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5 steps to better, cheaper health insurance

Bupa, Medibank, HCF and NIB will delay the 1 April premium increase. 

woman comparing health insurance policies
Last updated: 27 March 2023
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Checked for accuracy by our qualified fact-checkers and verifiers. Find out more about fact-checking at CHOICE.

Need to know

  • Health insurance premiums are set to rise by an average of 2.9%, so it's a good time to compare policies and make sure you're getting the best deal
  • A number of funds including Medibank, Bupa, HCF and NIB will delay the 1 April premium increase until later in the year
  • Consider choosing a higher excess to reduce your premium 

Health insurance can be expensive and with premiums due to increase by 2.9% on average this year, it's a great time to review your current cover and provider to make sure you're not paying more than you need to. While this year's increase is below the 10-year average, some funds will have bigger price hikes than others.

The lowest 'increases' this year are Health Care Insurance, which is reducing premiums by an average of 0.09%, and Police Health, which will leave premiums the same on average. CBHS Corporate has the largest average increase for the third year in a row with a 5.38% price hike across their policies.

While many health funds, including WA-based HBF, will increase their premiums on 1 April, four large health funds are delaying their premium increases:

  • Medibank will delay its 2.96% premium increase until 1 June 2023 (this includes AHM)
  • NIB will delay its 2.72% premium increase until 1 September 2023 (this includes Qantas Health)
  • HCF will delay its 3.33% premium increase until 1 September 2023 (this includes RT Health)
  • Bupa will delay its 3.39% premium increase until 1 October 2023.

Your health fund will let you know your policy's actual increase before the increase takes effect. If you can afford to pre-pay a full year's premium, you can lock in 12 (or in some cases up to 18) months of cover at that year's prices.

Follow our step-by-step action plan below to check if your premium went up, decide if you really need health insurance, compare health insurance policies, and find a better deal.

Has your fund delayed the premium increase?

Due to COVID-19 and the fact that many people haven't been able to make full use of their health insurance policies, a number of private health funds are delaying their price increases until later in the year.

Check the list below to see if your fund has a premium increase coming up.

1. Find out your new premium

The first step is to check how much your premium went up by.

Each year your insurer will send you an email or letter to explain any forthcoming changes to your rate and cover.

Check if your excess has changed. Health insurers introduced a $750 excess in 2019, and some people might have seen their $500 excess increase to $750, which is payable if you have to go to hospital. 

Will a higher excess save you money?

An excess is a contribution towards each hospital stay that you can choose to pay to reduce your premiums. 

  • If you're not likely to go to hospital in the next one or two years, opt for a higher excess to reduce your premium.
  • If you think you'll need to go to hospital sooner rather than later, switch to a policy with a lower or nil excess at least 12 months before your hospital stay.

2. Decide if you really need health insurance

Have a think about whether you actually need either hospital insurance or extras.

Hospital cover

You may decide you want private hospital insurance because it could save you money at tax time.

Take our Do I Need Health Insurance? quiz to find out if hospital insurance will save you money at tax time, and how the Lifetime Health Cover (LHC) loading affects you.

If you don't need health insurance for tax reasons you might still want it for peace of mind. Here are some things you should consider.

  • Are you happy to rely on Medicare and public hospitals that provide excellent care, especially for life-threatening illnesses and emergencies? 
  • Do you want to use a potentially more comfortable private hospital?
  • Is it important for you to choose your own doctor? For example, you might want to choose a plastic surgeon rather than a general surgeon for reconstructive surgery after cancer or a burn.

Extras cover

Do you pay too much for extras cover? Should you consider downgrading or dropping it altogether?

According to APRA, the average annual extras premium per person is about $500 but the average annual benefit is $390, meaning many people spend more on extras than they get back from their health fund. In 2020, benefits were lower than usual because of restrictions on services due to COVID-19, making it more important than ever to check whether you're getting value from your extras cover.

Many people spend more on extras than they get back from their health fund

Extras insurance has no bearing on government surcharges or your tax – it's essentially a budgeting tool to help you cover part of the cost of treatments or services over the year.

pregnant woman at hospital

Make sure you're still covered for what you need following changes to the tiered system of health cover.

