Are you a young Australian who wants to take out private hospital cover, but aren’t sure you can afford it?
You’ll be pleased to know that health insurance can be cheaper for young people in Australia than you might think. With the age-based discount, you could save up to 10% on your hospital insurance premiums if you take out cover between 18 and 25 years of age.
In the past, the Australian Government didn’t allow health funds to offer discounts based on age. However, to encourage younger people to take out cover, the government introduced the age-based discount in 2019, which allows funds to charge a reduced premium on their hospital products by a certain percentage based on a person’s age when they first take out cover.
The age-based discount could reduce the premiums for eligible hospital policies held by Australians aged 18 to 29.
Check out which discounts are available and what these savings could mean for you:
| Age | Discount | Discount on a $1,500 (per year) hospital policy |
| 18-25 | 10% | $150 |
| 26 | 8% | $120 |
| 27 | 6% | $90 |
| 28 | 4% | $60 |
| 29 | 2% | $30 |
| 30 | 0% | $0 |
| Source: Private Health Insurance Ombudsman – Age-based Discount, 2022 | ||
So, if you’re 25 years old and paying roughly $1,500 a year for hospital cover, you could save up to $150 each year – a percentage discount that you’d enjoy every year until you turn 41, provided that you hold a policy (or switch to a policy) that allows you to maintain your age based discount. At this age, it’ll start to decrease 2% per year until it’s no longer available to you.
You just need to hold continuous cover on an eligible product, meaning you can’t have any gaps in your cover, or you might lose it.
The purpose of the discount is to help make health insurance more affordable for young adults and encourage them to take out cover earlier in their lives.
It is optional for health funds to offer products that include an age-based discount. This means that if you have hospital cover, there’s a chance your current insurer might not offer the age-based discount for your policy.
The age-based discount only applies to hospital cover. Policies that only cover care and treatment outside of a hospital, known as extras cover, will not attract the age-based discount.
You also won’t be able to receive the discount if you’re listed under your parents’ health insurance policy. You’ll need to have your own policy – or a couples or family policy with your partner – to be eligible.
There’s also a government rebate you can claim to reduce your premiums. Provided you hold cover (either hospital or extras, in this case) and your annual taxable income is less than $144,001 as a single or $288,001 as a couple/family, you can claim this rebate through your tax return or enjoy it as discounted premiums.
From the age of 41, your discount rate will begin to decline by 2% every year until it reaches zero and is no longer applicable.
For example: Say you took out a hospital policy at the age of 27 and received a 6% health insurance discount. This discount will drop to 4% when you turn 41 years old, a 2% discount at 42 and will no longer apply once you turn 43.
If your insurer doesn’t offer age-based discount products, it could be a good idea to compare and find out which other funds will. Along with cover that suits your healthcare needs, a discount may help ensure you’re on the most cost-effective policy, now and in the future.
If you’re an existing member of a health fund that offers the age-based discount on your policy, you may have automatically received the discount based on your age from 1 April 2019, or your age when you first took out health insurance (whichever is latest). However, please check with your health fund.
Some health funds may offer a retained age-based discount, which means your original discount will apply if you switch to an eligible policy. As such, be sure to confirm with the health fund whether you’ll receive a discount before you switch.
Any gap in cover means you may lose your discount. For example, if you move from a policy with the age-based discount and but don’t move to another for a few years (still before you turn 30), you’ll receive the discount based on your current age, not the one you had when you first had cover.
If you and your partner have a couples or family policy that offers a discount, your total discount will be calculated as an average of both your applicable discounts.
For example: If you have a 2% discount and your partner has a 6% discount, it will balance out to a 4% discount off your couples or family policy premiums.
If you’re under 30, not only could you save with the aged-based discount, you’ll also save yourself from incurring Lifetime Health Cover loading, which makes your hospital insurance premiums more expensive if you take out cover after the 1 of July following your 31st birthday.
Compare hospital insurance with us now and we’ll help you look for a policy that’s great value for money and meets your health care needs. It’ll only take minutes!
