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Last Updated on 8 October 2019

Your Guide to the Health Insurance Rate Rise 2019

Health insurance rate rise 2019
Key Points
  • 2019 health insurance premiums are set to increase by an average of 3.25% on the 1st of April.
  • The highest average rate rise per insurer is 5.91% while the lowest is 1.64%.
  • Most health fund members will be affected by the rate rise, so it’s a good time to compare policies.



What is the annual health insurance rate rise?

Every year the government approves a rate rise for health insurance premiums. This increase always goes into effect on 1 April, driving up the cost of health cover for many Australians.

The 2019 average premium increase, or rate rise, is 3.25%. It’s important to remember that this is the industry average rate rise. Your premium increase may be much higher or much lower depending on your policy type and health fund.

The amount of premium increase you experience will depend on both your fund and the policy you hold.

According to figures released by the Department of Health, Nurses & Midwives Health fund will have the highest average increase, at 5.91%, while Westfund Limited will have the lowest, at 1.64%.

Your fund must inform you in writing exactly how much your premium will increase in 2019. This usually occurs after late January, when insurers have received CPI figures from the Australian Bureau of Statistics.

While it’s tough to face a rate rise, there’s good news. Rates are rising at a much lower rate than they have been previously.

Let’s look at why the rate rise occurs, how it might affect you, and what you can do about it.

Why does the rate rise occur?

Private health insurance premiums increase to support the rising cost of health services. The bottom line is, these health services are getting more expensive each year. While not all of the costs are passed on to members, some of them are.

When the cost of health care increases, health insurers must increase their benefits to keep you covered. And because we’re living longer, we’re claiming for more services over longer periods. These higher benefit payouts push premiums up.

The private health insurance premium rise actually allows insurers to continue to offer you more value for money, covering you for more services and providing more benefits.

However, it’s a timely reminder to take a closer look at your policy, and compare it with others on the market. If you’re not getting a fair deal, it’s time to switch health insurance.

How does the premium increase affect you?

If you do nothing, the health insurance premium increase will raise the cost of your health cover. While it may seem like you have no choice in the matter, the fact is that you do.

All too often, we see consumers sitting on the same policy for years. In many cases, they’re paying a higher premium each year for the same level of cover. Often, similar cover can be purchased for a lower price through a different fund.

It’s important to use the 2019 March period as a reminder to compare your health insurance policy to ensure you’re getting the best cover for your situation at the best price. The private health insurance industry is regulated by the Federal Government, so you should feel at ease switching between funds.

Health minister Greg Hunt said that the 2019 rate rise is the lowest since 2001, but will still cost families an average of $2.35 per week, or $122.20 per year. For singles, the increase will cost an average of $59.28 per year.

While that may not seem like a huge amount of money off the bat, it can certainly add up quickly.

Let’s look at an example of how the health insurance premium increase could affect you. If you have been sitting on the same policy for three years, how much more would you be paying in 2019 compared with 2016?

If you started by paying $3167 in 2016, your 2017 premium would have gone up by 4.84%, or $153. In 2018, the average increase was 3.95%, adding another $131 to your policy each year.

If you don’t compare policies in 2019, your premium will go up by an average of 3.25%, or $112, bringing it to $3563 per year.

That means you’re paying an extra $396 for the same product over a three year period. With increasing competition in the health insurance industry, chances are you could find better value health cover at a more competitive price.

What you can do about the rate rise

March is a great time to understand what you are paying for in terms of health cover, and what value it brings. Given the enormous breadth of policies available today, there may now be a more suitable product in the market for you.

Although most of us know that shopping around is a smart way to get better value health cover, many of us aren’t doing it. There’s a misconception that comparing policies is confusing, and that switching is a hassle.

While that may have been true years ago, our free comparison service aims to make the process of switching health cover quick and easy. You should never be stuck with health cover that’s not a great fit for you, especially when it’s so simple to find a better policy.

