How to Find Cheap Health Insurance in Australia

Published: February 7, 2019

Whether you’re looking to downgrade your policy to a more affordable option or want cheap private health insurance only for tax reasons, you might want to consider the pros and cons of cheap health cover and the type of protection that will meet your unique requirements before committing to a policy.

Cheap health insurance in Australia might help you avoid paying the Medicare Levy Surcharge (MLS) and Lifetime Health Cover (LHC) loading, however, take a step back and decide to choose a cheap policy smartly by first gathering quotes and comparing features and rates.

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In this article, we'll help you find the best health insurance policy for your requirements, at a competitive price by:

  • Listing the cheapest health insurance policies currently available in Australia.
  • Reviewing the pros and cons of cheap private health insurance.
  • Providing you with the steps to reducing your premium.
  • Answering questions from people with similar cost concerns.

What is the cheapest health cover you can get?

In Australia, the most affordable health insurance plans are generally the Basic Extras only cover options, which usually only pays for essential general treatments received outside of the hospital. For example, physio, general dental and optical. However, Extras only will not exempt you for paying the Medicare Levy Surcharge (MLS) or Lifetime Health Cover (LHC) loading.

The cheapest private health insurance that will relieve you from paying the MLS fee and LHC loading is a Hospital policy (on its own or combined with Extras) that has an excess of $500 or less. This might be a suitable policy for you if you’re single, healthy and at an age where you don’t require surgery any time soon.

What does a cheap hospital policy cover?

Generally, the cheapest Hospital cover available from private health insurers is categorized under Basic Hospital plans. Such an affordable Hospital policy is usually only required to include the most basic of in-hospital treatments and services, such as:

  • Rehabilitation
  • Hospital psychiatric services
  • Palliative care

Other in-hospital services, like the removal of tonsils, adenoids and grommets, gynecological services and joint reconstruction, are only available as Restricted Cover on a Basic policy, meaning the insurer has the option of offering these services on a restricted or unrestricted basis. That is why it is so important to shop around and compare affordable health insurance policies.

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The cheapest health insurance in Australia

Health fund and Policy name
*$500 Excess
Monthly premium
*Before April 2019
CBHS
Entry Hospital $500 excess
$92.08
AHM
White Starter
$92.10
Frank
Basic Hospital
$93.26
GMHBA
Bronze Hospital Level 2
$93.90
HCF
Accident Hospital Only Cover $500
$96.00
TAL
Basic Hospital $500 Excess
$100.70
Nib
Basic Hospital $500 Excess
$100.70
Medibank
Accident Cover
$101.70
CUA
Accident Only Hospital
$102.24
myOwn
Basic Hospital 500
$105.01
Qantas
Basic Hospital $500 Excess
$105.04
Australian Unity
Basic Hospital
$105.10
HBF
Basic Hospital Plus $500
$109.40
CBHS
Basic Hospital Plus $500
$109.81
BUPA
Basic Hospital $500 Excess
$120.20
Source: Privatehealth.gov.au (5 February 2019)

The above Hospital only premiums are based on a single person, with Medicare, living in Queensland without any prior private health insurance and excludes the MLS fee an LHC loading.

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How to choose among the cheap health insurance plans

The best and cheapest health insurance policy for you depends on your unique requirements. You might want to start by identifying your needs first, then gather cheap health insurance quotes from various Australian health funds and compare prices, including the policy benefits and features. To make sure you choose a policy that suits your requirements you might want to speak with a health insurance specialist who can assist you in this critical decision-making process.

Should you get cheap private health insurance?

When purchasing the cheapest Hospital cover with a co-payment of $500 or less for singles and $1000 or less for couples, your premiums might be more affordable. However, the out-of-pocket costs you could be stuck with might cost you more in the long run. Consider the pros and cons of purchasing a cheap health policy.

