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How to save on health insurance

Premiums are on the rise, but there are still ways to save.

close-up of a stethoscope sitting on Australian money - how to save on health insurance lead image
Last updated: 30 April 2018

Health insurance premiums increased by 3.95% on average on 1 April. However, this is only the average increase; some policies went up by much more. 

Beware of switching to cheap junk insurance with restrictions and exclusions that won't cover you when you need it. Instead, use our savings tips to save on quality health insurance.

How to save on health insurance

Pay your annual premium in advance

  • Some funds give you a discount of up to 4% for paying annually.
  • Pay your annual premium before 31 March. With most funds you'll get the cover at the old price and can delay the premium increase for 12 months.

Pay by direct debit.

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

Can you afford a higher excess?

Switching to an annual excess of up to $1000 on a family policy can be a smart move. Policies with an excess are substantially discounted, compared to policies without. The discount on your premium could be so large that even if you needed go to hospital once every three years you'd still come out on top.

Do you really need extras cover?

The Medicare levy surcharge and lifetime health cover surcharges will apply if you don't have hospital cover. Cover for 'extras', ancillary health services like dental or optical only makes sense if the benefits you receive are at least as much as the premium you pay (if you don't expect your circumstances to change).

Can you join a restricted membership health fund?

Their full cover policies in particular can be substantially cheaper than the offers from open funds. They 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 sisters and brothers) and former employees are also eligible.

Do you need cover for pregnancy?

Older families and people who do not need cover for pregnancies, IVF and obstetrics can use a small number of discounted policies that provide full cover for all other conditions. They are: Australian Unity Gold Hospital, GMHBA Gold Hospital (no pregnancy) Gap Saver and NIB Top Hospital No Pregnancy.

CHOICE tip: For hospital policies, we don't recommend restricting your policy to save money, as that can mean you're not covered for the unexpected. But it can be a smart move for extras cover, depending on your needs.

What about the rebate?

The so-called 30% rebate on health insurance premiums was also reduced, because premium increases are usually above inflation. And if the increase is higher than the CPI, the rebate is reduced – so you are not only paying more but also getting back less.

Last year the rebate was 25.9% and this year it will be about 25.4%. This means in real terms you will be slugged by a 4.7% higher premium on average. Also, the rebate only applies in full to singles earning up to $90,000, and couples and families earning up to $180,000.

Do 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.

Discounts for families

Many health insurers offer perks for families:

No excess for kids

Hospital policies that require an excess often do not charge the excess for children who need to go to hospital. Make sure this applies to your policy.

No gap for kids

For extras policies, some services can be offered gap-free for children. For example, a number of health funds including Medibank offer no out-of-pocket expenses for children for some dental services – other insurers offer some dental services gap-free for adults as well at selected providers.

Age limits and cover for young adults

Since family premiums are the same as couple's premiums; children are essentially covered for free. Most insurers allow children to be covered on their parents' policy up to a certain age, generally 21. Dependent children in full-time study are often allowed to stay on the policy until they turn 25.

Some health funds also offer 'extended family policies' at a higher charge that allow you to include older children who are no longer deemed dependent.

Discounts for single parents

In the past, single parents were charged the family rate, which means they paid double the premium that singles did.

Since 2007, health insurance funds have been able to give single parents a reduced premium compared to the family rate.

Not all health funds offer lower premiums, however, and the amount can vary; one fund may offer 10%, another 30%. Health funds may also offer lower premiums for hospital cover, but the full family premiums for extras cover.

If you're a single parent, make sure you're with a health insurer that gives you a reduced premium. And if you've had the same health insurance policy since before 2007, check with your insurer. 

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