2018 Health Insurance Premiums On the Rise

Published: February 8, 2018

Although many people might regard Australia’s healthcare system as one of the best in the world, residents have come to view it as an unattainable luxury.

Health insurance premiums are rising because of an ageing population, medical inflation and an increase of people frequently seeking treatment. Many residents purchase private health insurance for the treatments and services not covered by Medicare. However, with premiums having increased by an average of 5.6% every year since 2010, Australians are wondering if private health insurance is worth it.

How health insurance premiums increase by year


Source: health.gov.au

Are my health insurance premiums going up in 2018?

Health insurance premiums will rise by an average of 3.95% from the 1st of April 2018. Your health insurer and particular policy type might be above or below the industry average. Your insurer will inform you in writing of the exact premium rise you can expect before April 1.

Of the significant funds available to all Australians, HCF's premium rise was the lowest with 3.39%. Medibank will raise their premiums by an average of 3.88%, while nib goes up by 3.93% and Bupa by an average of 3.99%.

As of April, a single person can expect to pay an average of $1.40 more a week, while families will spend an average of around $2.75 extra week.

If you are questioning the value of your policy and whether you’re paying more than you should be then it might be time to shop around and make sure you’re getting the best deal for your current budget and requirements.

We aim to provide you with clarity on health insurance increases and how you'll be affected. In this article, you'll find out what you can do to lower your premiums and keep your policy affordable.

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What is a health insurance premium?

A private health insurance premium is defined as the payment you, as the policyholder, make to the health insurance company in exchange for the security of knowing that some or all the expenses incurred for medical treatments and services will be paid for by the health fund.

What is the average cost of private health insurance premiums?

The average price of private health insurance to an individual will depend on the fund you choose, the type of cover you select (Hospital only, Extras only or Combined), the state you live in and how many people you want to receive protection on your policy.

When comparing the average premiums and their respective increases, you should consider the benefits offered and the level of benefits paid. For example, one company may have a higher premium increase than another, but they may also provide more generous benefits or have a more affordable product price.

What causes health insurance premiums to rise?

While health insurers generally keep reserves to cover unexpected increases in salaries and equipment, if such increases persist then they have no choice but to submit a rise in health insurance premiums or risk financial instability.

10 Reasons why health insurance premiums are rising

  1. Increase in hospital, medical and health-related costs.
  2. Cost of pharmaceuticals are rising.
  3. Rise in chronic illnesses that are linked to inactivity and obesity.
  4. Increase in amount and frequency of claims.
  5. Australia’s growing ageing population which needs more medical and surgical care.
  6. Many younger Australians abandoning the private healthcare sector.
  7. More complex and costly medical procedures.
  8. The need for innovative technologies and the increased cost of these medical equipment.
  9. Increase in doctor’s charges, nurses’ wages and hospital staff salaries.
  10. Health insurer might have initially under-priced their policies.

Most Australians have private health insurance because they want:

  • More control over their health care, i.e. choice of services and doctors,
  • To avoid financial penalties and
  • To access allied health services, which are not covered by Medicare, such as visits to the dentist and the cost of glasses.

However, the share of Australians who can afford to pay their health insurance premiums is now the lowest it has been since 2012.

According to APRA’s 2017 private health insurance quarterly statistics, as at 31 March 2017, 46.5% of Australians have private health insurance Hospital cover, and 55.5% have Extras cover (ancillary services like dental and optical).

Private health funds are aware that consumers’ primary concern when purchasing cover is the cost of their premiums. Nevertheless, if premiums never increase then these health funds would not be able to provide excellent value insurance and keep up with the populations growing demands for high-quality healthcare.

Who approves the premium rises?

Under section 66-10 of the Private Health Insurance Act 2007, private health funds must submit details of proposed premium increases to the Commonwealth Minister of Health for approval.

Documentation and proposed increases are then assessed by the Department of Health and the Australian Prudential Regulation Authority (APRA).  It is the Minister that must approve any proposed increases, which will generally be denied if it is contrary to the public interest.

The average premium increase for 2018 is the lowest in 17 years, possibly due to the health reforms introduced in October 2017:

Reduced pricing for prosthesis, including hip and knee prosthesis.

Easier access to mental health care.

Younger people might get cheaper premiums.

Standardising clinical terminology to make it easier for consumers to compare health funds.

Ability to increase your excess to reduce premiums.

More clarity on what's covered by funds by improving by their classification system.

Upgrade privatehealth.gov.au to provide precise information on the different health funds available.

Introducing a ‘rural health product’ to improve private health insurance for people living in rural and remote areas.

How the Top 10 health insurance companies compare

Not all funds increase by the same percentage. Make sure your insurer is providing you with exceptional value by comparing premium increases.

