Explore Health Insurance

Many Aussies misunderstand how health insurance is priced. Namely, they believe that health insurance is more expensive if they’re older, or if they have a pre-existing condition.

This isn’t necessarily true.

While numerous factors affect your health insurance premium, you may be surprised to learn that it’s a simple product when it comes to how insurers calculate your premiums.

Does age affect health insurance premiums?

The industry’s community rating system ensures that every person – regardless of age, health and claim history – can purchase the same health insurance policy at the same base price, with the ability to switch to a new policy without penalty.

The main factor that your age will play into when it comes to your health insurance premiums is whether or not you have a Lifetime Health Cover (LHC) loading. If you intend to take out private hospital insurance, it may be beneficial to purchase when you’re younger to avoid this loading.

Lifetime Health Cover Loading

The Australian Government introduced LHC loading as an incentive for Aussies to take out private cover at a younger age by charging a loading to people who decide to purchase a private hospital policy after 1 July following their 31st birthday.

As a result, your private hospital insurance premiums will attract a two per cent loading on your premiums for every year you don’t hold hospital cover after 1 July following your 31st birthday. However, you only need to pay it once you take out hospital cover.

Taking this into consideration, someone aged 40 would have to pay 20% LHC loading (unless an exemption applies) on top of their usual premium if they purchase private hospital cover for the first time after 1 July following their 31st birthday.

The maximum loading amount is 70%, and your loading will be dropped altogether once you’ve held hospital cover continuously for 10 years.

So, if you ever intend to take out private hospital cover, it’s essential that you continue to hold some form of hospital cover to avoid the LHC loading. Though, once you take out hospital cover, you are allowed 1,094 Days of Absence (one day less than three years) without hospital cover before your loading will start increasing again.

What about the age-based discount?

The age-based discount is available to Aussies aged 18-29. This discount is part of an Australian Government incentive to encourage younger Australians to take out hospital cover earlier in life and help ease the strain on the public system.

If you take out an eligible policy from an insurer that offers this incentive, you could benefit from a discount of up to 10% on your premiums each year. You could even retain your eligible discount each year until you’re 41 if you hold your policy continuously.

Here’s how much the discount is worth, depending on your age:

Source: Department of Health (2021)

Learn more about the age-based discount.

Your income

Depending on your taxable income and age, you may be eligible to receive the Private Health Insurance Australian Government Rebate. The rebate is currently tiered by income and age brackets, ranging from 8.471% through to a maximum of 33.887%.

You’re eligible for the Private Health Insurance Rebate if

medicare card icon

You have a Medicare card

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You have health insurance from a registered health insurer

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You’re single and earning less than $140,000 annually, or a couple and earning less than $280,000 annually

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You’re an Australian citizen or permanent resident

People in lower income tiers and higher age brackets will receive a more substantial rebate.

If you’re eligible for an Australian Government rebate, you can claim it back at tax time, or through a reduced premium. To claim it through a reduced premium, you will need to supply your insurance provider with your age and predicted income bracket. Keep in mind that if you claim in the wrong tier, an adjustment will be made at tax time.

 Medicare Levy Surcharge – Income Thresholds
SinglesUnder $90,000
($0 payable)
$90,001 – $105,000
(~$900 – $1,050 payable)
$105,001 – $140,000
($1,312.51 – $1,750 payable)
(~$2,100+ payable)
Families^Under $180,000
($0 payable)
$180,001 – $210,000
(~$1,800 – $2,100 payable)
$210,001 – $280,000
($2,625 – $3,500 payable)
(~$4,200+ payable)
Retrieved from the Australian Taxation Office | Information current at 2 October 2020. Dollar amounts payable are rounded up.
^For families with children, thresholds increase by $1,500 for each child after the first.
Families include couples, de facto couples, and single parents.

Learn more about health insurance during tax time.

Your chosen policy

The policy you select will be the greatest determinant of price, as policies can range from comprehensive (most costly) through to basic (budget policies).

The different levels of cover are generally determined by what services and procedures are included or excluded on your cover, so it’s vital you regularly assess what you need cover for and tailor your policy accordingly.

For example, if you have a top-level health insurance policy, like a Gold policy, it will cost more than lower levels of cover. This is because more comprehensive policies generally cover most services/treatments that Medicare pays a benefit towards; such as obstetrics, joint replacements, assisted reproductive services and thousands of other procedures.

Conversely, a Basic policy will cost less due to fewer of those treatments/services being available for you to claim on.

Your family status

Who your policy covers also affects the price of the premium.

Yourself, under a singles policy. If you don’t hold hospital insurance after 1 July following your 31st birthday, you might need to pay Lifetime Health Cover (LHC) loading, which will increase your premiums.

Yourself and your partner under a couples policy.

You’re covered for the same services and procedures. If either of you need more or less cover, you may want to consider two singles policies.

Any applicable LHC loading will be averaged between you both.

Your family under a family policy. Dependants under a certain age can be added at no extra cost.

Depending on your insurer, your child might be covered on this policy up until they’re 25 if they’re a full-time student dependant and unmarried.

Otherwise, they can typically stay on this policy until they’re 21.

Yourself and your dependants under a certain age.

Single-parent policies are just like family policies, only they may be slightly cheaper as they cover one parent.

If you’re paying any LHC loading, it won’t be averaged out between you and someone else.

Along with the level of cover you select and who is covered by your policy, other factors may impact your premium.

Did you know these can impact your health insurance costs?

This is a set amount you agree to pay your insurer when you’re admitted to hospital and claim on your cover.

Your full excess is only charged once per person per year.

You can choose to pay a higher excess when you claim on your policy in exchange for lower premiums – and vice versa.

You may need to pay these fees for every day you’re admitted as a private patient in a public or private hospital.

So, if you agree to pay a $100 co-payment and you’re admitted for five days, you’ll pay $500.

Some insurers cap the amount you’d need to pay per year.

Where you live might affect how much your premiums are. Hospital charges may vary state-by-state, as can the rate of claims.

As such, insurers may charge different premiums throughout Australia.

Health insurance premiums change every April

Health insurance premiums are subject to change every year due to the annual rate rise. This review is a process where health insurance providers apply to the Minister for Health to increase premiums. Once the submitted changes are reviewed and approved, they usually become effective on 1 April.

Health insurers aim to keep premium increases to a minimum. Rises in premiums are required to cover increases in claims cost, often driven by:

  • increases in the number of claims by members
  • increases in the cost of services by doctors and hospitals
  • increases in the cost of medical equipment and technology
  • costs of complex procedures completed through private hospitals.

Learn more about the health insurance premium rate rise and how it could affect you.

Comparing health insurance can help you find affordable cover

Are your premiums making you reconsider your health insurance cover? If so, why not try to find a more suitable policy?

Compare policies from several Australian providers by using our health insurance comparison service. It’s free to use, and you can receive quotes and even join in just minutes.

If you prefer the personal touch, call one of our experts on 13 32 32. They can help take the confusion out of health insurance and even handle the paperwork for you.

So, what are you waiting for?

Compare health insurance
Or call us on 1800 304 709