How to Reduce Your Health Insurance Costs After the 2026 Increase
Health insurance premiums are rising by an average of 3.73% from 1 April 2026. For a family paying $400 per month, that is an extra $179 per year. But you are not locked in to your current policy. With the right adjustments, many Australians can offset the increase entirely and potentially reduce what they were paying before.
This guide covers eight practical strategies to lower your health insurance costs, ranked from highest impact to easiest quick wins. Most can be done in under 30 minutes.
1. Compare and Switch Funds
Switching health funds is the single most effective way to reduce your premiums. The same level of hospital and extras cover can vary by $500 to $1,500 per year between funds. Yet most Australians stay with the same fund for years without comparing.
Under Australian portability rules, your served waiting periods transfer when you switch to an equivalent or lower level of cover. You will not be penalised for switching, and your new fund cannot impose waiting periods you have already served.
How to switch in 5 steps
- Identify your current cover level (Gold, Silver, Bronze, or Basic hospital tier, plus any extras).
- Use a comparison tool to find equivalent policies at lower premiums.
- Apply with your new fund. Provide your current membership details so they can arrange the transfer.
- Your new fund contacts your old fund directly to transfer your waiting period credits.
- Your old policy is cancelled automatically once the switch is complete. There is no gap in coverage.
Funds price competitively to attract new members. Smaller and mid-sized funds often offer equivalent cover at 10-25% less than the largest funds. The product is standardised by government clinical categories, so a Gold policy at Fund A covers the same minimum clinical categories as Gold at Fund B.
2. Increase Your Excess
Your excess (also called a front-end deductible) is the amount you pay per hospital admission before your fund covers the rest. Choosing a higher excess reduces your premium. If you rarely go to hospital, this trade-off can save you hundreds per year.
| Excess level | Typical annual premium (single) | Estimated saving vs $0 excess |
|---|---|---|
| $0 | $2,400 | - |
| $250 | $2,160 | $240/yr |
| $500 | $1,950 | $450/yr |
| $750 (max) | $1,800 | $600/yr |
With a $500 excess saving $450 per year, you break even if you are admitted to hospital less than once per year. Most Australians under 55 average fewer than 0.3 hospital admissions per year.
3. Review Your Extras Cover
Extras cover (also called general treatment) pays benefits for services like dental, optical, physiotherapy, and chiropractic. It is the most over-purchased component of health insurance. Many people pay more in extras premiums than they claim back each year.
The extras equation
Add up every extras claim you made in the past 12 months. Compare that total to your annual extras premium. If you claimed less than you paid, you are subsidising other members. Consider dropping extras and paying for services out of pocket.
| Extras service | Typical annual cost (out of pocket) | Typical annual benefit limit | Worth insuring? |
|---|---|---|---|
| 2 dental check-ups + clean | $300 - $500 | $400 - $600 | Marginal |
| Prescription glasses (1 pair) | $200 - $400 | $200 - $300 | Usually no |
| Physio (6 sessions) | $540 - $720 | $300 - $500 | Usually no |
| Chiropractic (12 sessions) | $840 - $1,200 | $400 - $600 | Usually no |
| Major dental (crown/root canal) | $1,500 - $3,000 | $1,000 - $1,500 | Possibly |
Log into your fund's member portal and download your claims history. If your total extras claims are less than 70% of your extras premium, you are likely overpaying.
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4. Downgrade Your Hospital Tier
Since April 2019, hospital cover in Australia has been classified into four standardised tiers: Gold, Silver, Bronze, and Basic. Many people hold Gold cover but only need Silver or Bronze. Downgrading your tier can deliver significant savings while still covering the clinical categories most relevant to you.
| Tier | Clinical categories covered | Typical annual premium (single) |
|---|---|---|
| Gold | All 38 clinical categories | $2,800 - $4,200 |
| Silver | Most categories except some elective procedures | $2,000 - $3,000 |
| Bronze | Core categories (heart, cancer, mental health, rehabilitation) | $1,400 - $2,200 |
| Basic | Limited categories (accidents, some same-day procedures) | $900 - $1,600 |
Common downgrades that work
- Gold to Silver: Suitable if you do not anticipate pregnancy, assisted reproduction, or weight-loss surgery. Estimated saving: $600 - $1,200/yr.
