Cost of health insurance: Are you paying too much?
- 50,353 private health insurance policies from 35 health funds analysed by finder.com.au
- More expensive policy doesn’t necessarily mean better value
- Australians could potentially save thousands of dollars on health insurance
UPDATE: See 2018 Private Health Insurance Costs
30 June, 2016, Sydney, Australia – A new investigation into every private health insurance policy in Australia by one of Australia’s biggest comparison websites finder.com.au1, reveals higher costing policies are not necessarily better value.
finder.com.au compared all 50,353 variations of private health insurance policies from 35 health funds available in Australia.
The study found that some of the most expensive health insurance policies offer less cover for certain services. For instance, the dearest policy in Australia costs up to $1,344.35 by HBF Health for combined (hospital and extras) for families, and covers major dental up to $1,000 per person annually. This is compared to other policies that are cheaper and offer higher coverage for major dental, such as Australian Unity’s policy for $850.60 and up to $1,500 per person, and NIB for $856.74 with up to $1,200 per person.
Some policies that are among the most expensive charge an excess as high as $500 per person by Westfund Limited (up to $1000 per policy per year) for a $566.80 policy and NIB with a premium worth $887.54. This is compared to cheaper policies that charge as little as $50 excess, such as Health Care Insurance Limited for a worth $634.25, and Grand United Corporate Health, which has a policy for $507.00 and $100 excess.
Michelle Hutchison, Money Expert at comparison website finder.com.au/health-insurance, says Australians need to compare the fine print and value for money when it comes to health insurance policies.
“The are over 50,000 variations of health insurance policies, which shows just how many differences there are between costs for different levels and types of cover. However the onus is on Australians to check what is and isn’t included in these policies, as well as how much value is received for each service, because there are major differences in cover details.
“While more expensive policies generally offer better value such as no excess and cover more services, it’s not always the case. And don’t think that the most expensive policies will cover you for everything as they could have some exclusions, like cosmetic surgery and assisted reproductive services.
“There are also significant differences between premiums across different states. This is because hospital and medical treatments are generally more expensive in some states like New South Wales and Victoria, so health funds compensate the extra cost by charging customers who live in those states more.
“Another difference between state health services is that some states offer free ambulance services. For instance, in the Northern Territory, individuals can choose to pay an annual subscription to the ambulance service, such as $100 per year for St John Ambulance, and receive unlimited free emergency ambulance transport.
“With the end of financial year just days away, private health funds are doing their best to entice new customers with special offers including gift cards and waived waiting periods. But, it’s never been more important for Australians to review their current and potential health insurance policies before deciding which one is going to provide the best value.”
The biggest difference between premiums was for top combined policies. Premiums for this type of policy range from $69.80 up to $1,344.35 – a difference of $1,274.55 per month and $15,294.60 per year.
Difference between lowest and highest monthly premiums across health insurance policies
|Cover level||Combined||General Treatment||Hospital|
(Source: finder.com.au/health-insurance, Private Health Insurance Ombudsman)
Family policies (two adults and dependent(s)) with combined cover hold the biggest range in premium costs, starting from $139.60 per month by Bupa Australia and ranging up to $1,344.45 by HBF Health – a difference of $1,204.75 per month or $14,457.00 per year.
For basic combined cover for families, policies range from $140.50 per month by Teachers Health Fund, and up to $769.82 per month from Health.com.au – a difference of $629.32 per month or $7551.84 annually. For top combined cover for families, premiums start from $139.60 per month by Bupa Australia, to $1344.35 per month by HBF Health – a difference of $1,204.75 per month or $14,457 per year
Hospital cover for families starts from $57.15 (by HBF Health) and ranges up to $634.90 (by Doctors’ Health Fund) per month – a difference of $577.75 per month or $6,933 per year.
For basic hospital cover for families, premiums start from $57.15 (by HBF Health) to $540.80 (by Westfund Limited) per month – a difference of $483.65 per month. For top hospital cover for families, it costs from $96.70 by Bupa Australia, to $634.90 by Doctors’ Health Fund per month – a difference of $538.20 per month or $6,458.40 annually.