3. Review your health cover

Hospital insurance policies are divided into the following tiers of cover, with Gold offering the highest level of cover. You could save money by switching to a lower tier of cover if you don't need some of the services in that tier. The tiers are:

  • Gold – full or top cover health insurance in a private hospital, which includes services such as rehabilitation, pregnancy, and hip/knee replacements
  • Silver – medium cover, which includes heart surgery and nearly all cancer surgeries 
  • Bronze – low cover, which includes treatment for the flu, broken bones, asthma, tonsils, breast and prostate surgery
  • Basic – very little cover, if any.

Silver Plus, Bronze Plus and Basic Plus policies cover at least one service more than regular Silver, Bronze or Basic policies.

For example, a Silver Plus policy could also include cover for rehabilitation or cataract surgery, which are services normally only covered under Gold policies.

Make sure you're still covered for what you need. Especially if you need elective surgery such as a hip replacement. Waiting lists for elective surgery in public hospitals have increased significantly due to COVID-19.

4. Shop around for a better deal

It's an ideal time to check if your policy is good value for money.

The same cover with a different insurer can be hundreds of dollars cheaper. The largest savings are available for Gold policyholders, but even if you have a Silver or Bronze policy, you'll probably be able to find a cheaper deal that will give you at least the same cover. 

Maximal potential annual savings* for a single person across Australia generally range from between:

  • $550 and $1520 for Gold
  • $340 and $1200 for Silver
  • $210 and $910 for Bronze.

Consider comparing health insurance policies so you can see how your current premium fares against the top policies for your selection.

*Rounded to the nearest $10. Potential savings are based on a comparison of the most expensive hospital policies with the cheapest, with the same excess and at least the same cover. We looked at annual policies for a single person with no health insurance rebate. The greatest savings are available for people in the Northern Territory, while the smallest are for those in South Australia.

5. Pre-pay your premium and pay by direct debit

All funds allow you to prepay your premium for at least 12 months, so make sure you prepay your full annual premium by 31 March each year or before the date of the increase if your fund increases its premium later in the year.

But don't leave it until the last moment: when Teachers Health delayed its premium increase until 1 October in 2020, prepayment was required by 25 September.

As an added bonus, some funds give you a discount of up to 4% if you pay by direct debit or pay your annual premium in advance. Of the big five funds, though, only HBF and NIB give a discount for this.

  • HBF – 4% for direct debit and 3.85% if you prepay your annual premium, which adds up to a total discount of 7.85% if you pay your annual payment by direct debit.  
  • NIB – 4% for direct debit.

HCF, Medibank and Bupa do not give a discount for direct debit or prepayment of your premium.

If your needs have changed or you're looking to save money, you can use our tool to compare health insurance and see what your options are. We've looked at thousands of policies from 36 funds and given ratings based on price, out-of-pocket costs, complaints and more.

Other ways to save money on health insurance

Join a restricted membership health fund

Gold level health policies from restricted health funds can be substantially cheaper than those from open funds. 

Restricted funds are open to Australians working in many industries, from police officers, soldiers, reservists and defence contractors, to transport employees and forestry, electricity and steel workers. Bank employees, health practitioners, teachers and workers of associated industries are also covered. Families (sometimes even siblings) and former employees are also eligible.

Check out the best restricted membership health insurance funds for more information. 

Check whether you qualify for a corporate discount

You could easily qualify for a discount without knowing it. Private health insurance legislation allows health funds to give up to a 12% discount under agreements with companies. The company can then offer cheaper policies, for example, to its staff, members or customers. Check to see if you can get a discount through one of the following options.

  • Your employer: Many companies have arranged corporate policies or discounts for their staff with health funds. Ask your employer whether they offer this.
  • Your super fund: A number of super funds have arrangements with health insurers.
  • Associations and clubs: Some offer health insurance discounts to their members.
  • Your mutual bank: Some credit unions and mutual banks have negotiated a discount for their shareholders or customers.
Find out more about how to get a discount on your health insurance.
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