What you need to know about Private Health Insurance Increases in 2025

In 2025, it's expected that all Australian health insurers will increase their premiums on 1 April. While the exact amount is yet to be announced, there are reports that health funds have asked for an average increase of 6.00%. If implemented, this will be the largest premium price hike in the past decade.

It's also worth noting that some health funds may push their premiums significantly higher than the government’s stated average. In 2024, the average increase was 3.03%, but one insurer raised premiums by an average of 5.82%.

If that all sounds a bit confusing, don’t worry. Below we’ll take you through how the 2025 premium increase may affect you, the difference in premium increases by fund, and how you can make sure you’re not overpaying for your health cover.

How much is the 2025 average health insurance premium increase?

The average premium increase is projected to be 6.00% in 2025. The last time there was increase this large (2015), policyholders faced average monthly increases of $24.66 for family cover and $12.75 for singles policies.*

That said, Compare Club's experts have run the numbers against the average cost of premiums we've sold over the past five years, and we estimate the average annual increases will be:

• Singles: $234

• Couples: $335

• Families: $296

• Single parent families: $224

Of course some policies may go up by more and some may go up by less.

The bottom line? Check any messages from your health fund. They may not always be easy to understand, but they will help you work out if you’re paying too much. If you're finding their legalese confusing, Compare Club's experts are here to help.

When will my health insurance premiums increase in 2025?

Health funds are expected to increase their premiums from 1 April. The following funds put up their premiums on this date last year:

• ACA

• AIA

• CBHS Corp

• HHI (CDH)

• Doctors Health

• HBF (includes CUA)

• HIF

• Health Partners

• LaTrobe

• Mildura

• OneMediFund

• Peoplecare

• Phoenix Health

• Queensland Country Health

• TUH

• RBHS

• Westfund

List of historical premium price changes by insurer

During the pandemic, several funds deferred their premium increase until later in the year. At the time of writing, there's been no announcements from any funds about delaying their premiums increases in 2025.

We expect health insurance premiums to rise from 1 April for all funds. If this date alters for any funds we will update you here.

Will any health funds delay their price increase?

• Members may get a few extra months of lower premiums but it's likely that the cost of your policy will go up at some point in 2025.

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

How much extra will a health insurance policy cost me in 2025?

If you normally pay $100 a month for private health insurance, a 6.00% rate rise would see your monthly premium increase to $106. That might not sound like much, but when you add up your 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, and your out of pocket healthcare.

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 may increase their average premiums by well above the government average of 6.00%. In 2015 (the last time premiums rose by over 6.00%), Westfund Corporate health fund put their premiums up by an average of 7.92%.

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 price rise. There could be a better value fund out there where you won't have to wear it all.

You can use our private health insurance rate rise calculator to check your fund’s expected average premium increase for 2025.

Will my health fund tell me about their premium increase?

Yes. Your health fund should let you know about your premium increase by letter, email, app messaging, or SMS. This will happen soon after the announcement from the Federal Health Minister, but before the 1 April increase deadline so keep an eye out for any communication.

Even if your fund delays your premium increase to later in the year, they still need to notify you that it’s happening.

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.

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

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

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

This means that your health insurance rebate is calculated as a percent of the cost of your premium, and you can claim it as a tax offset by reducing the amount of tax payable on your income.

Your private health insurance rebate amount is calculated based on your age and household income. We recommend discussing this with your financial adviser at tax time.

Can I avoid the impact of a health insurance premium increase in 2025?

If you switch to a different, lower cost fund than your current health fund, yes you can. Premiums will still increase by the average amount of 6.00%, but a lower cost policy can still save you money. 

Our experts at Compare Club look at a panel of health policies side by side to provide you with options that fit within your budget and support your lifestyle, saving you time and money.

What is a lock-in premium?

When health insurers increase their premiums, they first give you the opportunity to pay for your next 12 months' cover upfront at your current rate.

This means that you won't have to pay the increased premium rate for up to a year and is known as a lock-in premium.

