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Private health insurance premium increases 2022

Megan Fraser Updated: 23 March 2022
Types of Health Insurance

If you have private health insurance, chances are you’ve received a letter from your insurer informing you of the upcoming health insurance premium increases. Although news of a price hike may seem daunting, there is some good news. At an industry average of 2.7%, this is the lowest premium increase the health insurance industry has seen in the past 21 years. It’s also a touch lower than the 2021 increase of 2.74%.

In this guide, we’ll take you through the details of this price increase and help you make the best decision for yourself and your family. If you’re wondering whether your current health insurance policy is worth the increase, you might want to shop around and compare quotes to determine if you’re still getting the best value for money.

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2022 Premium increases by insurer

Source: (March 2022)

The average increase in health insurance premiums by year

Source: (March 2022)

When do health insurance premiums increase?

Private health insurance premiums rise every year on 1 April. The industry average increase for April 2022 is 2.7%. Even though the price of health insurance goes up annually, this year has been the lowest increase we’ve seen in over two decades. However, the exact percentage increase you can expect depends on your chosen health fund and the state you live in. 

Generally, your health fund is required to notify you, in writing, of any updated rates and changes you can expect. If your increase is higher than the industry average, your fund should demonstrate how the rise is necessary to cover the benefits offered in your policy. 

Select insurer’s delaying increases in health insurance premiums

As many Australians continue to battle the financial hardships brought on by the COVID-19 pandemic, some of the leading insurers have made the decision to delay their premium increases until later on in the year. This is an effort on the insurer’s part to provide some level of relief for people who are still struggling with the after-effects of the pandemic.

Select insurers are also extending their COVID-19 relief measures to help their customers cope with the ongoing costs of health insurance. If you are in a similar situation, it may be worth contacting your insurer to learn more about the relief options available.

Some insurers who have delayed their health insurance premium increases include:

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Why are insurers delaying private health insurance premium increases?

It’s highly likely that the majority of health cover companies were able to save a significant amount of money as the pandemic continued on through 2020 and 2021. With non-urgent elective surgeries being delayed, insurers have generally had to pay out fewer claims than they normally would. This surplus of savings has allowed many insurers to provide their customers with some financial relief without it causing any major losses for the insurer.

2022 Private Health Insurance Rebates to remain unchanged

Most private health insurance holders receive an income-related rebate from the Government to ease the cost of their monthly premiums. The rebates apply to singletons and families and income scales range from $90,000 to upwards of $280,000. However, as premium increases are at a record low this year, the rebate has not been changed.

Generally, rebates become effective on the same date as the increases in private medical insurance come into effect on 1 April of each year.

Why has health insurance gotten so expensive?

While health insurers generally keep reserves to cover unexpected increases, for example, higher salaries for medical practitioners, if the expenses exceed their budget, then they have to submit a rise in health insurance cost or risk financial instability.

If premiums never increased, then these health funds would not be able to provide excellent value insurance and keep up with:

  1. Australia’s population growth,
  2. The rise in senior Australians requiring medical and surgical care,
  3. Increase in health insurance claims,
  4. Rising chronic illnesses,
  5. More complex and costly medical procedures,
  6. Growing demands for expensive innovative technologies,
  7. Increase in medical practitioner fees

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Is private health insurance still worth it?

Whether private health insurance is worth it for you or not should depend on your health, stage of life and budget. Private health insurance might be worth it for you if you want to choose your doctor, be treated as a private patient in a public or private hospital, possibly reduce waiting times for surgeries and need various out-of-hospital treatments, like physio, optical and dental.

How to get cheaper health insurance premiums

If you find you can’t afford your increased premium, there are several ways you can keep costs more affordable:

  • Review your cover benefits and determine if you’re paying for treatments and service you don’t need.
  • Contact your health fund and find out if they’re able to offer you a cheaper alternative. You can always upgrade to a higher level of coverage in future.
  • Shop around and compare policies to determine which insurer offers you the cheapest premium, while including the benefits you want. You can switch health funds at any time.
  • If you’re under the age of 30, choose a health insurance company that offers age-based discounts and save up to 10% on your premium.
  • Avoid the April premium rise by locking in your premiums when paying annually.
  • For Hospital policies, consider paying a higher excess or co-payment to reduce your premium.

Frequently Asked Questions and Answers

  • Why does private health insurance keep going up?

    Health costs are driven by increases in the delivery and treatment of new and expensive medical procedures. Advances in medical care have increased the average lifespan. Still, it is the ageing members of society who add to the pressure on the health system to deliver an ongoing service.
  • Can health insurance companies raise premiums?

    Yes, most insurer’s will raise your premiums when the health insurance premiums increase on the 1st of April. Your insurer may also increase the amount you pay for your premiums if you make changes to your policy which entitles you to more benefits. However, your insurer is required to inform you of any changes to your policy or premiums.
  • Do health insurance premiums increase with age?

    No. Your age does not affect what you’ll pay for a private health insurance policy. However, senior Australians might be able to claim a higher rebate in the form of a premium reduction.
  • Who approves the premium rises?

    A health fund’s application for a premium increase is examined the Department of Health and the Australian Prudential Regulation Authority (APRA), after which it is carefully considered by Minister of Health, who then approves and rejects the premium changes.
  • Does claiming on health insurance increase the premium?

    No. When you claim benefits, your annual limit (the benefit amount you can claim each year) will reduce by the benefit amount your insurer pays. This limit differs depending on the level of cover you choose and the health insurer you’re with and generally restarts yearly.
  • Is the 2022 health premium increase on par with inflation?

    No. Core inflation, which excludes the cost of food and energy, is projected at about 2% for 2022. Health insurance premiums will increase by an average of 2.7%. The fact that this is higher than the cost of inflation, yet it represents the smallest increase in health insurance premiums in two decades, indicates just how expensive a commodity private health insurance has become.

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