Affordable health insurance in Australia – What you need to know

Affordable health insurance in Australia – What you need to know
Man takes out australian money currency from wallet
Man takes out australian money currency from wallet

Finding affordable health insurance in Australia

Private health insurance is a big deal for millions of Australians. It means you can get timely medical care, your choice of doctors specialists, the ability to stay in a private room, as well as lots of different wellness programs and other perks.

But given the annual hikes to health insurance premiums and the rising cost of living, finding affordable health insurance – without compromising on the cover you need – has never been more important.

Key Takeaways

  • Don’t think of affordable health insurance as being about just the price – it’s about value. The cheapest policy might exclude critical treatments and result in higher out-of-pocket costs when you need care.
  • Some comparison sites place price above cover, which means you’ll miss out on better policies that suit your health needs.
  • Government rebates and incentives can reduce your premiums, which might make taking out private health cover truly affordable for you.
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Why affordability matters more than just price

When comparing health insurance, it’s unsurprising that most people instinctively look for the lowest-priced policy. But the cheapest policy isn’t always the most cost-effective in the long run. While cutting costs on your monthly premiums might seem like the smartest move right now, having inadequate cover can mean you end up paying higher out-of-pocket costs when you actually need medical care.

Think about it this way: a basic hospital policy will usually exclude important services for older Australians, like knee replacements, cataract surgery and rehabilitation. While it will certainly save you a bit of money in the short term, it can put unexpected – and, frankly, unnecessary – financial strain when those procedures aren’t covered. If instead you pay slightly higher premiums but get a better-value policy out of it, it could save you thousands of dollars in the long run by covering treatments you will actually use.

According to the latest figures from the Australian Prudential Regulation Authority (APRA), the average out-of-pocket expense for hospital treatment was $432.12 as of the September 2024 quarter – up a substantial 8% from the year prior. With everything getting more expensive these days, it really goes to show the importance of picking a policy that balances affordability with benefits.

The problem with cheap comparison sites

Some Australians try to compensate for rising premiums by using health insurance comparison websites to find the best deal. While these tools are very convenient, the biggest names in the business usually place their focus on price rather than overall value. Most comparison platforms:

  • Pay attention to policies with the lowest premiums rather than those with the best cover.
  • Partner with only a handful of insurers, meaning they don’t show you the full range of options available to you.
  • Use aggressive sales tactics, which means you have to field repeated follow-up calls and are pressured to purchase a policy on the spot.

Instead of relying solely on the comparison sites you see advertised on TV, it’s better to compare policies with unbiased experts like Fair Health Care Alliance who will work to understand your individual needs and then find policies that align with your circumstances.

What makes a health insurance policy affordable?

We’ve said it before but it bears repeating: affordability in health insurance isn’t just about low monthly premiums. The true measure of affordability is in value for money – meaning a plan that meets your medical needs at a reasonable cost. Here are some of the biggest factors to consider when choosing an affordable health insurance policy:

1. Cover that matches your needs

Ask yourself a few questions about your current health requirements:

  • Do I need hospital cover for specific procedures (e.g. seniors health insurance that includes joint replacements or cardiac services)?
  • Am I also looking for extras cover that includes benefits for dental, physiotherapy and optical?
  • Would I prefer choosing my own doctors and specialists, or would I be more comfortable in a private hospital room?

2. Excess

A higher excess (the amount you pay before your health fund contributes) can lower your monthly premiums. But if you expect to be visiting the hospital relatively frequently, then a higher excess might mean you aren’t hit with more out-of-pocket expenses.

3. Rebates and discounts

The private health insurance rebate helps to reduce premiums for many Australians, depending on their age and income. As of 2025, singles earning under $97,000 and families earning under $194,000 qualify for the highest rebates of between 24.608% and 32.812%.

4. No unexpected exclusions

The vast majority of low-cost hospital policies will exclude important services, so always check what’s covered versus what isn’t – especially for things that are essential to you, which might include procedures like knee surgeries and mental health services.

Portability

Don’t re-serve waiting periods when you switch to a new health fund or policy

“John was immediately covered for a hip replacement in private hospital because he had already served his waiting periods for joint replacements on his old policy”

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4 Steps for finding an affordable health insurance policy in 2025

Step 1: Figure out your ‘must-haves’

  • If you’re young and healthy, you might only need a Basic or Bronze policy.
  • If you’re planning to start (or grow) your family, higher-tier policies that include pregnancy and obstetrics are a must.
  • If you’re over 50, think about the value of upping your cover to Silver or Gold policies for joint replacements, cardiac care, cataract surgery and more.

Step 2: Compare multiple health funds and policies

Don’t rely on just one comparison site. Instead, do your research and shop around. It’s also worth speaking to the experts at Fair Health Care Alliance who work independently from just a small network of insurers – which is what other comparison sites do.

Step 3: Pay attention to waiting periods

  • Upgrading your cover? You may have to serve a 12-month waiting period before claiming for pre-existing conditions and certain services that you are now covered for.
  • New to private health insurance? You will need to wait two months for general hospital services and 12 months for obstetric-related claims.

Step 4: Take advantage of government incentives

  • Rebates: Check if you qualify for a rebate to lower your premiums.
  • Lifetime Health Cover (LHC) loading: Avoid paying extra by signing up for hospital cover before you turn 31.
  • Medicare Levy Surcharge (MLS): If you earn above $97,000 as a single or $194,000 as a couple/family and don’t have hospital cover, you could be stung with an extra charge at tax time.

Why Fair Health Care Alliance?

Since 2017, Fair Health Care Alliance has been helping Australians tackle the often-confusing world of private health insurance. We believe in a value-over-price approach – in other words, we strive to help our members find policies that match their healthcare needs without unnecessary costs.

We work with a wider range of insurers to give you unbiased options, while placing more emphasis on custom health cover instead of one-size-fits-all comparisons. We also work to find you policies with benefits you’ll actually use, so you can get more from your insurance. Start comparing today to find the right plan and save.

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FAQ's

Compare policies beyond just price – look at the level of cover, rebates you’re eligible for and exclusions. Speak to Fair Health Care Alliance for the most unbiased policy options.

If you’re switching to a policy with equal or lower cover, further waiting periods won’t usually apply. Upgrading, however, might require you to serve new waiting periods.

The private health insurance rebate can give you a substantial reduction on your premiums if you’re eligible (based on income and age).

Affordable health insurance in Australia – What you need to know

Founder at Fair Healthcare Alliance

Aaron Savrone, founder of Fair Health Care Alliance (FHCA), is a health insurance expert with over 15 years of experience. Specializing in transparent, customer-focused advice, Aaron launched FHCA in 2017 to address the lack of genuine care in the health insurance comparison space. With a commitment to simplifying complex policies and data, Aaron and the team have earned FHCA top ratings and awards, including a 5-star Google Review score from hundreds of reviews and winner of the Best Insurance Comparison Website by ProductReview 3 years in a row (2023, 2024, 2025).

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