How do I lock in a premium?

In order to lock in a premium, you simply need to pre-pay your cover before your insurer's price increase comes into effect. You can pay up to 12 months in advance.

If your premium increases, your health insurer must notify you before increasing it. This is a legal requirement and they can't get around it.

When is the best time to lock in my premium?

The rate rise usually starts from April 1st each year, so you'll need to ensure that your bank has processed your payment for your health cover before then.  Some banks can take up to six days to process a payment, and some insurers even have a cut-off date for accepting premium lock-ins, so you’ll need to do it sooner rather than later.

Ideally, locking in your premium in early to mid-March ensures there’s plenty of time for your payment to go through by April 1st.

What are the benefits of locking in my premium?

The most significant benefit of locking in your premium is that you save money. 

Let's say you're currently paying $100 per month for insurance, and your insurer ups their monthly premium to $106.

If you lock in your premium at your current rate, you'll pay $1200 for the whole year, whereas if you left it and paid the increased premium, you'd pay $1272 over the next twelve months, meaning you've made a significant annual saving.

The other benefit of paying everything upfront is that you're left with one less bill to worry about for the rest of the year.

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've 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're overpaying for your cover. You could be getting better value for your dollar elsewhere.

Plus, 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. This can lead to higher out of pocket costs so it's worth exploring your options at least once a year.

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 has limitations, especially for non-urgent care (a category of care that's determined by Medicare - not by you). 

Having private health insurance offers you a level of financial protection against unexpected health care costs – and it covers you for things Medicare typically won’t, like dental (including orthodontics), 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.  

In addition, if your income is above the Medicare Levy Surcharge threshold of $93k (or $186k as a couple), you can avoid paying this tax by buying eligible hospital cover.***

Reviewing your private health cover every year or so ensures you’re not overpaying. It can save you hundreds or even thousands of dollars in the long run.

Over the last 5 years, Compare Club’s experts saved customers an average of $304** when they switched policies through us.

That could be enough to cancel out the extra cost of your annual health insurance premium increase.

How are premiums calculated for health insurance?

Health insurers set their premiums for the various levels of cover they offer.  As a general rule, the higher the level of protection a cover offers, the higher the premium.

After that, the actual amount you pay is dependent on multiple factors, including whether or not you have a Lifetime Health Cover loading, which private health insurer you choose and, of course, the type of health insurance policy you decide to take out.

With that in mind, it's always worth taking the time to carefully compare offers from health insurers# to find one that offers the cover you and your family need at a price you can afford. You can also contact the Private Health Insurance Ombudsman for general information about private health insurance policies.

Sources

^Department of Health, List of historical premium price changes by insurer for 2025.

^^Commonwealth Ombudsman, Private Health Insurance - Quarterly Update to September 2023.

*Department of Health & Aged Care announcement 2024

** Based on 336,746 customers between 1 Jan 2019 - 23 December 2023.

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

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

#Compare Club compares selected products from a panel of trusted insurers. We do not compare all products in the market.

Chris Stanley is the sales & operations manager of health insurance at Compare Club. With extensive experience and expertise, Chris is a trusted leader known for his deep understanding of health insurance markets, policies, and coverage options. As the sales & operations manager of health insurance, Chris leads a team of dedicated professionals committed to helping individuals and families make informed decisions about their health insurance needs.

Meet our health insurance expert, Chris Stanley

Chris's top health insurance tips

• 1

  Australia’s public health system is world-class, but wait times for public hospitals can be long, inconvenient - and leave you living in constant pain while you wait.

• 2

  An appropriate private health insurance policy can speed up your surgery, relieving your pain sooner.

• 3

  Family health cover means your children are covered under the same policy as you.

• 4

  Many health insurance policies come with a 12-month waiting period for pregnancy-related cover, so it’s a good idea to get a family policy organized well before starting your family. This means your child will be covered from birth until at least their early twenties (depending on which health fund you select).