Single adult cover
Combined cover for singles starts from $43.55 by ahm Health Insurance and ranges up to $672.05 by HBF Health Fund – a difference of $628.50 per month or $7,542 per year.
For basic combined cover for singles, premiums range from $43.55 (ahm Health Insurance) to $384.91 (Health.com.au) per month – a difference of $341.36 per month. For top combined cover for singles, the monthly difference in premiums is $602.25 – from $69.80 by Bupa Australia and up to $672.05 HBF Health.
Premiums for hospital policies for single adults range from $28.55 per month for the cheapest basic cover (by HBF Health Fund), and up to $317.45 for the dearest top cover (by Doctors’ Health Fund) – a difference of $288.90 per month or $3,466.80 per year.
The difference between the cheapest and dearest premiums for basic hospital cover is $241.85 per month ($28.55 by HBF Health, to $270.40 by Westfund Ltd). There is a difference of $269.10 per month between the cheapest top hospital cover for singles, $48.35 by Bupa Australia, to $317.45 by Doctors’ Health Fund.
By health fund
The health funds that offer the dearest premiums in the country include HBF Health, followed by Medibank and Bupa Australia. HCF holds the cheapest premium of $8 per month for general treatment only (available in Northern Territory), then Westfund Limited and Mildura Health Fund.
By average price across all policies, Mildura Health Fund came on top as the cheapest health fund ($166.46 per month on average). The most expensive health fund by average price across all of its policies was Doctors’ Health Fund, with an average cost of $447.34 per month.
The biggest health fund by market share, Medibank Private, was the 14th cheapest out of the 35 health funds compared, with an average monthly premium of $286.22. The second largest health fund by market share, Bupa, came in at 13th place, with an average monthly premium price of $285.27. The 3rd largest health fund, HCF, was 20th on the list, with an average price across all of its policies at $302.25 per month.
State by State
Victorians are likely to pay the most for private health insurance for combined cover (hospital and extras), costing an average of $435.63 per month. Residents in NSW and ACT will pay the most for general (both averaging $147.56 per month). Victorians also pay more for hospital cover on average, paying $330.10 per month.
The Northern Territory is the cheapest state for each type of cover, with an average cost of $353.41 for combined cover, $135.55 for general and $248.28 for hospital per month.
Average cost of private health insurance by type per state
(Source: finder.com.au/health-insurance, Private Health Insurance Ombudsman)
“This study shows just how complex and multidimensional health insurance policies are. Not only do they have different combinations of coverage types and levels, but they also differ between health funds, making it even harder for Australians to compare policies side by side.
“If you’re looking to take out private health insurance for the first time or if you’re reviewing your policy, it’s important to look at what your policy covers you for, what the differences are between policies and what you actually need. For instance, there would be many Australians who take out policies with extras cover and not realise what extras they could be claiming or what they don’t need.
“Also, if you earn over $90,000, or $180,000 for couples, and are looking to take out private health insurance to avoid the Medicare Levy Surcharge, make sure you check if the policy allows you to be exempt from this tax.”
- finder.com.au/health-insurance compared all 50,353 variations of policies from 35 health funds available in Australia, obtained from the Federal Government’s Private Health Insurance Ombudsman website.
- Health funds price their policies for each state, and costs also vary by number of adults and dependents on the policy, policy type – general treatment, hospital and combined, coverage for dependents only, one adult, one adult and any dependents, one adult and dependent(s), two adults, two adults and any dependents, two adults and dependent(s), policy level – basic, comprehensive, medium, public, top, and ambulance cover – basic, comprehensive and medium.
- Some health funds don’t offer all levels and types of cover.
1Based on Experian Hitwise, since 2013
For further information
The information in this release is accurate as of the date published, but rates, fees and other product features may have changed. Please see updated product information on finder.com.au's review pages for the current correct values.
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