Your health insurance could soon skyrocket by 25 per cent, here's why

The not-for-profit consumer advocates analysed the big five funds - Bupa, HCF, HBF, Medibank and NIB - and found price rises were imminent and well above the government-approved average rise of 4.41 per cent.

Nearly half of the population will find themselves hit with another extra cost in April when health insurance premiums rise, spokesperson Mark Blades said, which will be "the largest average hike in premiums CHOICE has seen since 2017".

The number of Australians with private health hospital cover increased by 94,913 people over the latest quarter, to reach a high of more than 12.6 million, according to industry body Members Health Fund Alliance. That's around 45.6 per cent of the nation's population.

It comes as new data suggests millions are overpaying for health insurance, costing households hundreds of dollars a year, as people simply don't check annually if there's a better deal or not.

Around one in four (23 per cent) of those surveyed by Finder revealed they hadn't compared their health cover in more than 12 months, while research from Money.com.au suggested 18 per cent of Australians miss their fund's premium increase notice.

Of the Finder respondents who have private health insurance, 27 per cent said it was one of their top three most stressful bills.

Earlier in March, Minister for Health and Ageing, Mark Butler, announced a 4.41 per cent increase for average policies, but Mr Blades of CHOICE believes this will not reflect the "true cost" many will face.

"Our analysis has revealed a huge difference between the increases consumers will face, depending on the level of policy they hold, particularly those with top-level Gold insurance," he said.

"Of the five largest health funds, HCF has the biggest increase of 25 per cent for its 'Hospital Optimal Gold' cover across all states and territories. HCF customers holding this policy will be facing costs more than five times the advertised average."

Mr Blades said the analysis for Basic, Bronze and Silver policies showed increases ranging from 2.6 per cent to 3.3 per cent on average, while Gold policies across the largest funds were expected to increase by an average of 13.3 per cent.

The consumer group also analysed health insurance price rises between 2021 and now, and found despite government-approved increases (cumulative of 14.8 per cent), Gold cover across the biggest fund increased on average by 71.1 per cent.

A single person in NSW comparing comprehensive Gold cover in 2022 from the largest five funds could find cover at $257/month, or $3080 a year, CHOICE stated.

After the price rise in April, the same Gold cover will cost on average $439/month, or $5270 a year.

Mr Blades offered one solution to keep a cheaper rate, pay upfront your next 12-months worth of cover - but that may not be viable for all.

"If you're able to prepay for 12 months before your fund increases the price, you can make some good savings and delay the 2026 price increase, but this isn't possible for many Australians."