The private health insurance hack that could cut your premium by $650

March 28, 2026 — 5:01am

On Wednesday, along with just about every other cost in your life, private health premiums go up. The average increase – at 4.41 per cent – is the biggest in almost 10 years.

And some policies will increase far more, with Choice analysis finding “Gold” policies across the largest funds will jump a typical 13.3 per cent.

Now, a couple of columns ago, I wrote how private health proved priceless for me in helping me beat breast cancer five years ago – but it’s difficult to ignore that it’s getting darned pricey. So, instead of ditching your cover, try this tactic that’s guaranteed to cut its cost.

Several years ago, the government upped the excess you are allowed to have and still be exempt from the Medicare Levy Surcharge. Remember, this is a tax penalty of up to 1.5 per cent of your taxable income, if you don’t hold at least basic hospital cover, and earn more than $101,000 as a single or $202,000, as a couple/family.

While until 2019 you used to need an excess below $500, for singles, and $1000, for couples/families, today it’s $750 and $1500 respectively. And that makes a big difference to the premiums you pay – still with no tax penalty.

A quick search on the excellent (and independent) privatehealth.gov.au shows that with one provider listing that difference, singles can slash their premium by $27.15 a month or $325.80 a year. For couples and families, the saving is $54 a month or $648 a year.

All in all, far from having to wear the April 1 health fund premium hike, could you instead save money?

The difference is similar with my own health fund – so I long ago opted for the highest excess! Not comfortable that you’re risking a bigger bill, though? It’s not that much risk really: you only pay this once a year per person, just on hospital visits and never for kids.

And, of course, you’d ordinarily be aiming not to go to hospital. But you’d almost break even on premium savings if one family member had to go two years apart, and so pay the $1500 excess. If that lengthened to three years, you’d be laughing.

It’s possible you could slash the cost of your cover more, too, by tailoring it to you. Obstetrics and reproductive services typically add $600 a year to premiums. Are you done having kids or is the cover irrelevant?

Equally, if you’re younger, how likely are you to need a hip replacement? That’s perhaps another $400 cut. Are you paying for particular surgery and procedures you are incredibly unlikely to claim?

You should be able to “pick and mix” the cover you need to slash its cost. But if your insurer doesn’t let you, you can – again – find one that will on privatehealth.gov.au. And while you’re there, price policies with generous extras. As I also revealed recently, I work my extras so hard that the payouts entirely cover my premiums.

Ways you can do the same include claiming all the obvious benefits like dental, optical, osteo, chiro, physio and remedial therapy etcetera, along with little-known ones like kids’ swimming lessons, exercise in a group physiotherapy/exercise physiology situation and even gym membership in certain circumstances.

Too often people stick with the same private health fund – and progressively pay further over the odds over time – because they have served waiting periods and thus qualified for particular treatments and services.

But know that you, generally, do not have to re-serve these – think about it, this would completely stymie competition in the private health industry. Under portability rules, you should be able to take your hospital entitlements with you.

A Commonwealth Ombudsman brochure outlines all your rights and says: “The Private Health Insurance Act 2007 includes ‘portability’ rules to protect consumers who want to change to another hospital policy with the same insurer or with another insurer. This means that you will not have to wait the normal waiting periods again before benefits can be paid to you.

“To take advantage of the portability rules, you need to make sure that your payments for the policy you are transferring from are up-to-date. Some insurers will allow a small gap period between the end of your old policy and the start of your new one, but this varies, so you should check with your new insurer for confirmation.”

Note though, that the same rules do not apply to extras cover and, especially, you may have to wait if any additional benefits or better conditions apply to a new policy. But here’s the thing: at this highly competitive time for health insurers, as some policyholders drop or change cover, they may well waive waiting periods to lure you across.

All in all, far from having to wear the April 1 health fund premium hike, could you instead save money?

Nicole Pedersen-McKinnon is the author of How to Get Mortgage-Free Like Me, available at nicolessmartmoney.com. Follow her on Facebook, X and Instagram.

• Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.

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