Overview

Most health funds in Australia raise their premiums every year. While this helps the funds offset any rising healthcare costs, it can also add hundreds onto the cost of health insurance for many policyholders.

At the start of the year, the federal government announced health premiums would rise by an average of 2.70% on 1 April.^. The Department of Health calculated that this rise meant the average policyholder would see an increase of $125.84 if you’re on a family or couples policy, or $58.24 for singles.

But some health funds are increasing their premiums by significantly higher than the government’s stated average, while a handful of funds have opted to delay the price rise until later in the year.

If that all sounds a bit confusing, don’t worry. Below we’ll take you through how the 2022 increase may affect you, the difference in premium increases by fund, and how you can make sure you’re not overpaying for cover.

Key Points

  • On 1 April 2022, health insurance premiums are set to increase by an average of 2.70%.

  • The federal government estimates this will be average increase of $125.84 for families and$58.24 for singles policies.

  • Compare Club’s data suggests that the true cost premium increase could be higher for many members.

  • Some funds have opted to delay their price rise until at least August.

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How much is the 2022 average health insurance premium increase?

The average premium increase will be 2.70%. Based on federal government estimates, this means that the average policyholder could see an increase of $125.84 if you’re on a family or couples policy, or $58.24 for singles policy holders.

According to the Department of Health, this will be the lowest increase in 21 years, although some holders will be hit with a price rise that’s a lot higher than the average. 

The bottom line? Check any messages from your fund. They may not always be easy to understand, but they will help you work out if you’re paying too much.

When will my health insurance premiums increase in 2022?

Health funds usually increase their premiums on 1 April. In 2022. While some funds will raise prices on this date, others have chosen to push back the increase until later in the year to offer a little financial relief to their customers after two years of the global pandemic. 

At the time of writing, the following funds have announced they’ll defer their increase until later in 2022:

  • Medibank

  • Ahm

  • Nib

  • HCF

  • Teachers’ Health

  • Defence Health

  • Latrobe Health

  • AIA

  • Transport Health

  • Nurses & Midwives Health

Funds in bold are on Compare Club’s panel. Funds in italics have restrictions on who can join. We’ll update this section if any other health funds announce they’re pushing back increases.

So what does it mean if a fund has delayed their price increase?

  • Members will get a few extra months of lower premiums but the cost of their policy will go up at some point in 2022.

  • A delayed price rise this year could mean two premium increases in quick succession if the funds revert back to the standard 1 April date in 2023. We already saw this happen last year when insurers put prices up on 1 October 2020 and again six months later.

  • Be smart: Thinking of switching? You may get a better deal by moving funds before your insurer puts their prices up. Our experts can help advise you on where to find a good deal.

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Which funds are putting up their premiums in 2022?

The table below shows planned premium increases for 2022 for each health fund:

Source: Department of Health

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How much extra will a health insurance policy cost me in 2022?

If you normally pay $100 a month for private health insurance, a 2.70% rate rise would see your monthly premium increase to $102.70.

That might not sound like much, but when you add up the costs over the course of a year, it can make a huge difference to how much of your income you're spending on health insurance.

Our internal data shows that if you haven’t switched health funds in the last five years, you could be paying a whole lot more than you need to based on average premium increases.

Not only that, but some funds are increasing their average premiums by well above the government average of 2.70%– the highest increase is CBHS Corporate, who are putting premiums up by an average of 5.33%.

That's why it's important to check your policy costs if your health fund tells you that your premiums are going up.

You could actually be at the top end of their rate rise.

You can use our private health insurance rate rise calculator to check your fund’s expected average premium increase for 2022.

Will my health fund tell me about the premium increase?

Yes. Your health fund should let you know about your premium increasing by letter, email or SMS. This usually happens in February or March, so keep an eye out for any communication.

Why do health insurance premiums increase each year?

The most common reasons why private health insurance funds increase their premiums annually include:

  • More people are accessing our health services each year.

  • An ageing population and higher rates of conditions like cancer or heart attacks places a bigger strain on our health services.

  • Improved treatments are often more expensive for our healthcare system.