- Silver to Bronze: Suitable if you are under 50 with no chronic conditions and want cover for serious illness. Estimated saving: $400 - $800/yr.
- Any tier to Basic (MLS-only): If you only hold hospital cover to avoid the Medicare Levy Surcharge, Basic with a $750 excess is the most affordable complying option. Estimated saving: $1,000 - $2,500/yr vs Gold.
For a detailed breakdown of what each tier covers and when downgrading makes sense, see our guide on whether you should downgrade your health insurance in 2026.
5. Maximise Your PHI Rebate
The Australian Government provides a rebate on private health insurance premiums based on your age and income. Many people are on the wrong rebate tier, either because their income has changed or they never nominated a tier with their fund.
| Tier | Singles income | Families income | Rebate (under 65) |
|---|---|---|---|
| Base Tier | $97,000 or less | $194,000 or less | 24.608% |
| Tier 1 | $97,001 - $113,000 | $194,001 - $226,000 | 16.405% |
| Tier 2 | $113,001 - $151,000 | $226,001 - $302,000 | 8.202% |
| Tier 3 | Over $151,000 | Over $302,000 | 0% |
For the full rebate table including rates for 65-69 and 70+ age groups, see our PHI rebate tiers guide.
Log into your health fund account or call them to confirm which rebate tier you are on. If your income has decreased (e.g., you went part-time, took parental leave, or retired), you may be entitled to a higher rebate than you are currently receiving.
6. Pay Annually (Before 1 April)
Most health funds offer a discount of 2-4% for paying your premium annually instead of monthly. Additionally, if you pay your annual premium before 1 April, you lock in the current year's rate and avoid the April increase for that 12-month period.
On a $4,000/yr family policy with a 3% annual payment discount, you save $120 per year. If you pay before 1 April and avoid the 3.73% increase, you save an additional $149 for the year. Combined saving: approximately $269.
This strategy requires upfront cash, but the effective return is significant. If you have the funds available, paying annually is one of the simplest ways to save.
7. Use Corporate or Group Discounts
Many employers, unions, alumni associations, and professional bodies have negotiated group discount arrangements with health funds. These discounts typically range from 2% to 10% off the standard premium and can be combined with other savings strategies.
Check with your employer's HR department, your union, or any professional associations you belong to. Some funds also offer discounts for emergency services workers, defence personnel, and government employees.
8. Remove Duplicate Cover
If you have ambulance cover through your health fund but live in Queensland or Tasmania (where state governments provide free ambulance services), you are paying for something you do not need. Similarly, if both partners in a couple hold individual policies, consolidating onto a single couples or family policy is often cheaper.
Other common duplications include travel insurance bundled with extras cover (which you may already have through your credit card) and accident cover that overlaps with your hospital policy.
How Much Can You Actually Save?
To illustrate the combined impact, here is a realistic scenario. Emma and Tom are a couple in their early 30s earning a combined $160,000. They currently hold a Gold hospital policy with $0 excess and comprehensive extras with a large fund, paying $5,400 per year.
| Strategy | Change | Annual saving |
|---|---|---|
| Switch to a mid-sized fund | Same cover level, more competitive fund | $780 |
| Downgrade Gold to Silver | No pregnancy or weight-loss surgery planned | $720 |
| Increase excess to $500 | $0 excess to $500 per person | $450 |
| Drop extras, self-fund dental/optical | Were claiming $400/yr on $900/yr extras premium | $500 |
| Confirm correct rebate tier | Were on Tier 1, corrected to Base Tier | $214 |
| Pay annually | 3% annual payment discount | $180 |
| Total estimated saving | $2,844/yr |
Emma and Tom reduce their annual health insurance cost from $5,400 to approximately $2,556 per year. That is a 53% reduction while maintaining Silver hospital cover with a $500 excess, which still covers the clinical categories most relevant to a healthy couple in their 30s.
For more context on why premiums are rising and what the 2026 increase means for your policy, see our guide on the April 2026 health insurance premium increase.
Frequently Asked Questions
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Compare Health InsuranceGeneral information only. This is not personal financial advice. Premiums, rebate rates, and savings estimates are indicative and based on publicly available data as at March 2026. Actual savings depend on your individual circumstances, fund, and level of cover. Consult a qualified financial adviser for personalised advice.