D-day for health insurance hikes as customers urged to switch

Households are in for greater financial strain from today as private health insurance hikes kick in. Customers are facing average price rises of 3.73%—the steepest increase since 2018.

In a small additional sting for policyholders, the government’s private health insurance rebate drops down a notch from today, decreasing from a maximum of 24.608% to 24.288% for Australians under 65. The rebate is calculated annually based on the average premium price rise and CPI (See table at end).

As a result, Canstar’s analysis shows someone with a single gold hospital policy previously paying $2,896 a year, could be staring down the barrel of a $121 price hike from today if their premium rises by 3.73%. This assumes they are earning $97,000 or less and are eligible for the full rebate for under 65s.

Gold hospital cover: potential annual increase

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Source: canstar.com.au. Premiums as of 5 March 2025 based on state averages weighted by proportion of insured people according to APRA. Based on hospital insurance policies on Canstar’s database (exclusions apply) and includes the maximum rebate for under 65 (24.608% and 24.288%).

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nib, BUPA policies set to rise by over 5%

The Federal Government’s 3.73% rise for health insurance is an average, rather than a cap on how much insurers can lift the cost of each of their policies.

Last year, the average price increase was 3.03%, yet the average price of a gold single hospital policy rose by 11.2%, according to Canstar Research’s analysis of pre- and post-April 2024 prices.

Similarly, across the funds, some insurers are permitted to increase their policies by more than others. Four of Australia’s five largest health funds are raising premiums this year above the national average:

● nib: 5.79%
● Bupa: 5.10%
● HCF: 4.95%
● Medibank: 3.99%
● hbf: 2.80%

More than 1 in 3 Australians with private health insurance cover have never switched policies

Despite rising annual health insurance costs, a new survey of over 2,000 Australians with private health insurance found that 38% have never switched policies and another 46% haven’t reviewed their policy in the past 12 months.

Among the 15% who did switch health insurance policies in the last year, the majority reported savings, reducing their costs by an average of $78.50 per month or $942 per year on their policy.
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Source: canstar.com.au. Survey of 2,040 people with private health insurance in March 2025. Figures don’t add up to 100% due to rounding.

Canstar’s Data Insights Director, Sally Tindall says, “The price hikes keep piling up with private health insurance the latest to hit the hip pocket.”

“Shelling out for private health insurance can be frustrating for many people. Like so many insurances, if you’re not making claims on your cover it can feel like you’re getting dudded, yet if you do make a claim it’s the one thing you’ll profusely thank yourself for taking out.

“The big carrot in the private health insurance system is the government’s rebate, which unfortunately has been peeled back ever so slightly as a result of an annual review process.

“While the impact of the reduction in the rebate is minimal, it’s yet another sting to the budget some households could do without.

“If your health insurance is putting a strain on your budget, there are ways to save without having to go without adequate cover.

“First up, see if you can minimise the fallout from the April price hikes by switching providers. You might find you can avoid the hikes altogether and potentially even save money just by switching insurers.

“Reviewing your cover is also important and just after the April price hikes is a good time to do this. Take stock of how much you are paying versus the competition but also take the time to review your cover to make sure it’s still fit for purpose.

“Life, death and marriages, along with the state of your joints, eyes, heart and most other body parts should be front of mind when reading over the fine print.

“Not having cover when you need it is one thing. Thinking you have cover for something, only to realise you haven’t read the fine print is possibly even more frustrating.”

Five ways to save on health insurance

1. Review your cover – make sure you are paying for the cover you need or might need.

2. Shop around for a better deal – previous Canstar research shows a single person in NSW could save up to 44% by switching within the gold tier. Many providers also offer sign-up incentives such as a number of weeks of free cover, cashback or rewards points—just don’t pick a provider solely based on the dangle of a discount.

3. Mix and match – consider mixing and matching your hospital and extras cover when you’re shopping around. You may find it’s cheaper to use two different providers for each cover.

4. Opt for a higher excess – choosing a higher excess can bring down your premium. Of course, be aware that if you need to make a claim, you’ll need to fork out that money so weigh up the savings versus the risk.

5. Pay by direct debit – Canstar’s research shows that almost half (43%) of providers will give you a discount for paying by direct debit, although some come with conditions so read the fine print.

Private health insurance rebate changes – 1 April 2025

The government’s private health insurance rebate is designed to encourage people into the system in the form of a discount on your insurance premium. The rebate applies to hospital and extras cover.

Like many government contributions, the incentive is tiered based on your income, with the current rebate reducing to zero from an annual income of $151,001 for a single person.

The rebate is calculated based on the “Rebate Adjustment Factor” which is the difference between CPI and the average premium increase with a maximum drop of 0.43 percentage points for those aged 70 and over earning under $97,000 as a single person.

Health insurance rebate level changes from April 2025

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Source: Privatehealth.gov.au.

The income brackets will be revised on 1 July to account for wages growth with the base tier, where the maximum rebate is applied per age group, increasing to $101,000 for singles and $202,000 for families. The thresholds for higher-income tiers are also rising.

Health insurance rebate new income brackets from July 2025

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Source: Privatehealth.gov.au.

If you’re looking to switch policies or take out private health insurance for the first time, you can compare health insurance using Canstar’s comparison tables. These tables are a quick and easy way to compare the policies and providers currently on Canstar’s database. You can also book a call with a health insurance professional if you would like to discuss your health insurance needs.

It’s important to read all relevant documentation, such as the Product Disclosure Statement (PDS) and Target Market Determination (TMD), for any policy you are considering.

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Cover image source: pogonici/Shutterstock.com