospital Fund Ltd | 3.65% | 6.14% | 6.74% | 5.95% | 5.68% | 3.89% | 4.68% |
| MO Health Pty Ltd | 3.90% | 4.45% | 5.63% | ||||
| National Health Benefits Australia Pty Ltd | 4.50% | 6.26% | 5.28% | 5.41% | 3.97% | 3.62% | 2.99% |
| Navy Health Ltd | 4.53% | 4.50% | 5.50% | 4.94% | 3.94% | 4.94% | 3.49% |
| NIB Health Funds Ltd | 7.99% | 6.55% | 5.55% | 4.48% | 3.93% | 3.38% | 2.90% |
| Nurses & Midwives Health Pty Ltd | 3.22% | 5.91% | 3.74% | ||||
| Peoplecare Health Limited | 5.82% | 6.08% | 4.38% | 5.09% | 4.19% | 4.90% | 3.48% |
| Phoenix Health Fund Limited | 6.52% | 6.48% | 5.72% | 5.93% | 4.19% | 3.26% | 3.10% |
| Police Health Limited | 4.81% | 4.48% | 4.81% | 4.63% | 3.72% | 3.58% | 3.14% |
| Queensland Country Health Fund Ltd | 5.85% | 4.77% | 4.91% | 5.15% | 4.39% | 3.95% | 3.56% |
| Queensland Teachers' Union Health Fund Limited | 4.50% | 6.36% | 7.15% | 7.30% | 4.40% | 3.18% | 2.66% |
| Railway & Transport Health Fund Ltd | 4.80% | 6.17% | 5.61% | 5.54% | 4.47% | 3.36% | 2.91% |
| Reserve Bank Health Society Ltd | 4.39% | 4.88% | 5.37% | 5.00% | 3.97% | 3.73% | 3.08% |
| St Luke's Medical and Hospital Benefits Association | 6.33% | 6.27% | 5.89% | 4.99% | 4.23% | 3.56% | 2.90% |
| Teachers Federation Health Ltd | 5.42% | 6.86% | 4.97% | 4.96% | 2.84% | 3.94% | 3.24% |
| Transport Health Pty Ltd | 5.90% | 4.84% | 6.49% | 4.93% | 5.16% | 3.41% | 2.59% |
| Westfund Limited | 3.25% | 7.92% | 5.94% | 4.96% | 3.43% | 1.64% | 4.32% |
| Industry Weighted Average | 6.20% | 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.
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