Everything you need to know about health insurance for young adults

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As you enter adulthood, there are lots of things you’ll need to start taking care of on your own – health insurance included. But if you’ve never had to deal with insurance before, knowing where to get started can be a bit of a head-scratcher. That’s what we are here for! From understanding the different tiers of health policies to factoring in the key considerations when choosing an insurer, we've got you covered.

Whether you’re starting your first job, transitioning away from your parents’ insurance or simply want to explore your options, this guide will give you the valuable insights you need to make the best health insurance decision possible.

Do young adults need health insurance?

Health insurance is something we all need during our lives – regardless of age. But when you’re young, taking out your first solo policy can be one of the many milestones as you transition into independence.

Here’s the trouble – many young adults think they are invincible, so why would you ever want to pay for private health cover? While it might seem optional, having health insurance provides invaluable financial protection and peace of mind. Without it, any unexpected medical expenses can quickly put a strain on your finances. And no one wants to start their adult lives being in debt.

Having health insurance also means you can access medical care without worrying too much about how much it costs. Moreover, the right policy will let you choose your preferred healthcare providers and hospitals, so you can trust that you are getting the best care for your particular needs.

Then there are the long-term benefits it gives adults. By keeping private cover from a young age, you can avoid things like lifetime health cover (LHC) loading, which raises premiums for those who delay taking out private health insurance.

What's the best health insurance for young adults?

How long is a piece of string? The reality is, the right policy for you will depend on your individual circumstances. And it will probably change as you get older – especially if you want to up your cover when you start thinking about having your own family.

Whatever your situation, there are a few big factors you should consider to help guide your decision-making. First, reflect on your current healthcare needs and your budget to figure out which level of cover is best. Look for policies that offer comprehensive cover for all the essentials like hospital visits, GP check-ups and specialist consultations. Also think about whether you might want extras cover for services like dental, optical or physiotherapy, based on any existing health requirements.

Another aspect to consider is the flexibility and accessibility of your insurer’s network of providers. They will differ from health fund to health fund, so make sure you read the PDS and go for a policy that has a wide network of hospitals and medical professionals. You’ll also want to do some digging into the claims process and the insurer’s reputation for good customer service.

Then it’s time to see what sort of waiting periods you can expect for different services, or whether any pre-existing conditions you have might impact the policy. Some policies might have longer waiting periods than others, which could affect your ability to access certain services straight away.

Last, you’ll want to compare premiums, excess payments and any potential discounts or incentives across the various policies that interest you. Only by doing this will you be able to find the most cost-effective option that lines up with your budget and healthcare needs.

Here's a quick recap of what most young adults should be looking for in a policy:

  • Comprehensive cover for essential services.
  • Wide network of hospitals and medical professionals.
  • Fast claims processes and responsive customer service.
  • Affordable premiums and excess payments.

The cost of health insurance for young adults

The amount you end up paying for health insurance will depend on things like the type of policy you choose, as well as your personal circumstances. Generally, premiums are determined by the tier of health cover you choose, ranging from Basic to Gold and beyond, and whether you are single or in a couple.

If you’re after combined hospital and extras cover, the average cost of health insurance for young adults is generally around $3,000 per year, equivalent to approximately $250 per month. However, it's important to note that this is just an estimate – actual premiums will vary based on factors like your age, location, health status and the insurer’s pricing structure.

The best thing you can do when looking at health insurance for young adults is to compare quotes from different insurers and review each policy in full detail. Think about your current healthcare needs and budget (set yourself a hard limit – and don’t go over it!) to find a policy that gives you the right balance of cover and affordability. Also keep in mind that your premiums will likely go up over time, so it’s a good idea to review your policy annually to make sure it’s still meeting your needs at a competitive price.

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What is the age-based discount for health insurance?

For several years now (since 1 April 2019), health insurers have been able to offer young adults (aged 18–29) a discount of up to 10% on their private health insurance hospital premiums. The best part? You’ll get to keep this discount until you're 41, until it’s eventually phased out. The age-based discount is available for both new and existing policyholders.

Here’s how it works. For every year you're under 30, you get a 2% discount, up to a maximum of 10% if you’re between the ages of 18 and 25. But it’s important to realise that if you’re already covered as a dependent on a family or single-parent policy, you won’t get access to this discount – you need your own policy to qualify.

Age when you were insured under policy offering a discount
Percentage (%) discount offered

How long can I stay on my parents’ health insurance?

You can stay on your parents’ health insurance until you turn 21 years old. If you’re studying or still considered a dependent, you might even be covered until you’re 31. But this option will disappear if you get married or enter a de facto relationship.

Which services do young adults want included in their health cover?

For many young adults, feeling invincible is part of the charm of youth. But when it comes to your health, it’s better to be safe than sorry. While relying solely on Medicare might seem like all you need, you’re really putting yourself (and your bank balance) at risk in the event of the unexpected. So even taking out something small like a Basic tier policy can be a huge load off your mind.

Then there’s extras cover. ‘Extras’ is just that little bit of added protection that can come in really handy. Depending on the policy you go for, it can cover you for dental check-ups, physio sessions, prescription glasses and lots more. Without it – and considering the eye-watering cost of living these days – those annual visits could hit your wallet hard. Plus, with mental health support becoming increasingly important for everyday Aussies, having cover for counselling and therapy can be a game-changer.

Final word

Get ahead in the game of life by taking out private health insurance as a young adult. Whether you’re just starting out on your own or want to get more independence with your own policy, having the right cover will give you peace of mind and financial security. Don't wait until it's too late – invest in your health today and enjoy a brighter, healthier tomorrow.

Simon Jones
Written by
Simon has spent more than 15 years covering the technology and finance sectors as both a journalist and content marketer. He is fascinated by the convergence of AI and big data, and spends what little free time he can scrape together either wrangling two kids or expanding his gin collection.

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