How much does private health insurance cost?

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Trying to wrap your head around the actual cost of private health insurance can be a complex job – with everything from premiums and excess to extras coverage and more to think about. But fear not, our helpful guide will break down the financials of private health insurance and explore all the contributing factors.

Whether you’re eyeing off hospital, extras only cover or a combination of both, understanding the nuances – including rebates and state-specific variations – is key. So let’s get stuck into the information you need to make the best decision about your health insurance.

How much does private health insurance cost?

Before we examine a few examples of actual private health costs, it’s important to understand that there’s no one-size-fits-all price for every Australian. The amount that you end up paying will be influenced by several different factors, from your age and the level of cover you want, to the amount of excess you choose and whether or not you want to take out extras or ambulance cover.

But for the sake of argument, let’s look at some example costs. For singles, the average annual cost for combined hospital and extras cover can range from $3,017 (if you are under 36) to $3,829 (if you are 60 or over). Breaking it down monthly, you’re looking at around $251 for young Aussies, $288 for middle-aged and $319 for those enjoying their golden years.

If you’re just after hospital cover, the annual tab ranges from $2,257 to $3,076, with monthly instalments starting at $188 and rising to $256. Meanwhile, extras-only plans clock in at an average of $877 to $1,157 annually, which translates to around $73 to $96 monthly. Bear in mind that these figures are based on a lower tier of extras cover.

But private health insurance is about more than just numbers. The type of policy, your preferred fund, the size of your family (if any) and even where you live in Australia all play pivotal roles. Hospital cover, which is split into Gold, Silver, Bronze and Basic tiers will allow you to pick a price that matches your budget and your healthcare needs. For example, a Gold-tier policy from a fund like St Luke’s Health costs around $160.89 monthly for a 30-year-old in NSW who earns less than $90,000 a year. Silver, Bronze and Basic get cheaper as you go down the tiers – but cheaper health insurance means you're also covered for fewer things.

If all those numbers are giving you anxiety, remember that you might be eligible for the private health insurance rebate. Depending on your age and income, this rebate could sway your policy costs by over 25%. At the other end of the scale, don’t forget about lifetime health cover (LHC) loading: a 2% annual increase if you don’t hold hospital cover once you turn 31. Costs and policy excess will also fluctuate depending on which state or territory you live in, so speak to your provider and always read your policy’s PDS!

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How much does extras only cover cost?

If you are really only interested in getting cover for expensive health services like dental check-ups, physiotherapy sessions or new glasses and contact lenses, extras-only cover might be your best bet. On average, these plans range from $877 annually for lower-tier coverage to $1,157 for a more comprehensive policy. Monthly, this translates to a manageable $73 to $96.

Unlike hospital cover, extras isn’t broken down into Gold or Silver tiers. Instead, each fund will likely have lower, mid-range and higher coverage options. As you might expect, the lower level means you’ll be getting fewer things covered under your policy, whereas a higher (and more expensive) level will be more comprehensive. But the good thing is that being able to choose which level you want means you can tailor your extras cover costs to align precisely with your health needs and budget.

Remember that the cost of extras insurance isn’t just about numbers – it’s a balance between what you want and the financial investment you’re willing to make for certain services.

What factors affect the cost of private health insurance?

As you’ve probably already realised, private health insurance costs are influenced by a huge range of factors, each one playing a specific role for how your premiums are calculated. Here’s a breakdown of the key factors:

  • Cover type and tier: The type of cover, whether hospital, extras or both, and the tier or level within each category will be the biggest determinant of your premiums.
  • Age and income: The private health insurance rebate can make your policy cheaper, but remember that it’s determined by your age and income. Younger Aussies may get access to more affordable plans.
  • LHC loading: If you don’t have hospital cover at age 31 or beyond, a 2% loading is added annually. This can seriously compound the amount you pay over time. You should also think about the effect of things like the Medicare levy surcharge.
  • Where you live: Healthcare costs (and premiums) vary between states and territories.
  • Policy excess: Choosing a higher excess on your policy will reduce your premiums – however, it will also increase your out-of-pocket costs when it comes time to make a claim.
  • Extras cover inclusions: More services covered under your extras only policy will ultimately mean higher premiums.
  • Number of people insured: The number of people covered under the policy, such as singles, couples or families, will affect your private health costs.

How much should I spend on private health insurance?

Figuring out how much you should actually put aside for private health insurance really comes down to your personal circumstances and your priorities around health cover. Your budget will probably factor in things like your income, family size, current lifestyle and spending habits, as well as your individual health needs.

For those who want comprehensive cover with lower out-of-pocket expenses, setting aside a higher budget may be the smart move – especially if you expect to be using certain medical services quite frequently. On the other hand, if you don’t want to spend through the nose on premiums then you might decide to go for a higher excess on your policy.

In all things, be sure that you balance the cost considerations with your health priorities. That means taking the time to think about your age, any pre-existing conditions and the likelihood that you – or a member of your family – might need treatment in the near future.

How does private health insurance excess work?

Private health insurance excess is the amount you agree to pay upfront when you make a claim. It’s a fixed sum chosen when you take out a policy and can affect how much you pay on your premiums. Going for a higher excess usually results in lower premiums, but it means you'll pay more out of pocket for each claim.

Conversely, a lower excess means you pay higher premiums – but, this reduces your upfront costs whenever you need to access medical services.

Final word

From hospital to extras and beyond, understanding exactly what influences your private health costs can empower you to make more informed decisions. As always, compare your coverage options wisely, consider your own health needs and make sure your preferred policy fits your budget!

Remember, the cheapest policy isn’t always the best fit. And the most comprehensive policy might not actually be necessary for your circumstances. Striking the right balance will make your health cover align with both your financial situation and your wellbeing.

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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