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Many Australians seem to overestimate the true cost of private health insurance, and you could be too!

According to a 2021 IPSOS survey, it’s estimated that of the 40% of Australians who don’t have private health insurance, 54% cite the cost of health insurance as a major factor for their lack of cover and 23% express concern about not being covered.1

However, the survey also found that 33% of uninsured Australians said they would take out private health insurance if they knew that the government could pay for 25-29% of their premium through the Australian Government rebate.

How much does health insurance cost?

The exact cost of your health insurance will depend on if you take out hospital, extras or combined cover and several other factors such as your health fund, level of cover, who’s covered, your excess, any loadings, rebates or discounts and more.

We’ve gone through hundreds of policies from every registered Australian insurer to provide you with an overview of the average cost of health insurance in Australia per state.2 Both hospital and extras cover include policies with an ambulance cover component.

Average cost of hospital insurance

Source: Privatehealth.gov.au, current as of January 2023.

These figures are based on the monthly premium for single-only hospital policies with an excess of $750 that exempts you from the Medicare levy surcharge (MLS). They don’t include rebates, discounts or loadings. ‘Plus’ tiered policies have been included within the four main tiers (e.g. Bronze Plus policies are included in the Bronze tier, and Silver Plus policies are included in Silver). For more information on how ‘Plus’ policies work, refer to our guide to health insurance tiers.

Average cost of extras cover

Source: Privatehealth.gov.au, current as of January 2023.

These figures are based on the monthly premium for single-only policies and don’t account for different dollar and percentage limits or the services provided.

Unlike private hospital cover, which is divided into tiers based on the hospital treatments covered, extras insurance policies vary in the general treatments covered (e.g. physio or dental) and how much they will pay toward them.

What affects your health insurance premiums?

Unlike many other insurance products, health insurance is community-rated. This means your age, gender, health status and other risk factors do not influence the base premium you pay.

However, several other factors can influence the amount you’ll pay for your health insurance cover, such as:

Read more about what influences the cost of health insurance.

When do your premiums increase?

Traditionally, every year on 1 April, many insurers increase their private health insurance premiums.  In recent years, many health funds have deferred these increases to give COVID-19 savings back to members. These private health insurance premium increases adjust for:

  • Increased health care costs (i.e. hospital and doctor’s fees)
  • An increase in claims made
  • More complex and expensive medical equipment
  • Higher costs for complex medical treatments.

Before increasing their premiums, insurers must seek approval from the Australian Department of Health to ensure any cost changes are necessary, reasonable and fair.

Here’s a view of how much rates have increased from 2012 to 2022.

Cost of health insurance rate rise graph

These rates are industry-weighted averages. So, while the average rate rise in 2022 is 2.7%, health funds can choose to increase their policies by more or less than this.

Even if your policy was the best option for you when you took it out, that might no longer be the case. This is why you should compare health insurance regularly to see if there’s a product out there that’s better value for money or more suited to your needs.

Is health insurance worth it?

Whether or not a health insurance policy will suit you depends on your circumstances, lifestyle and priorities. Here are some of the common benefits of private health insurance that motivate people to take out cover:

  • You may be able to choose your own doctor and surgery dates (on availability)
  • You could receive treatment and recover in your own private room (on availability)
  • You can avoid long public hospital waiting lists
  • With an extras policy, you can claim for a range of health care services that Medicare doesn’t cover (i.e. physiotherapy, dental, chiropractic).

Frequently asked questions

Will I have out-of-pocket costs with private health insurance?

When you’re treated through the private health care system, you may still have to pay some of the medical costs out of pocket, even if your health insurance policy helps to cover your treatment.

When you’re admitted to hospital as a private patient for a treatment listed on the Medicare Benefits Schedule (MBS) and covered by your insurance policy, Medicare will typically pay for 75% of the MBS fee, and your health fund will pay 25%. However, because the hospital and doctors are allowed to charge above the MBS fee, you may have to pay the difference between the MBS fee and the total cost of your treatment; this difference is commonly referred to as ‘the gap’.

You may be able to avoid or minimise the gap through your health funds gap cover scheme. For more information on how the gap works, see our guide to gap payments here.

What is an excess or co-payment?

The excess is an amount you pay upfront when you’re treated as a private patient for a condition covered by your private health insurance. Depending on your policy, you will usually only have to pay the excess on your first hospital admission for the year.

When you take out a health insurance policy, you can typically elect to pay a higher premium in exchange for a lower excess. Or, if you think it’s unlikely that you’ll be admitted to hospital, you could choose a higher excess and pay less in premiums.

Unlike an excess, a co-payment is a fixed amount you pay for every day you’re in hospital. The amount payable is usually capped up to a maximum payable annually or per admission.

It’s vital that you’re aware of any excess and/or co-payments on your policy when you sign up for private health insurance to help you avoid unexpected expenses when you’re admitted to hospital. Talk to your health fund or refer to the relevant Product Disclosure Statement (PDS) for more information.

Is joint cover cheaper than singles health insurance?

In simple terms, taking out a joint health insurance policy is the same as taking out two identical single policies, except that you only pay one premium. Because of this, the most significant benefit of couples’ health insurance is convenience, not cost.

While a couples policy might not lower your total base premiums, depending on the age and income of you and your partner, it is possible that a couples policy would affect your eligibility for the Australian Government rebate.

For example, the singles income threshold for the rebate is $140,000, and the family threshold is 280,000, so if you earn $150,000 annually you might not qualify for a rebate as a single. However, if your partner earns less than $130,000, you might qualify for a rebate on your combined family income.

Tips on how to save on health insurance premiums from our health insurance expert, Lana Hambilton

  1. While couples’ cover could be more convenient as you only have to maintain one policy and payment, the cost is equivalent to two individual policies. If you have substantially different health needs, consider taking out two singles policies, as this could save you money.
  2. Private health insurers aren’t required to stick to the minimum hospital inclusions. They can also offer additional coverage through ‘plus products’. This means you could find a policy that suits your needs without needing to pay the premiums for a higher tier of cover.
  3. If you are over the age of 30 and don’t have hospital cover, you’ll also need to consider the Lifetime Health Cover loading, which increases your premium by 2% for every year you don’t have private health insurance over the age of 30. Depending on your age, you can either stop it from increasing or avoid it altogether by taking out cover.

Have you compared your health insurance options recently?

If you think you might be paying too much for your health insurance there’s no better time than now to compare your options and find out for yourself.

Alternatively, if you don’t have health insurance and don’t think you could afford it, our free comparison tool can show you a range of products side-by-side to potentially find a product that meets your healthcare needs and is more affordable than you thought.

Or, if you’d rather talk directly to one of our health insurance experts, you can give us a call and we’ll do our best to help you find a policy that works for you.


1 IPSOS – Health Care and Insurance Australia Report. Published 2021

2 Private Health Ombudsman data. Released November 2022

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