Health insurance price rises penalising older Australians

Understandably, many older Australians with private health cover are feeling worried about the impact of the government’s latest changes to health insurance rebates. The government plans to remove age-based rebates, so that the rebates are solely dependent on your income. 

This will directly increase the cost of premiums for many Australians over 65, on top of the usual yearly premium price hikes. 

The government changes will reduce the rebate for some over 65s by 4%. While this is a substantial amount, CHOICE research has found that insurers increased prices by almost double that amount this year for Gold hospital insurance – the health insurance that older Australians need the most. 

In fact, while the government changes will mean an unwelcome extra expense for many older Australians, our research shows that Gold-level cover has already been becoming increasingly unaffordable, with a 71% increase in the average cost of a policy over six years.

Proposed changes to health insurance rebates

Currently, Australians under 65 who earn less than $101,000 as a single person can receive a rebate of 24% on their health insurance premiums.

Australians aged 65–69 on the same income receive a rebate of 28%, and if you’re aged over 70, you get a 32% rebate.

The rebates shrink for higher incomes, and for couples and families the income thresholds are double that of a single person.

As of 1 April 2027, these rebates will be standardised onto the 24% rate, regardless of your age. So over-65s will get a 4% lower rebate, and over-70s an 8% lower rebate.

The government argues that basing rebates solely on income rather than age is a fairer system, with the Budget savings to be funnelled into additional aged care beds and care packages, both of which benefit all older Australians.

How the lower rebate will affect premiums

CHOICE research indicates that the impact on the cost of premiums will be especially significant on the Gold-level policies, which older Australians need the most. 

Based on May 2026 prices, the average cost of a Gold-level policy for a 67-year-old single person earning under $101,000 would increase by $200, from $3590 annually to $3790. For a couple over 70, the average increase will be $800 a year if they earn less than $202,000 combined.

Increase in the average yearly cost of a Gold-level policy due to rebate changes*

How the insurers’ jacked-up premiums affect older Australians

The government rebate that you receive on health insurance is paid as a direct subsidy to insurers. You may pay less on your health insurance, but we’re still all paying insurers out of our taxes.

In spite of these subsidies, however, CHOICE research has found that the insurers’ price rises have been driving Aussies out of Gold-level health insurance for years. 

In recent years, the price of Gold-level insurance has increased dramatically and at a much faster rate than the overall average for health insurance.

This year, the government announced an average increase in premiums across all health insurance of 4.41%. But CHOICE found the increase applied by the big five funds to Gold-level cover was more than triple the average at 13.3%. 

For a single person, this amounted to a $555 annual increase to Gold-level cover, and for couples and families, a $1110 increase, before the rebate.

These dramatic double-digit percentage increases to Gold cover have been ongoing for several years and have pushed the price to unaffordable levels.

Where the annual cost of a Gold policy for a single person averaged $3010 in 2022 before rebates, the average price of equivalent policies is now $5000, an increase of almost $2000.

The government’s changes to rebates will increase premiums for some over 65s by 4%. But insurers have been increasing premiums for their Gold-level policyholders many times more than that amount every year, for at least the last six years.

Gold cover is especially important for seniors

As we age, we’re more likely to need certain types of treatments and surgeries. In 2023–24, those aged over 65 accounted for 44% of hospitalisations and 52% of the days spent in hospital, despite making up just 17% of the population. 

Many important and common treatments are only covered on Gold-level cover, including joint replacements (e.g. for hips and knees), and surgery for cataract removal and replacement.

You may be able to find coverage for these on cheaper Silver Plus policies, but it isn’t guaranteed. 

Insurers driving Aussies out of Gold hospital insurance

Despite the name and price, Gold coverage shouldn’t be a luxury item. It is simply the most comprehensive level of cover without exclusions.

The number of Gold policies being sold has fallen dramatically in just a few short years as consumers are pressured by price rises into downgrading their cover. 

In fact, while the percentage of the population with health insurance has remained steady at roughly 45%, the proportion with Gold-level cover has dropped from 40% in 2020 to less than 30% in 2025, with no sign of the trend changing as prices continue to rise.

Indeed, with many healthy people dropping their Gold-level cover, even more pressure is put on premiums as the average cost of claims rises.

Savings tips for seniors

A common question older Australians ask about health insurance is why should they pay for a policy that includes pregnancy and IVF services? These are covered by all Gold and some Silver Plus policies – but these tiers are also suited to people over 65 who want to be covered for surgery typically needed later in life, such as cataract surgery or hip and knee replacements. 

So before downgrading, make sure you shop around for other Gold and Silver Plus policies that cover the services you need – you may be able to find a cheaper option that offers the same coverage.

If you do decide to downgrade, make sure that the new policy is actually cheaper than what you were paying before, and that you’re still covered for things you do need, such as joint replacements. Keep in mind some Silver Plus policies might be a good option if you need to downgrade from your Gold-level cover.

Selecting a higher excess can also end up saving you money if you don’t make any claims for the first two years or so (you’re better off selecting a lower excess and paying a higher premium if you plan to claim soon). You can choose to pay a higher excess of up to $750 per person and $1500 per couple/family to reduce your premiums.

An excess is the amount of money you pay out of your own pocket towards a hospital visit. You pay an excess once per hospital visit, and it’s usually capped at once (single) or twice (couple/family) per year. 

If you are expecting an upcoming surgery, be sure to avoid policies that charge you an excess for day surgery. Cataracts are a common day surgery and some policies allow you to avoid the additional excess or daily co-payments for these.

Do you need Extras insurance?

Before dropping your hospital cover, you should also review your extras cover, which pays back a portion of the cost for services such as dental, optical and physio. The average cost of these policies is typically double the amount people actually claim in benefits, meaning that in many cases people are better off paying for these services upfront instead of through an extras policy.

The money you save by dropping this cover could be put towards a more comprehensive level of hospital insurance, which might be more worthwhile, depending on your needs.

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Mark Blades