The age-based discount
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What is the age-based discount?
To encourage younger people to take out cover, the Australian Government introduced the age-based discount in 2019, which allows funds to reduce hospital premiums by a certain percentage based on the person’s age when they first take out cover.
The age-based discount could reduce the premiums for eligible hospital cover policies held by Australians aged 18 to 29 by up to 10%. Below is an example of the discounts available and what these savings could mean for you:
| Discount | Age* | Discount on a $1,500 (per year) hospital policy |
|---|---|---|
| 10% | 18-25 | $150 |
| 8% | 26 | $120 |
| 6% | 27 | $90 |
| 4% | 28 | $60 |
| 2% | 29 | $30 |
| 0% | 30 | $0 |
|
Source: Private Health Insurance Ombudsman – Age-based Discount. Accessed January 2024. *Age when you first purchase a hospital policy offering discounts. |
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So, if you’re a 25-year-old and paying roughly $1,500 a year for hospital cover, you could save up to $150 each year – a percentage discount that you’d enjoy every year until you turn 41, provided that you hold a policy (or switch to a policy) that allows you to retain your age-based discount. At this age, it’ll start to decrease 2% per year until it’s no longer available to you.
The purpose of the discount is to help make health insurance more affordable for young adults and encourage them to take out cover earlier in their lives. You just need to hold continuous cover on an eligible product (meaning you can’t have any gaps where you don’t have cover) or you might lose it.
Getting a discount
It’s optional for health funds to offer products that include an age-based discount. This means that even if you’re an eligible age and have hospital cover, there’s a chance your current insurer might not offer the age-based discount for your policy.
Keep in mind also that the age-based discount only applies to hospital cover. Policies that only cover care and treatment outside of a hospital, known as extras cover, will not attract the age-based discount.
You also won’t be able to receive the discount if you’re listed under your parents’ health insurance policy. You’ll need to have your own policy – or a couples or family policy with your partner – to be eligible.
What if my health fund doesn’t offer an age-based discount?
If your insurer doesn’t offer products with an age-based discount, it could be a good idea to compare policies and find out which other funds will. Along with cover that suits your healthcare needs, a discount may help ensure you’re on the most cost-effective policy, now and in the future.
Will I receive a discount if I’m between 18 and 29 and already have health insurance?
If you’re an existing member of a health fund that offers the age-based discount on your policy, you may have automatically received the discount based on your age from 1 April 2019, or your age when you first took out health insurance (whichever is latest). However, please check with your health fund.
Keeping your discount
How does the age-based discount work after I turn 41?
From the age of 41, your discount rate will begin to decline by 2% every year until it reaches zero and is no longer applicable.
For example, say you take out a hospital policy at the age of 27 and receive a 6% hospital insurance discount. Provided you maintain an eligible cover continuously, this discount will drop to 4% when you turn 41 years old, a 2% discount at 42 and will no longer apply once you turn 43.
Can I keep my discount if I change my health fund or policy?
Some health funds may offer a retained age-based discount, which means your discount from your previous health fund will apply if you switch to an eligible policy. As such, be sure to confirm with your new health fund whether you’ll receive a discount before you switch.
What happens if I cancel my policy then take out cover again later?
Any gap in cover means you may lose your discount. For example, if you’re 25 and cancel your policy with the age-based discount and but then don’t move to another eligible policy until you’re 28, you’ll receive the discount based on your current age, not the one you had when you first had cover.
More information
How does the age-based discount work on a couples or family policy?
If you and your partner have couples or family cover that offers a discount, your total discount will be calculated as an average of both your applicable discounts. The age-based discount won’t apply to any dependants covered.
For example, if you have a 2% discount and your partner has a 6% discount, it will balance out to a 4% discount off your couples or family policy premiums.
Is there any other health insurance discount I qualify for?
There’s also a government rebate you can claim to reduce your premiums. Provided you hold cover (either hospital or extras, in this case) and your annual taxable income is less than $144,001 as a single or $288,001 as a couple/family, you can claim this rebate through your tax return or enjoy it as discounted premiums.
Meet our health insurance expert, Steven Spicer
As the Executive General Manager of Health, Life and Energy, Steven Spicer is a strong believer in the benefits of private cover and knows just how valuable the peace of mind that comes with cover can be. He is passionate about demystifying the health insurance industry and advocates for the benefits of comparison when it comes to saving money on your premiums.
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