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5 steps to better, cheaper health insurance cover

Review your health insurance policy and save money.

close-up of a stethoscope sitting on Australian money - how to save on health insurance lead image
Last updated: 17 September 2020


Checked for accuracy by our qualified fact-checkers and verifiers. Find out more about fact-checking at CHOICE.

Need to know

  • Most health insurance funds will increase premiums on October 1. Look out for a letter from your insurer.
  • Health insurance has changed: you’re now on a Gold, Silver, Bronze or Basic policy. Make sure you have the right cover for your needs.
  • Prepay your annual premium before 1 October and lock in 2019 prices.

While health insurance premiums normally go up on 1 April, this year most funds have delayed the premium increase until October 1, so now is the right time to review your health cover.

Follow our step-by-step action plan to see if your premium went up, decide if you need health insurance, review your cover, and find something better.

1. Find out your new premium

The first step is to check how much your premium will go up.

The average health insurance premium increase announced for this year is 2.92%, which is the lowest since 2001, but most funds will increase premiums from 3% up to 5.63%.

Your insurer will send you another letter (if they haven't already) to explain any forthcoming changes to your rate and cover.

In that letter, check if your excess has changed. Health insurers introduced a $750 excess last year, and some people might have seen their $500 excess increased to $750, 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 an 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 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 tax.

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 loading affects you.

Perhaps you want private hospital cover for peace of mind. Here is what you should consider:

  • are you happy to rely on Medicare and public hospitals that provide excellent care, especially for life-threatening illnesses and emergencies? 
  • will your health cover be useful during the COVID-19 health crisis?

Extras cover

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

According to our calculations, the average annual extras premium for a single person in NSW is about $630 and the average annual benefit is $435, so a lot of people spend more on extras than they get back. 

A lot of people spend more on extras than they get back from their health fund

This year, because of COVID-19 social distancing measures, it may be even harder to get value out of your extras insurance.

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 last year's change to the tiered-system of health cover.

3. Review your cover

Hospital insurance went through big changes last year. Policies are now classified as:

  • Gold – full or top cover health insurance in a private hospital; it includes services such as rehabilitation, pregnancy, and hip/knee replacements
  • Silver – medium cover; includes heart surgery and nearly all cancer surgeries 
  • Bronze – low cover; includes 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 pregnancy, rehabilitation or cataract surgery, services normally only covered under Gold policies.

Make sure you're still covered for what you need since those changes.

4. Shop around

It's a good time to check if your policy is value for money, especially if you need to save because of the COVID-19 economic downturn.

You might be surprised by how much you can save. Our own CHOICE writer Pru Engel was told by her insurer her family would get moved to a new Silver Plus policy with less cover and a higher premium. 

Instead, she found a better Silver Plus policy that covers her needs and saves $1800 per year (without rebate).

Compare health insurance and see how your current premium compares with the top policies for your selection.

Most health funds also have hardship measures in place where they may waive your premium for a time or allow you to suspend your cover. So call your fund if you have lost work or have other economic pressures because of COVID-19.

5. Pay your annual premium in advance

Prepay your annual premium in September, so you can lock in 2019 prices. 

Compare health insurance if your needs have changed or you're looking to save money.

Other ways to save money on health insurance

1. Pay by direct debit

Some funds give you a discount of up to 4% if you pay via direct debit.

2. 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, soldiers, reservists and defence contractors, to transport employees, 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 Best restricted membership health insurance funds for more information. 

3. See if 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 their staff, members or customers. Discounts may be available through:

  • Your employer: Many companies have arranged corporate policies 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.