Compare the Market is warning the millions of Australians with health insurance that their premiums will likely rise again in 2025, with the Federal Government set to announce an industry average adjustment in the coming months.

Health funds had until 13 November 2024 to submit their plans for rate adjustments that would apply from 1 April 2025, which means we should expect an announcement on how much premiums are changing anywhere from December to March of next year.

According to Compare the Market’s Economic Director David Koch, there’s a lengthy process that health funds need to go through to get their premium adjustment approved.

“While it’s almost certain that those with hospital and/or extras cover will see an increase to their premiums in 2025, it remains to be seen what that increase will actually be,” Mr Koch said. “But Australians should rest assured knowing that any increase won’t be a cash grab from health funds and there’s a strenuous process that they need to go through to get their premium adjustment approved.

“Health funds must first provide details of their proposed premium adjustments to the Department of Health. The Department of Health and The Australian Prudential Regulation Authority consider various factors before passing on the proposal to the Health Minister for final approval.

“These factors can include an increase in doctor fees, the rising cost of medical equipment, the increased cost of hospital procedures, wages of health professionals, the increased cost of an insurer paying out a claim and more.”

According to Mr Koch, the Australian Prudential Regulation Authority and The Department of Health go through the proposals with a fine-tooth comb and they aren’t afraid to knock back a proposal if they don’t think the increase is justifiable.

“You may recall that some health funds proposed an increase of up to 6% last year, but those proposals were rejected by the Health Minister, forcing health funds to re-submit adjusted proposals,” Mr Koch said. “That did lead to a delay in the Federal Government announcing the industry average increase, which ended up being 3.03%.

“Australians will be eager to know what their health insurance premiums will be for 2025, but it’s important to trust the process and know that the increase must be considered reasonable in order to be approved.”

While the Federal Government’s announcement is important, Mr Koch urged people to pay careful attention to the communication they receive from their health fund relating to their specific policy.

“While this year’s industry average was 3.03%, it’s vital to know that the actual premium change was different between health funds and even individual policies within that fund,” Mr Koch said. “This will almost certainly be the case again next year and because it’s such a mixed bag, it’s really going to be on Australians to understand what their premium adjustment is, whether there’s a better deal available and if there are ways to save.”

Mr Koch’s tips for paying as little as possible for health insurance.

1. Shop around. When the premium increases come around, don’t just accept your renewal letter. See if you can find a similar level of cover with a lower premium. The price can vary between health funds. Comparison websites like Compare the Market allow you to compare a range of policies from different providers.
2. What perks and incentives are available? Health insurers try to secure new customers all year round with perks, incentives, promotions and offers and these can really ramp up around health rate rise time. In the past, we’ve seen everything from waived waiting periods to free coverage for a limited time and access to reward programs offered to customers. Insurers can be quite competitive, so use any incentives to your advantage.
3. Cheaper policies aren’t always the best. Moving to a policy with a lower premium may be tempting, but be aware that this can result in fewer inclusions. At the end of the day, you need to find a policy that offers coverage for services and treatments that are important to you. In fact, a basic policy may offer very little or no major benefits at all. For a small difference in price, you may be better off with a bronze policy which provides a higher level of coverage.
4. All that’s gold may not glitter. Similarly, while more comprehensive policies include a wider range of inclusions, they usually do cost more and you could be wasting money if you aren’t utilising all the services included. Use the upcoming rate changes to assess your health needs, as you may be able to switch to a lower-level policy that still covers you for the services and treatments that are important to you.
5. Don’t be scared by waiting periods. There’s a myth that you’ll need to re-serve waiting periods if you switch health funds or policies, but this isn’t true. Your new health fund will recognise any waiting periods you’ve already served if you’re moving to an equal or lower level of cover. If you are moving to a more comprehensive policy, you would need to serve waiting periods for any upgrades.
6. Policies may have similar names, but they could be different. Health insurance can be a tricky topic to understand, but it’s vital to pay attention to the terms and conditions. In particular, keep an eye out for any inclusions and exclusions, waiting periods, benefit limits, excess amounts and more. This information can be found in your health fund’s policy brochure or by speaking to a health fund representative on the phone.

For more information, please contact:  

Phillip Portman | 0437 384 471 | [email protected]

Compare the Market is a comparison service that takes the hard work out of shopping around. We make it Simples for Australians to quickly and easily compare and buy insurance, energy, and home loans products from a range of providers. Our easy-to-use comparison tool helps you look for a range of products that may suit your needs and benefit your back pocket.