How Health Insurance Premiums Are Changing In 2022
Last Updated: 19th October 2022
What’s the old saying? That ‘a change is as good as a holiday’? Well, it turns out a change can be downright confusing when it comes to health insurance, and there are plenty of them to discuss in 2022.
What do I need to know?
- Typically, health funds increase policy premiums on April 1, but many have delayed their increases this year
- A smaller number of funds (such as Australian Unity) went ahead with their rises on the traditional date
- This year’s average premium rise is 2.70 per cent
- Aussies could see lower premiums in the future after the Federal Government announced a deal that would reduce the cost of medical devices used in the private health sector10
The timing of premium increases
A recent study commissioned by iSelect revealed that almost half of Australians surveyed with private health cover claim they’re either very confused or somewhat confused about if and when their premium is increasing in 20221.
iSelect Commercial Coordinator – Health, Hayley Crowden said it’s understandable why so many policy holders may be feeling this way.
“Many health funds have decided to delay the date of their annual premium increases this year, when typically funds up their premiums on April 1 annually,” Ms Crowden said.
While a smaller number of funds (such as Australian Unity) went ahead with their increases on the traditional date, a number of funds including AIA and nib have pushed their increases back2.
nib Managing Director, Mark Fitzgibbon said earlier this year that the decision was a result of the ongoing financial and economic pressures on the community, fueled by the pandemic.
“It’s a highly stressful time and I don’t want to downplay the financial toll it’s having on our members,” Mr Fitzgibbon said3.
It’s one of the reasons shared by other funds that have announced deferrals, the majority of which –including Bupa, AHM and Latrobe – have all postponed premium increases too4.
The size of premium increases
In Australia, health insurance premiums are increased to keep up with rising health care costs, but funds are required to seek approval through the Federal Government and justify any hikes5.
This year’s average premium rise is 2.70%, which is the lowest average increase since 20016.
The 2.70% average increase could cost families an extra $125 per year on average, while singles could be parting with an additional $58 a year on average7.
“It’s important to remember that’s an average only. In fact, premiums for most policy holders go up by 3.06% on average this year as the big five funds who make up the majority of market share all increase their premiums by an average of at least 3.06%8,” Ms Crowden said.
Despite this year’s average increase the lowest in two decades, many families may already be struggling with the cost of private health insurance.
In fact, over the past decade private health insurance premiums have increased on average by more than 50%9, so it’s understandable that Aussies may be concerned about the affordability of their health insurance.
It’s wise to first explore potentially more affordable options rather than simply cancelling your cover altogether, especially when iSelect research highlights that there are savings or better value to be had for many if they do shop around*.
85% of Aussies with private health cover iSelect recently surveyed, who switched policies in the past two years, said they were able to save money or find better value. 39% surveyed claimed they saved at least $100 off their annual premiums, while 18% said they saved at least $300 a year1.
Watch this space
So, after laying out the changes to how health premiums are changing in 2022, what about in the years to come? Stay tuned on this.
Aussies could see their private health insurance premiums lower in the future after the Federal Government announced a deal that would reduce the cost of medical devices used in the private health sector and improve the affordability private health insurance as a result. Starting from this year, the reforms are expected to be implemented by the Department of Health in stages, so they’re not expected to be fully implemented until 202510.
Got questions? We can help
If you’ve got any questions about how your health policy could be impacted by potential rate rises this year, feel free to call our friendly team on 13 19 20.
1 iSelect commissioned i-Link Research to conduct a national online survey between 1st and 9th of February. The sample is n=1,500 Australians 18+ years, with data weighted to represent the population by age, state and gender, and is representative of all Australian adults 18+
2 Source: Australian Unity public announcement: Health Insurance Premium Changes 2022 – Rate Review | Australian Unity, AIA public announcement: Health Insurance | AIA Australia & nib public announcement: nib defers premium increases for members | nib
3 Source: nib public press release: nib defers premium increases for members | nib
4 Source: Bupa public announcement: Bupa to defer premium increases for six months, AHM public announcement: We’re postponing our 1 April 2022 premium increases. Woo! – Help – ahm, Latrobe public announcement: Latrobe Health Services’ six-month rate freeze | Latrobe Health Services
7 Source: Based on weekly calculations included in Minister’s media release multiplied by 52 weeks to reach an annualised figure https://www.health.gov.au/ministers/the-hon-greg-hunt-mp/media/delivering-australias-lowest-private-health-insurance-premium-change-in-21-years
8 Source: Calculated as a weighted average based on the percentage of policies held in the respective funds per the APRA Operations of Private Health Insurers Annual Report data 2020-21 (https://www.apra.gov.au/operations-of-private-health-insurers-annual-report) and https://www.health.gov.au/resources/publications/average-annual-increases-in-private-health-insurance-premiums
9 Source: Calculated as the compound increase in premium from 2012-2022 using industry average increases in premium at https://www.health.gov.au/resources/publications/average-annual-increases-in-private-health-insurance-premiums
10 Sources: https://www.health.gov.au/ministers/the-hon-greg-hunt-mp/media/reforms-to-deliver-lower-prices-for-medical-devices-and-lower-private-health-insurance-premiums & https://www.health.gov.au/health-topics/private-health-insurance/the-prostheses-list/the-prostheses-list-reforms
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