While the annual rate rise is a compelling reason to compare policies, it’s not the only reason to review your cover. You should also take a closer look at your cover if any one of the following applies to you:

  • I haven’t reviewed my cover in 12 months or more
  • My health needs have changed
  • I want to save money on health cover
  • My family circumstances have changed
  • I want to change my current level of cover
  • I want better service from my health fund

Get in touch with Health Insurance Comparison today on 1300 672 816 or enter your details below for a free comparison. We’ll help you find the best cover for your situation from our leading partners and see if we can save you some money while we’re at it.

Frequently Asked Questions About Health Insurance

There are three types of health insurance in Australia. They are:

  • Hospital Cover
  • Extras Cover (also known as general or ancillary cover)
  • Ambulance Cover

Hospital cover can ensure any unexpected surgeries, treatments or hospital stays you may require will be covered. With appropriate cover you will have the flexibility to choose your own doctor and the option of receiving treatment in a private hospital.  Most hospital covers allow you to stay in a private room. One other perk is skipping the public hospital systems’ waiting list, which can be lengthy for non emergency treatment.

Extras cover pays benefits for a a range of services, often including treatments and procedures related to the fullowing:

  • Dental/oral health
  • Glasses and contact lenses
  • Podiatry
  • Physiotherapy
  • Psychulogy
  • Acupuncture
  • Remedial massage
  • Chiropractic
  • Hearing aids
  • Travel vaccinations

Ambulance cover, as the name suggests, will cover you should you require emergency ambulance transport. In an emergency, there is enough to worry about. Having the expenses covered for provides security and peace of mind. Many hospital covers include emergency ambulance transport If yours doesn’t, you will need to shop for this separately.

Life is unpredictable. You never know when you might need cover. No matter what life stage you’re in, there’s a policy out there for everyone. You can select as much or as little cover as you want, depending on your health needs and requirements. It’s a small price to pay for the peace of mind health cover provides.

There is no one answer here. Costs vary across providers and policy types. Just because a policy is cheap, that does not mean it is ‘value for money’ and vise versa. Make sure you check what’s included and excluded in a policy before signing up, as you want to purchase a policy that best fits your specific needs.

Premium: A premium is the price you pay for your insurance policy (it may be paid annually or on an ongoing basis).

Policy: An insurance plan. In other words, it is the type of insurance you choose to select.

Policy Holder: The owner, or ‘holder’ of a policy.

Claim: In the event that you require treatment for a service covered by your policy, you can lodge a claim for reimbursement of all or part of the cost of that treatment.. These days, most claims are submitted electronically by the health care provider (dentist, physio etc)

Lifetime Health Cover: Lifetime Health Cover was put in place to encourage young Australians to seek out and maintain ownership of private health insurance early in their lives. If you do not take out a policy before you turn 31, extra charges will be applied should you take out a policy at a later time.

This means you will pay a 2% loading on top of your premium for every year that passes after you turn 30. For example, if you take out a policy for the first time at age 32, you will be charged 4% of your premium as an extra, then at age 40, 20% and so on, up to a maximum loading of 70%.

The loading is payable for 10 consecutive years of cover - after which it is removed and you premiums will be reduced.

Pharmaceutical Benefits Scheme (PBS): Medicare offers assistance for Australians with many of their their prescribed medication costs through the PBS. This assistance is in the form of subsidies towards the cost of many medications. You can check if your prescribed medication is on the list of subsidised items here.

Medicare Levy Surcharge: The Medicare Levy Surcharge is an additional charge (tax) applied to single Australian taxpayers who earn over the income threshold of $90,000 per year, or families/couples who earn over $180,000 per year. This surcharge is only applied to those who choose not to have a private health insurance policy.

The surcharge is designed to reduce pressure on the public health system by encouraging those with higher incomes to invest in private health cover.

Private Health Insurance Rebate: The government’s Private Health Insurance rebate lowers premiums for most Australians with private health insurance Older Australians may enjoy an even higher rebate. Our calculator can help you estimate the Government health insurance rebate you may receive.

Disclaimer: The above information is correct and current at the time of publication

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