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Private Health Insurance Premium Increases in 2020

Anneke Van Aswegen Updated: 04 December 2020
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Types of Health Insurance

Health insurance rates are rising by an average of 2.92% on 1 April 2020. If you have private health cover, chances are you’ve received a letter from your insurer informing you of this increase. Health funds do not increase their prices by the same percentage; some will have a lower or higher than average rise in health insurance cost.

If you’re wondering whether your 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.

Premium increases postponed

Take note: Health Insurance premium increases postponed for 6 months from 1 April 2020, due to the Coronavirus outbreak. Select health funds, like HBF, have waived premium increases for 12 months.

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What is a premium in health insurance?

A health insurance premium is the money you pay, weekly, monthly or annually, to your health fund in exchange for your cover remaining active. The amount you pay generally depends on your chosen insurer, type of coverage (Hospital, Extras or Combined) and your level of cover (Basic, Bronze, Silver or Gold).

In addition to your premium, you might also be responsible for paying other health insurance costs, including hospital excess, co-payments and Lifetime Health Cover (LHC) loading.

When do health insurance premiums increase?

Private health insurance premiums rise every year on 1 April. The industry average increase for April 2020 is 2.92%. Even though the price of health insurance goes up annually, this year has been the lowest increase we’ve seen in over a decade. However, the percentage increase you can expect depends on your chosen health fund and the state you live in.

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

Compare health insurance premium increases for 2020

Health insurance company 2020 average premium increase
HBF Health Limited 1.98%
CBHS Corporate Health Pty Ltd 2.37%
Transport Health Pty Ltd 2.59%
Queensland Teachers’ Union Health Fund Limited 2.66%
Health Partners Limited 2.77%
Australian Unity Health Limited 2.79%
NIB Health Funds Ltd 2.90%
St Luke’s Medical and Hospital Benefits Association 2.90%
Railway & Transport Health Fund Ltd 2.91%
National Health Benefits Australia Pty Ltd 2.99%
Reserve Bank Health Society Ltd 3.08%
Phoenix Health Fund Limited 3.10%
Police Health Limited 3.14%
Teachers Federation Health Ltd 3.24%
BUPA HI Pty Ltd 3.26%
Medibank Private Limited 3.27%
Doctors’ Health Fund Pty Ltd 3.29%
GMHBA Limited 3.34%
Hospitals Contribution Fund of Australia Ltd 3.39%
Peoplecare Health Limited 3.48%
Defence Health Limited 3.49%
Latrobe Health Services Limited 3.49%
Navy Health Ltd 3.49%
Queensland Country Health Fund Ltd 3.56%
Nurses & Midwives Health Pty Ltd 3.74%
Health Care Insurance Ltd 3.75%
CBHS Health Fund Limited 3.91%
ACA Health Benefits Fund Limited 3.94% Pty Ltd 3.94%
Cessnock District Health Benefits Fund Limited 3.96%
CUA Health Limited 3.99%
Westfund Limited 4.32%
Mildura District Hospital Fund Ltd 4.68%
Health Insurance Fund of Australia Limited 5.58%
myOwn Health Pty Ltd 5.63%

Source: Australian Government Department of Health (December 2019)

When comparing health insurance costs, you might also want to consider the benefits offered and the policy’s annual limits. For example, one company may have a higher premium increase than another, but they provide more generous benefits or have an overall more affordable product price.

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The average increase in health insurance premiums by year

Source: Australian Government Department of Health (December 2019)

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:

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 lower health insurance premiums

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

  1. Review your cover benefits and determine if you’re paying for treatments and service you don’t need.
  2. 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.
  3. 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.
  4. 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.
  5. Avoid the April premium rise by locking in your premiums when paying annually.
  6. For Hospital policies, consider paying a higher excess or co-payment to reduce your premium.

Frequently asked questions

  • What is the average monthly premium for health insurance?

    The health insurance cost you can expect to pay generally depends on the fund you choose, the type and level of cover you select and the state you live in. The average monthly health insurance premium for a single adult living in NSW (excluding loadings and rebates) purchasing a Basic Hospital Only policy is around $96.30 to $106.10 as at 11 February 2020.
  • 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. If you’re over the age of 70 and earn an income of less than $90.000, you can expect a rebate of 33.413% (until March 2020).
  • How often do you pay health insurance premiums?

    Depending on your chosen health fund, you generally have the option of paying premiums weekly, fortnightly, monthly, quarterly, half-yearly or yearly. However, some insurers will provide you with a discount when choosing to pay premiums annually in advance.
  • 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.
  • What happens if you stop paying your health insurance premium?

    If your insurer does not receive your premium on your due date, they might request a double deduction during for next payment or suspend or cancel your coverage.
  • Can you claim health insurance premiums on taxes?

    Yes, if you have private health insurance, you can claim the Australian Government Rebate as a reduction in your health insurance premium. For April 2020, the rebate adjustment factor is 0.990. The rebate percentage you can claim back depends on your age and your annual income.
  • 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.
  • How does the state you live in affect your health insurance cost?

    The state you live in might result in you having to pay a higher or lower health insurance premium, compared to people with similar policies living somewhere else in Australia. This is generally due to the population density and the amount of competition between insurance companies.

    If you’re planning to move, you must contact your health fund and inform them of your address change.

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