Advantages of buying affordable Hospital cover

  • You’ll be exempt from paying the Medicare Levy Surcharge (MLS) fee.
  • If you’re under the age of 30 and purchasing hospital insurance for the first time, you won’t have to pay the Lifetime Health Cover (LHC) loading.

Disadvantages of purchasing the cheapest Hospital cover

  • Buying cheap Hospital coverage purely for tax reasons does not consider your requirements.
  • The health fund providing the policy might only offer the minimum in-hospital treatments. Carefully review their Standard Information Statement (SIS).
  • If in future you were to get sick or injured and Medicare didn't cover all your expenses, you might be severely out of pocket.

Is getting health insurance to avoid paying the MLS fee worth it?

Whether or not it's worth buying cheap private health insurance merely to avoid paying the extra 1% to 1.5% in tax, known as the Medicare Levy Surcharge (MLS), depends on your health, age, family structure and budget. Assess what health services you might need in the immediate future and the next 5 years.

If you have enough savings set aside to cover out-of-pocket costs associated with services and treatments not covered by Medicare, then a cheap policy to avoid the MLS might suit you.

10 Steps to finding affordable health insurance in Australia

  1. Shop around: Compare policies from a wide range of health funds, there are about 38 companies Australia-wide.
  2. Don’t stick with one company: Did you know you can purchase a Hospital plan from one health fund and an Extras plan from another. Also, you can switch health insurance companies whenever you want and won’t have to re-serve waiting periods when switching to a plan with the same or similar coverage.
  3. Check your industry: When working in a relevant trade, such as education, medical or police service, you might be eligible for a restricted health fund that is only open to people in your occupation. Such health funds might be cheaper.
  4. Ditch the bells and whistles. Look for a policy that only covers the treatments and services you want. If you’re nearing retirement, chances are you won’t want a policy providing pregnancy cover.
  5. Pay an Excess: Deciding to pay a higher amount upfront when being admitted to hospital will generally result in a lower premium.
  6. Lock-in your premium: When you are paying annually in advance, before the 1st of April, you can lock in your premiums at its current price.
  7. Review limits and sub-limits: Save money on general treatments by first reviewing how much you can claim on a benefit before you visit a medical practitioner.
  8. Choose a network provider: Limit potential out-of-pocket costs by visiting your health fund’s network of medical practitioners and hospitals.
  9. Remember your rebate: The Australian government refunds you a percentage of your health insurance premiums, up to a certain amount, depending on your taxable income, age and family structure
  10. Look for promotions and discounts: Because the health insurance industry is so competitive, health funds tend to offer special deals and savings, especially before the 1st of April when premiums rise. So, do your research.

Frequently asked questions and answers

Why is health insurance so expensive?

Private health insurance in Australia goes up on the 1st of April every year because of the need for more expensive medical technology, the rising cost of health care practitioners and the growing demand for health funds to frequently pay claims due to Australians living longer and growing older.

Is Australian private health insurance really worth the money?

It all depends on your specific requirements. If you live in Australia but don’t have Medicare, then private health insurance is essential. However, if you’re a citizen or come from a country with a Reciprocal Health Care Agreement, then deciding whether a health insurance policy is worth it should be determined by your health, stage of life and what you can afford.

What is the most affordable full coverage health insurance policy available?

A single person living in Queensland wanting a combined Gold Hospital policy with a $500 Excess and Comprehensive Extras policy can generally expect to pay between $287 and $414 per month, depending on the health fund you choose and whether you have an LHC loading.

What's good, cheap health insurance for a college student?

Presumably, an average college student would still be young, healthy and single. As such, you might want to review the Singles health insurance options offered by health funds, which are generally tailored to suit Australians with a similar profile than yours.

What cheap health insurance is good for babies?

With a family health insurance plan, you can generally add children health insurance at no extra cost. However, if you have a single or couples' policy and want to get pregnant, be sure to purchase a suitable, affordable private health insurance policy 12 months earlier, as this is the typical waiting period you can expect.

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