These factors help explain why health funds increase their premiums – and the cost of providing insurance to us gets more expensive each year.

They don't always pass on the additional costs to us, their customers, but this is generally why you can expect your premiums to go up.

Rate rises aren't ideal but in theory they should allow health funds to continue to be competitive in what they offer their customers, such as additional services and benefits. That doesn’t always translate into value for money for individual customers though.

Are health insurers doing anything to help members affected by the pandemic?

Many health insurers offered some form of relief during the coronavirus pandemic as it continued through 2021, such as freezing premiums, rolling over extras or refunding premiums to members who weren’t able to use their health insurance due to ongoing lockdowns across the country.

What your health insurer might have done during the coronavirus pandemic for you and the other members will vary.

Can I claim back my health insurance premiums on my tax return?

Possibly. If you have private health insurance, you may be eligible for a rebate on premiums.

If you haven't claimed the rebate through reduced premiums throughout the year, you may be able to claim it as a tax offset.

In these cases the rebate is calculated as a percentage of the cost of your premiums and claimed as a tax offset by reducing the amount of tax payable on your taxable income.

The rebate amount is calculated based on your age and household income.

Can I avoid the impact of health insurance premium increase in 2022?

The short answer is yes, if you switch to a different, lower cost fund. Our experts at Compare Club can help with this. 

We can compare policies and provide you with options that fit within your budget, saving you time jumping from insurer to insurer and comparing policies yourself.

Will I have to serve new waiting periods if I switch policies?

Not necessarily. You can switch to an equivalent or lower level of cover without serving new waiting periods on your health insurance.

You’ll only need to serve new waiting periods if you have upgraded to a higher level of cover.

Also, remember that any unserved waiting periods will transfer to your new health fund.

So if you end up switching health insurance to an equivalent cover, you may need to finish these unserved waiting periods before you can make a claim.

How do I know if I’m getting value for money from my health fund?

If you haven't changed funds or policies in a few years, there's a good chance you could be getting better value for money elsewhere.

And if you’ve moved to a different state or out to regional Australia, your current health fund may not have agreements with your local hospital or dentist.

One of the fastest and easiest ways to see how your current premiums stack up – and how much you could save by switching – is to compare health insurance quotes.

Is it worth buying or switching health insurance if premiums go up every year?

While Medicare is an essential service for Australians, it does have its limitations. 

Buying private health insurance provides a level of financial protection against health care costs – and it can cover you for things Medicare typically won’t like dental, optical and physio to name a few. 

Appropriate private health insurance can also help you skip the long public hospital waiting times if you need treatment. 

And if you’re income is over the Medicare Levy Surcharge threshold of $90k (or $180k as a couple), you can avoid paying this tax by buying eligible hospital cover***.

That said, it pays to review your private health cover every year or so to make sure you’re not overpaying. It could save hundreds or even thousands of dollars in the long run.

Over the last 5 years, Compare Club’s experts saved customers an average of $320** when they switched policies through us.

That could be enough to cancel out the extra cost of the annual rate rise.

How do I switch to a different health insurer?

There are lots of options to consider if you’re thinking about switching private health insurance but fortunately, you don't have to go it alone.

You can talk to one of our health insurance experts by clicking on the chat button on this page or compare health insurance quotes to see what you could save on your health insurance premiums by switching.

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This guide is opinion only and should not be taken as medical or financial advice. Check with a financial professional before making any decisions. 

*Compare Club does not compare all products in the market. The availability of products compared may change from time to time. Not all products available from our partners are compared and not all products are available to all customers.

^ Department of Health, List of historical premium price changes by insurer for 2022, accessed 25th January, 2022.

^^ Commonwealth Ombudsman, Private Health Insurance - Quarterly Update 100: 1 July to 30 September 2021, accessed 25th January, 2022.

* Department of Health, Delivering Australia's lowest private health insurance premium change in 21 years, accessed 25th January, 2022.

** Based on 111,658 policies sold Jan 2017 - Nov 2021.

*** You can avoid paying the Medicare Levy Surcharge only for the period you hold eligible health cover.