How Much Does Private Health Insurance Cost in Australia

Published: November 20, 2018

You’ve just turned 30 and want to avoid the Lifetime Health Cover (LHC) loading or are a high-income earner and want to avoid the Medicare Levy Surcharge (MLS), or perhaps you've decided you and your family need more comprehensive coverage than merely relying on Medicare.

As you start comparing policies, the price generally becomes a big part of the decision-making process. In this article, we aim to clarify how much you can expect to pay for the type of policy you're considering.

The cost of health insurance largely depends on where in Australia you live, the health fund you choose and the level of protection you want; Hospital only, Extras only or a Combination of both. Another factor influencing health insurance prices is whether you prefer a lower premium and higher excess, or would you rather pay a higher premium and have a lower co-payment.

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The average cost of private health insurance in Australia

First, you need to decide what’s important; do you want a policy that covers your preferred doctor or specialist, are you planning to get pregnant and want protection for a broader list of birth-related benefits, do you have kids that need braces or perhaps your approaching the age where you need to consider joint replacement surgery and hearing aids.

Your specific requirements and family dynamic should provide you with an indication of the level and type of coverage you need.

The average cost of a Basic Hospital only policy with a $500 excess for a single adult living in NSW is around $101.56 per month, while a Basic Extras only plan is approximately $29.81 per month. Should you choose to combine Basic Hospital and Extras cover into one policy, you can expect a monthly premium of about $112.73 (privatehealth.gov.au, 2018).

Health insurance policies vary from insurer to insurer and are very dependent on the level of coverage you want and where in Australia you live. Luckily, it’s a very competitive market, allowing you to shop around and compare policies from major health funds so you can find a plan best suited to your requirements and budget.

Health insurance monthly cost for basic Hospital & Extras cover

Private health fund Policy name Monthly premium
AHMAHM Back + White Starter $108.45
NibNIB Kickstarter $111.45
Australian UnityAustralian Unity Care ‘n Repair $112.25
GMHBAGMHBA Frank Starter Bundle $113.18
BUPABupa Simple Starter - Single $125.25
CBHSHealth.com.au Entry Hospital with Basic Extras $127.04
Defence HealthmyOwn Accident Package 50% on Extras $134.29
MedibankMedibank For Everyday Essentials $136.65
Teachers Health FundPeopleCare Basic Hospital and Basic Extras $145.05
Source: Privatehealth.gov.au

The above premiums were calculated on a Basic/Bronze Combined Hospital ($500 excess) and Extras plan for an individual living in Queensland as at November 2018.

Factors affecting your health insurance cost

The cost of health insurance in Australia increases each year on the 1st of April. This is predominantly due to how expensive medical devices, treatments and specialist services have become and the increasing number of claims that need to be paid, especially since people now tend to live longer.

When you’re considering buying a policy, the price you can expect to pay will generally be influenced by:

Your location

Heath insurance premiums vary according to where you live because of the level of competition experienced between the available funds, the state and local rules, and the cost of living in your area.

Also, if you live somewhere that requires you to pay for ambulance coverage, you might need a policy that provides ambulance services, and this could increase your expected price.

Policy type

Generally, Hospital only costs more than Extras only cover, however, if you combine the two options into one policy from the same insurer, you might be able to save.

Level of coverage

The number of treatments and services covered on your plan will affect its cost:

  • Gold/top: Generally, have the highest premiums, but the most comprehensive level of coverage.
  • Silver/mid: Typically, cheaper than the Gold option, but more expensive than the Bronze. However, usually has higher benefit limits and covers more services than Basic plans.
  • Bronze/basic: Usually has the lowest monthly premiums and higher out-of-pocket costs.

If you have a Gold plan because your health insurance was used mainly for the kids, but they have since left the house and are now financially independent, then it might make sense to downgrade your policy to a more affordable option.

Request quotes to compare private health insurance costs

Co-payments

The higher the amount of money you agree to pay for each day you’re in the hospital, the lower your monthly health insurance cost. This is also referred to as your hospital excess.

For extras cover, you might sometimes be asked to pay a co-payment for certain services before a benefit is paid.

Healthcare rebate

When calculating the cost of your health insurance policy, also take into account the Rebate you’ll receive from the Australian Government to help you reduce your premium.

The amount you can expect to pay for private health insurance is also determined on whether you bought coverage before or after your 31st birthday. Ad 2% Lifetime Health Cover loading to your policy for each year you’re older than 30 and did not have private health insurance. This loading will last for 10 years.

Private health insurance is expensive, but before you decide you'll go without, consider your and your family's risks. For example, do you have a family history of developing a disease that might require extensive medical services, do you rely on chronic medications, are you planning to start a family or have young children.

How to find affordable health insurance

The best way to find cheaper health insurance in Australia is to:

  1. Do your research and be confident in the benefits you want your health plan to cover. If you only wish to avoid the LHC loading and MLS, then a basic Hospital plan might suffice.
  2. Shop around and compare costs from some of the major health funds available in your state.
  3. Consider higher co-payments to reduce your monthly premiums. However, make sure you have that amount of money saved and ready when needed.
  4. Consider combining plans into one policy purchased from the same insurer; this may result in a discount.
  5. Pay your annual premium as a lump sum before the 1ste of April to avoid the yearly price increase.
  6. Check to see if you can join one of the restricted health funds suited to your industry, for example, the Teachers Health and Defence Health Limited.
  7. Pick the plan most suited to your requirements. If you're young, healthy and single go for a more basic package.

For many Australians, the peace of mind that private coverage brings is worth the cost. For others, it's a waste of money, and they directly save the money they would have spent on coverage in a designated bank account, using this money only for health expenses.

Will private health insurance save you money in the long run?

Consider how much money you’ll have to put aside in your bank account each month to pay for future medical expenses not covered by Medicare. Then, add the Medicare Levy Surcharge you’ll have to pay if you earn more than $90,000 annually as a single adult or more than $180,000 as a family. If these costs are lower than what you’ll pay in premiums per year, then you might not benefit from health insurance in the long run.

Carefully consider your stage of life and medical history before making a decision. If you’re unsure, call 1300 786 328 and speak to a specialist.

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