Key Takeaways
- Health insurance premiums almost certainly won’t be cheaper in 2026 – but the exact increase isn’t locked in yet.
- More claims, rising hospital costs and bigger gap fees are all putting pressure on premiums across private health funds.
- You can’t control decisions about premiums, but you can control your cover – especially how you compare and save.
The cost of health insurance in 2026
If you’re already feeling the squeeze from higher health insurance premiums, you’re not alone. Around 45% of Australians now have hospital cover and 55% have some form of extras cover, and those numbers have continued to grow despite cost-of-living pressures.
With millions of Aussies covered for either hospital treatment or extras (or both), even the smallest percentage bump could add up to billions of dollars in extra premiums in 2026 and beyond. So it’s fair to ask: will health insurance costs rise in 2026? And if so, which is likely to be the case, what can you actually do about it?
Yes, premiums are very likely to go up again in 2026, but by how much – and what that means for you – depends on your policy and the steps you take right now.
How premium increases work in Australia
Every year, health funds submit their proposed premium changes to the Federal Government. They are usually lodged in the second half of the year and need to be approved by the Health Minister before they can take effect. A few important points to be aware of:
- Increases are averages: When you see “average increase”, that’s across the whole fund. Some products can go up by much more (or less) than that figure.
- Every fund is different: One major fund might get approval close to the industry average, while another could be higher or lower.
- Your price rise is specific to your policy: A low-cost Bronze policy might change by a different percentage than a comprehensive Gold policy.
In 2025, the average premium increase approved by the Government was 3.73%, a fair bit higher than the 3.03% rise in 2024. But some funds sat even higher above that average, while others came in below it.
That’s why two people can have completely different experiences. One sees a modest increase, while the other gets a letter that’s closer to bill shock.
What we know so far about 2026 premiums
We don’t yet have the official premium decisions for 2026. But several signs point in the same direction: another increase is very likely.
Independent analysis suggests the industry-wide rise could sit somewhere around the high-3% to mid-4% range. On current average prices, that kind of increase could mean:
- Around $127–$144 extra per year for a single policy.
- Up to $200 or more per year for a family policy.
Bear in mind that these are projections, not final decisions – but they match up with the broader trend of premium increases tracking above general inflation in recent years.
The underlying membership base is also growing. APRA data shows more than 12.5 million people with hospital cover and over 15.2 million with general treatment (extras) cover as at June 2025, up on the previous year. More members claiming more often puts further pressure on costs.
So while we can’t yet quote the exact health insurance premiums increase 2026 has in store, it’s reasonable to plan on the basis that your cover is unlikely to stay the same price.
Why premiums keep going up
Premiums aren’t just moving up because funds feel like it. There are in fact a number of things that are pushing costs higher across the system as a whole.
1. Higher claims and use
Health funds are paying out more in benefits than in previous years. Hospital benefits paid by funds grew by around 8% in 2024, far outpacing health inflation of about 4% during the same period.
When benefits per member rise faster than the cost of providing insurance, premiums eventually need to catch up.
2. More expensive care
Australians are living longer but are now dealing with more chronic conditions. We’re seeing:
- More joint replacements, cardiac procedures and technical surgeries.
- Greater use of advanced imaging, devices and biologic medicines.
- Longer episodes of care, including rehab and follow-up.
Every procedure can cost upwards of tens of thousands of dollars per case in the private system – which again increases the total benefits paid by funds.
3. Rising out-of-pocket costs
Even with insurance, lots of people are paying more out of pocket. APRA data shows the average gap payment per hospital episode reached $426.80 in early 2024.
The AMA also reports that 87.7% of in-hospital services were provided with ‘no gap’ arrangements in 2023–24, down from 89.3% a few years earlier – meaning a higher share of services are now attracting some out-of-pocket cost.
While this doesn’t itself set premiums, it does show that pressure on overall healthcare costs is very real and definitely growing.
4. Industry margins and regulation
According to APRA, health insurers kept a whopping 16% of premiums as profit and management expenses in 2024–25, paying out just the remaining 84% in benefits.
The regulator expects funds to stay financially healthy enough to pay future claims, but also scrutinises whether proposed increases are actually justified. It’s tension that plays out every year when premium rises are assessed.