Average increases for the top 10 health funds according to market share

Source: health.gov.au (February 2017)
Insurer 2011 2012 2013 2014 2015 2016 2017 2018
5.35% 4.70% 6.20% 6.49% 6.59% 5.64% 4.60% 3.88%
5.14% 4.91% 5.80% 6.35% 5.59% 5.69% 4.90% 3.99%
6.41% 5.94% 5.74% 6.89% 6.57% 5.42% 3.65% 3.39%
6.19% 5.50% 6.50% 7.99% 6.55% 5.55% 4.48% 3.93%
5.85% 5.85% 3.75% 3.72% 5.96% 4.94% 5.96% 3.75%
4.91% 4.55% 5.23% 6.62% 6.26% 5.05% 4.46% 3.89%
4.89% 4.68% 4.10% 5.42% 6.86% 4.97% 4.96% 2.84%
5.68% 5.17% 5.23% 5.94% 6.43% 5.44% 4.94% 4.34%
3.98% 3.93% 4.02% 5.34% 5.62% 5.48% 5.51% 5.97%
7.12% 5.31% 4.59% 5.61% 6.58% 5.92% 3.29% 2.73%

If your health insurance price increases, your health fund is required to notify you in writing with an update on the rates and changes you can expect. If your inflation is higher than the average 3.95%, then your fund should demonstrate how the rise is necessary to cover the benefits offered in your policy.

Carefully assess the value offered by the specific product you have, before switching to an insurer offering lower premium increases.

Compare Health Insurance Companies

Is private health insurance worth it?

Private health insurance has become more complex, leaving many Australians to lower and even cancel their health insurance coverage.

It’s true that private health insurance provides you peace of mind knowing you and your family’s health will be taken care of. However, for many people, Medicare is sufficient enough.

With levies, surcharges and rebates it is difficult to determine the actual cost and value of your private health insurance policy. You need to consider your circumstances, requirements and whether you'll be able to afford your premiums in your old age when you actually need health insurance most.

Whether private health insurance is worth it for you or not is a personal decision only you can make and should be based on your health, stage of life and budget.

How to lower health insurance premiums

Unexpected illnesses and accidents can happen, no matter how healthy you are. So, if you want to keep your health insurance, but avoid excessive increases, then there are still a number things you can do:

Review your current hospital and extras cover and check what benefits you no longer need and whether your level of cover is still relevant to your current lifestyle. However, if you want to avoid the Medicare Levy Surcharge and maintain your Lifetime Health Cover status, you need to keep your Hospital cover.

Benefit from an ultra-competitive industry. Health funds have to continually improve their prices and offerings to retain customers and gain new ones. With a bit of research, you can find all sorts of discounts, bonus deals and refer friend incentives.

Lock in your premiums when you pay a year in advance and skip the April premium increases altogether..

Consider paying a higher excess or co-payment to reduce your premium.

Ask your insurer whether they offer discounts when paying direct debit.

You can potentially save hundreds when employed in a relevant industry and applying to an industry health fund, for example, Teachers Health and Doctors Health Fund.

Compare policies and shop around for a fund that provides you with an affordable level of cover suited to your particular needs.

It is essential that you remember not all health funds are the same. If you already have health insurance then ask yourself whether you are getting the cover you want or are you possibly paying too much for the protection you’re receiving.

Tax time and the impact on your health insurance premiums

If you are older than 31, you will be taxed if you do not have private health insurance. A 2% Lifetime Health Cover loading will apply, which will be added every year from your 31st birthday.

However, if you do have private health insurance, you can claim your private health insurance rebate as a premium reduction, which will reduce the cost of your premiums. This rebate will be based on your age and income.

How to find the best value health insurance policy

When reviewing different health funds, there are some critical points you need to consider:

How long have they been in operation for?

What's their paid claim rate like?

How many testimonials from satisfied customer can you find?

Look for a company with shorter waiting periods.

Make sure the list of pharmaceuticals and treatments you need is covered.

Ask your doctors which health insurers cover their services.

Consider your age and number of dependants.

Does the insurer offer access gap cover?

Review the list of hospitals, doctors and specialists tied to a policy.

Make sure your health fund will cover you when you travel overseas.

Always read your Standard Information Statement thoroughly, so you are clear on the benefits, exclusions and restrictions applied.

How can I prepare for premium increases in 2018?

Start reviewing your health cover today. Do your homework, shop around and compare policies from some of Australia’s top health insurance companies.

  • Step 1

    Determine the type of cover you want (Hospital, Extras or Combined)

  • Step 2

    Fill in the quote form above

  • Step 3

    A health insurance specialist will give you a call to tailor your cover

  • Step 4

    You'll receive a detailed quote comparing a variety of policies from Australia's top health insurance companies

Start Preparing Today

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