Here’s something I didn’t expect. Despite a cost-of-living crunch, more Australians are signing up for private health insurance. It turns out that 20-somethings are behind the uptick as they hunt for affordable dental, mental health and maternity care.
Even so, fewer than half (45 per cent) of us have hospital cover, and less than 55 per cent have general or ‘extras’ insurance, which pays for non-hospital services like dental, optical and physio. This low level of take-up isn’t surprising. Private health insurance isn’t cheap.
According to Canstar, a single person aged under 36 will pay an average of about $271 monthly for hospital and extras health cover. That jumps to around $354 for seniors aged 60-plus. Long story short, private health cover can set you back over $3,000 annually.
Australians with private health insurance are set to see their premiums jump by an average of 3.73 per cent from April 2025 following lengthy negotiations between the government and insurers. The increase, which is the highest in seven years, comes amid concerns over cost-of-living pressures and is expected, is shaping up to be a hot topic in the upcoming federal election.
Do you really need health cover?
Families managing tight budgets can be tempted to bail out of cover. It could certainly put cash back in your pocket. The drawback is the potential for lengthy wait times especially for elective surgery, in the public system.
An alternative is to take a short-term break from health cover. The catch is that you’ll likely need to re-serve waiting periods of up to 12 months if you rejoin a health fund at a later date.
Go without cover for more than three years, and you could be slugged with 2 per cent loadings for each year you weren’t insured. Fortunately, there can be ways to save on health cover that don’t involve giving up insurance altogether. Here are five options worth a look:
1. Have the right level of cover
Not so long ago, the standard advice with health insurance was “Don’t pay for services you don’t use.” However, since 2019, hospital cover has been standardised across four tiers: Basic, Bronze, Silver and Gold. Each tier includes pretty much the same clinical services no matter which health fund you choose.
This makes it easy to compare between providers. The downside is a limited scope to drop services not relevant to your needs. Gold cover, for instance, includes pregnancy care as well as hip and knee replacements.
What you can do is drop down to a lower level of cover. “Plus” policies, such as Bronze Plus or Silver Plus, can be useful here. These meet the minimum requirements of a given tier, while including additional coverage. It can be a way to gain access to services you need without wearing the full cost of a higher tier.
2. Consider if you really need extras cover
Figures from health fund regulator APRA show that fund members paid around $7,303 million for extras and ambulance cover in 2022/23 yet they only received $5,957 million back. This suggests plenty of people are paying for extras insurance but not using it.
So, think about what you need. If you’ve given up tennis, you may not need a high level of cover for, say, physio unless you’ve taken up pickleball instead.
3. Increase your excess
As with most types of insurance, increasing the excess you’re willing to pay at claim time can lower premiums. The maximum excess a single can be asked to pay is $750, or $1,500 for families and couples.
As with so much of private health cover, the devil can lie in the details. Switching to cover with a higher excess can be considered an upgrade, and that may mean having to serve a new waiting period. Check this with your fund.
Importantly, be sure you can afford to pay a higher excess if you need to make a claim.
4. Give your health cover an annual health check
Health funds increase their premiums each year on April 1. It makes February/March a good time to give your policy an annual health check. A handy tool for the job is the privatehealth.gov.au website. It lets you compare policies across all the health funds operating in Australia.
As a guide to how broadly premiums can differ, privatehealth.gov.au shows that Gold hospital cover for a single aged 31-64 can cost as much as $300 per month with AHM or $170 with Mildura Health Fund. The good news is that if you switch to a new fund with the same level of cover there’s usually no need to re-serve any waiting periods.
5. Take advantage of perks and freebies
Discounts on health cover are capped by law at 12 per cent. This is why we don’t see the big sign-on discounts of 15-20 per cent that are often available with car or home insurance.
Even so, by shopping around you’ll find plenty of funds offering new members free cover for the first 6-8 weeks (usually equal to around 12 per cent of annual premiums).
Other perks available to new members can include gift cards worth up to $400, waivers of wait times especially on extras policies, and on an ongoing basis, several of the bigger providers offer discounted gym membership plus savings on other types of insurance.
Freebies and other sweeteners are always attractive. Bear in mind though, that the main game is getting the cover you need at a competitive price. One final point. Single parents need to be especially careful when selecting health cover. Consumer group CHOICE says solo parents pay a high cost, on average an extra 65 per cent, to add kids to their health cover. This is definitely an issue to raise with any health fund you’re thinking of joining.
INFORMATION IS CORRECT AT THE TIME OF WRITING. any advice provided is general in nature and does not take your personal circumstances into consideration. readers should seek their own financial advice.
This feature originally appeared in the February 2025 issue of The Australian Women’s Weekly. Pick up the latest issue of the magazine at your local newsagents or subscribe so you never miss one!