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”
How Aussies can prepare for higher insurance costs
You can’t change the industry-wide forces at work. But you can control how your own policy works for you. When you’re thinking about how Aussies can prepare for increased insurance costs, it helps to break everything down into three steps.
1. Know what you’re paying – and what you’re getting
Start by asking yourself some basic questions:
- What’s your actual annual premium now (not only the fortnightly amount)?
- Which hospital and extras categories are you covered for?
- Which ones have you used in the past 12–24 months?
Many people will find they’re paying for things they haven’t claimed on for years, or that their policy is cheaper because it has more exclusions than they even realised.
2. Don’t just downgrade blindly
When money is tight, it can be tempting to slash cover to the bare minimum. But that can backfire if:
- You later need a service that’s excluded under the cheaper policy.
- You end up on a public hospital waiting list for surgery you thought was covered.
- You delay treatment because the out-of-pocket costs are too high.
The smarter approach is to swap out poor-value features, not simply chase the lowest price. And it’s here where a conversation with a comparison service – like Fair Health Care Alliance – can help you compare health funds while keeping an eye on true value.
3. Use the tax system and incentives to your advantage
For higher-income earners, premium changes can affect the Medicare Levy Surcharge (MLS) and the private health insurance rebate:
- Having eligible hospital cover can help you avoid MLS if your income is above the thresholds.
- The government rebate can discount your premiums depending on your age and income.
When you’re working out how to save money on health insurance premiums, it’s worth checking on how these incentives apply to you – and whether adjusting your policy could change the equation.
Top tips for getting the best value health insurance in 2026
- Look at the little guys: The largest funds won’t always give you the best value. Not-for-profit and member-owned funds can return a higher share of premiums in benefits, and some smaller funds are strong performers on things like hospital cover value and gap arrangements.
- Compare inclusions: When you compare health funds with Fair Health Care Alliance, you can look at which hospital categories are fully covered, restricted or excluded, as well as how generous the extras limits are for the services you actually use. We also show you how each fund performs on ‘no gap’ and ‘known gap’ claims in practice. That’s a much more powerful way to compare health funds than just browsing every fund’s website one at a time.
- Check excess and co-payments: Adjusting your excess can be a great way to reduce your premiums, especially if you’re unlikely to claim in the short term. Just be sure you can afford the excess if something unexpected were to happen, and that you’re not voiding tax advantages.
- Review your cover at major life changes: Premium increases are a good reminder to ask whether your policy still fits your life stage. If you’re a young single, do you need pregnancy cover yet? If you’re a family, are orthodontics and extras limits still appropriate? Or if you’re empty-nesters, are you still paying for child-centric extras you no longer use? A standard review every year or two, especially before April when increases land, can keep you ahead of the curve rather than reacting after the fact.
So, will health insurance costs rise in 2026?
Based on everything we know today – government process, recent increases, independent analysis, etc. – it’s highly likely that premiums will go up again in 2026. The exact health insurance increase for 2026 will depend on the fund and policy, but planning for everything to stay the same isn’t realistic.
What is realistic is taking control of the parts you can control:
- Making sure you’re not overpaying for cover you don’t need.
- Avoiding being under-insured which can leave you exposed when something goes wrong.
- Using experts help to get the best possible price and benefits.
If you’re not sure where to start, Fair Health Care Alliance can walk you through your current policy, explain your options in plain English and help you switch to a policy that fits your needs and budget.
FAQ's
Most funds send letters or emails about premium changes a few weeks before the new prices hit.
Cancelling might save you money in the short term but could cost you a lot more later if you face long public-hospital wait times, new waiting periods when you return or lose tax advantages. It’s usually better to review and tweak your cover before walking away entirely.
If you move to a policy with the same or lower level of cover, your new fund has to recognise the waiting periods you’ve already served. New or upgraded benefits (e.g. adding pregnancy) means you’ll have new waiting periods, so always check before switching.
No. Very cheap policies have restricted cover for common services, as well as more exclusions and lower limits. A slightly higher premium for a policy that actually covers what you’re likely to need will probably give you better value over time.
A good rule of thumb is every year, or any time your life changes – moving interstate, having a baby, kids leaving home, approaching retirement, etc.
