Understanding The Youth Discount On Health Insurance

Good news for young Australians: the federal Government has recently introduced reforms to private health insurance to make it more affordable1.
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The key element of the benefits for Australians aged between 18 and 29, is discounts on private health insurance premiums of up to 10%, depending on your age.

Private health insurance hospital cover discounts for young Australians

The younger you are, the bigger discount you could enjoy.. The discount maximum for 18 to 25 year olds is 10%1.

Private insurance discounts by age:

The Australian Department of Health indicates the discount you can receive on hospital cover, according to the age when you first took out a policy1:

Person’s age when they first purchase a hospital product offering discounts* Percentage discount the insurer may offer
18-25 10%
26 8%
27 6%
28 4%
29 2%
30 0%


*as a transitional arrangement for existing policyholders, their age when their insurer first introduces age-based discounts to their product. For example, a consumer who is 28 on 1 April 2019 could receive a 4% discount, even if they first purchased hospital insurance when they were 26 years old.

For example, if you’re aged 24 and take out a hospital cover valued at $1,500 per year, you’re eligibly for a 10% discount, and a saving of $150. For a young family with a $3,000 per year policy, the maximum discount would be $300 per year1

How long do the discounts apply?

Once you secure an age-based discount, you retain that discount until you turn 41, provided you continue with the same policy. After you turn 41, the discount will be gradually phased out each year1. This means if you take a hospital policy at the age of 18, you can enjoy a 10% discount for 23 years until you turn 41 if you stay on an eligible product.

Do insurers have to offer a discount to Australians aged between 18 and 29?

No, the participation of insurers is voluntary. According to the Australian Department of Health , if an insurer chooses to offer discounts they must offer the discount to all eligible customers, including new and existing customers1.

What if I transfer products between insurers - do I still get a discount?

Before changing insurance products, you should check with your new insurer that the discount is still available. It’s recommended that you check whether the existing discount will continue to apply before you transfer1.

Keeping private health insurance affordable

The Government is also maintaining legislation around low-priced premiums2. While this legislation isn’t aimed specifically at younger Australians, many of them will benefit from maintaining affordable premiums.

The Government's Private Health Ministerial Advisory Committee considered the role of low priced health insurance products. It found that removing low priced products would increase premiums, and this would mean that fewer Australians would be able to afford private health insurance2.

Improved access to mental health and drug & alcohol treatments

The recent government reforms also included changes to mental health and drug and alcohol addiction treatments. While these treatments are not exclusive to young Australians, many people aged between 18-29 will benefit from the reforms.

The Department of Health indicates that private mental health and drug or alcohol treatment services are highly valued by younger customers, but that most basic and medium level hospital products provide limited cover for these services3.

Consequently, changes were introduced in April 2018 to ensure that:

  • If you have basic insurance that only covers psychiatric or drug and alcohol in-hospital treatment at a minimum/restricted benefit (Private patient in a public hospital), you can upgrade your cover to full Private Hospital coverage without having to serve the usual two month waiting period to upgrade
  • You’re only able to access this exemption once in your lifetime4
  • Limits for psychiatric treatments were removed, including limits to day programs, electroconvulsive therapy and transcranial magnetic stimulation, allowing patients to access repeat treatments if required to manage mental health or addiction

By waiving waiting periods to upgrade from minimal/restricted cover and removing limits to some mental health treatment programs, the reforms make it easier for all Australians to access mental health services, and drug and alcohol treatment, when they need it3.

Additional reforms to private health insurance

The changes that benefit young Australians were part of broader reforms that help keep private health insurance affordable, and easier to understand for all Australians.

Other notable changes implemented in the reforms include amongst others the following5:

  • Making insurance easy to understand by categorising hospital insurance products as gold/silver/bronze/basic
  • Implementing standardised clinical categories for treatments
  • Boosting the powers of the Private Health Insurance Ombudsman, and increasing its resources to ensure consumer complaints are resolved clearly and quickly
  • Allowing insurers to expand hospital insurance to offer travel and accommodation benefits for people in regional and rural areas
  • Increasing the maximum voluntary excess consumers can choose under their health insurance policies

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