How Much Does Private Health Insurance Cost?

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Last Updated 24/10/2024
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Reviewed by Andres Gutierrez, General Manager – Health
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Last Updated 24/10/2024

What changed?

Reviewed by Andres Gutierrez, General Manager – Health
Our aim is to help you make better informed decisions. That’s why iSelect’s content is produced in accordance with our fact-checking and editorial guidelines.

Find out more about how we make money.

View our Privacy Policy.

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What does private health insurance cost? 

One of the big deciding factors for your premium cost will be your policy type. For instance, if you’re after hospital cover – the kind of health insurance you’ll need if you want to be a private patient and potentially skip wait times – your monthly premium could range from an average of around $50 to $300 depending on the health insurance tier you choose and where you live. A higher tier, like Silver or Gold, means more coverage, but that coverage can come at a price.  

Extras policies are more for your everyday health needs, as opposed to a surprise trip to the emergency department or getting your hip replaced. Think choosing inclusions like dental, optical or physio. Hence, your extras monthly premium could be more in the average range of $85 to $90. Like hospital cover, though, the more coverage you have, the higher your premium is likely to be. 

And what if you want the best of both worlds with a combined policy including hospital and extras cover? Well, depending on your tiers and extras, you might need to put aside, on average, $90 to upwards of $390 each month.

Source: PrivateHealth.gov.au – June 2024
Note: All averages are based on singles-only policies with an excess of $750 bought in June 2024. Rebates are not included. 

How are premiums decided? 

Your health insurance premiums are a little different to the ones you might pay for car or home and contents insurance. Rather than being risk rated (i.e. how likely are you to make a claim), they’re community rated. This means everyone pays the same for a particular policy, even if some people may need to claim on it more. It helps to stop anyone being discriminated against, like having to pay a higher premium because of their age, claims history or current health. Having said that though, premiums aren’t wholly static. Here are some of the ways they can vary. 

Annual rate rise

Each year, insurers can increase their premiums once. This can be a way to help cover the rising costs of health care, like more expensive equipment and increased wages for health staff.  

Usually, the increases happen across funds as part of an annual health insurance premium rise. As a result, you might hear people talking about an industry average increase but find your premium has increased more or less than the number mentioned.

Lifetime Health Cover (LHC) Loading

Also in the mix is the LHC loading. It’s an incentive to get people signing up for health insurance sooner rather than later. For every year you’re over 31 and don’t have hospital cover, you’ll pay an extra 2% on your premium when you do eventually sign up to a hospital policy (up to a maximum 70% loading). You’ll pay that increased rate, too, for at least 10 years. 

Age-based discount

The community-rated nature of health insurance means you can’t be discriminated against because of your age – but you can benefit from it! Along the lines of LHC loading, insurers can offer premium discounts to younger people to encourage them to sign up for hospital insurance. Theoretically, if a 25-year-old picked a policy with a maximum discount of 10% and kept that policy, they could keep the discount until they turned 41.

Helpful tip

If you’re feeling pretty confident about not needing to go to hospital in the near future, you may be able to lower your premium by opting for a higher excess or co-payment.

Mark Pangrazio​

Executive – Commercial

What is an excess? 

Your excess is the amount you’ll need to pay of your hospital bill before you can claim the rest via your health insurance. For instance, you might go in for surgery and rack up a bill for a few grand. If your excess is $500, you’ll first need to pay that $500 before Medicare and your private health insurance take care of the rest

What are out-of-pocket costs? 

There could be some instances where, despite being able to access Medicare and having a suitable private health insurance policy, you end up with some out-of-pocket fees. These could be co-payments for each day you spend in hospital or additional charges that just aren’t covered by Medicare or your insurer. Alternatively, you might have reached the limit of what you can claim on your extras cover for the year and everything else will need to come out of your pocket – until it all resets again on January 1, July 1 or even on the anniversary of your policy (it’s up to your insurer which date they pick). 

Does my private health insurance affect my tax? 

Having private health insurance can have some positive effects come tax time. For instance, it could mean you can skip the Medicare Levy Surcharge.  

Your garden-variety Medicare Levy is 2% of your taxable income. This money helps to keep Medicare working as it should. The Medicare Levy Surcharge is an extra percentage of your income, based on how much you earn. However, it only applies to you if you earn above a set threshold and you don’t have appropriate hospital cover for that full income year. 

Choosing to hold private health insurance can also further reduce the tax you pay, thanks to the private health insurance rebate. If you have an appropriate level of hospital cover and earn less than the threshold, you can get a tax offset because of your health insurance. You can claim it at tax time or ask for your premium to be reduced. 

Where can I find and compare health insurance? 

Finding a health insurance policy doesn’t need to be tricky or time consuming. With iSelect, you can compare a range of options from different insurers online, plus purchase one you like, in a matter of minutes. You can also call one of our health comparison experts on 1800 784 772 to have someone guide you through the process, answering any questions you may have. 

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