Many long-time holders of Gold-level cover are downgrading to Silver Plus or Bronze Plus policies, realising they have been paying for coverage they do not need as premiums rise.
Affordability is now the main factor behind policy changes. With inflation and the cost of living continuing to rise, Australians are re-evaluating their outgoings, including private health insurance. What was once seen as essential family cover is now being replaced with more affordable options that still offer core benefits.
Gold-tier premiums rose significantly in 2024, with some jumping as much as 40%. The average increase across all policies this year is 3.03%. A further increase of 3.73% is forecast for April 2025, marking the steepest rise since 2018. These increases are prompting consumers to reconsider features like fertility treatments or weight-loss surgery, especially if they are unlikely to ever use them.
Downgrading does not necessarily mean losing access to necessary health services. Health funds are now offering options that include higher age limits for dependents and greater flexibility on Extras. Selecting the maximum permitted excess of $750 for singles or $1500 for families can significantly reduce premium costs. Shifting to a lower-tier hospital policy and removing unused Extras can cut annual costs by up to 50%, all without compromising essential value.
High-income earners should avoid dropping health cover completely, as doing so could result in paying the Medicare Levy Surcharge. This ranges from 1% to 1.5% for singles with an income above $101,000 or couples earning more than $202,000. Downgrading allows them to keep some health benefits while sidestepping extra tax.
This increase in policy switching reflects more than cost-cutting. It signals growing consumer understanding. More Australians are taking an active role in managing their health cover and assessing their plans more regularly to ensure alignment with personal needs. Some families find joint policies offer better group value, while others benefit from choosing separate plans tailored to individual health profiles, often at lower cost.
