This guide provides an overview of the private health insurance landscape in Australia, focusing on the profile,
performance, and market share of the top health funds, as well as clarifying the differences between fund types.
The Australian private health insurance market is diverse, featuring a mix of large and small insurers. These funds
operate under different models, which can impact their structure, goals, and ultimately, their offering to
policyholders.
A key distinction between health funds is their operating structure:
| Type | Description | Goal |
|---|---|---|
| For-Profit | Health funds typically structured as companies with shareholders. | To generate a return (profit) for their shareholders. |
| Not-for-Profit | Health funds structured as mutual organisations, associations, or friendly societies. | To return surplus funds to members in the form of lower premiums, better benefits, or improved services. |
Not-for-profit funds often state that their primary focus is the benefit of their members, as they do not have
external shareholders to satisfy. For-profit funds, while aiming for competitive products, must balance member value
with shareholder returns.
Health funds can also be classified by who they allow to join:
| Type | Description | Eligibility |
|---|---|---|
| Open Funds | Funds that are available to all members of the public. | Anyone can join. |
| Restricted Funds | Funds that limit membership to a specific group of people, often based on employment, industry, or association. |
Only people who meet the specific eligibility criteria (e.g., employees of a specific company, members of a particular union, or those in a specific profession) can join. |
Restricted funds often have long-standing ties to the group they serve and may offer tailored benefits or services
relevant to their members’ industries or needs.
The following table summarizes the estimated profile, performance (measured by the percentage of premiums returned to
members as benefits), and market share of the top 10 largest health funds in Australia. This data is based on industry
reports and is subject to change.
| Rank | Health Fund | Profile (For-Profit/Not-for-Profit) | Performance (Benefits as % of Premiums) | Estimated Market Share |
|---|---|---|---|---|
| 1 | Medibank (including ahm) | For-profit | 84.9% | 26.7% |
| 2 | Bupa | For-profit | 82.6% | 25.4% |
| 3 | HCF | Not-for-profit | 89.0% | 12.6% |
| 4 | nib | For-profit | 80.8% | 9.7% |
| 5 | HBF | Not-for-profit | 83.6% | 8.1% |
| 6 | Teacher’s Health Fund | Not-for-profit (Restricted) | 89.0% | 2.6% |
| 7 | Australian Unity | For-profit | 81.9% | 2.2% |
| 8 | GMHBA | Not-for-profit | 80.7% | 2.2% |
| 9 | Defence Health | Not-for-profit (Restricted) | 85.0% | 2.0% |
| 10 | CBHS Health | Not-for-profit (Restricted) | 87.1% | 1.4% |
Note that performance metrics like the benefits paid as a percentage of premiums can be a useful indicator of how
much value a fund is returning to its members. High-ranking funds generally have a substantial market presence, which
may translate to greater financial stability and a wider network of hospital and ancillary agreements.
Private Health Insurance helps by improving access to hospital, medical and health-related services in Australia, by subsidising the cost of these services.
There are two types of cover: Hospital and Extras (commonly called General Treatment or Ancillary cover). These can be purchased separately or together as a Combined policy.
Hospital cover assists with the cost of treatment when you’re admitted as a private patient in a private hospital for a medically necessary procedure. This usually includes theatre fees, hospital accommodation, medications and your provider’s medical fees.
Extras cover, on the other hand, allows you to subsidise the costs associated with many health related services that are provided outside of hospital, such as going to the dentist or physiotherapist, or buying a pair of prescription glasses.
Many policies will also include ambulance cover, with requirements to access ambulance services varying from state-to-state.
The reasons to purchase Private Health Insurance are varied – from health related, financial or more simply for peace of mind. It’s important to not just understand the benefits of private health insurance, but also any risks associated with not having cover. Here’s some of the main considerations when decided to take out cover:
Whatever your considerations, consulting with a Private Health Insurance expert can help you understand whether health insurance is right for you.
There are 38 registered health funds in Australia, with thousands of products on the market to consider. Each fund and each product are targeted towards different demographics, whether that’s life stage, location or even employment industry.
Will I need to re-serve waiting periods if I change policy?
No. If you’re transferring to an equivalent level of cover where you’ve previously served the waiting period, then you won’t need to re-serve that waiting period. If you’re adding a new service or upgrading your level of cover (i.e. increasing your annual limits), then you will generally need to serve the waiting period for the upgraded level of cover.
Not specifically, no – but you may need to serve a waiting period of up to 12 months if your hospital admission relates to a condition where you had signs or symptoms in the six months prior to taking cover for that procedure. The health fund will use an independent doctor to determine if your condition is considered pre-existing, at their cost. As with all waiting periods, if you’re switching from another fund where the waiting period has already been served, then you won’t need to serve them again.
Generally, you should compare your health insurance at least every 12 months, or when your circumstances change. Here are some important times to considering comparing your cover:
Your health needs change
This could be the onset and change in a chronic medical condition, an injury or something short term. Your health insurance is there to offer peace of mind protection and it’s important that it is revised to meet your current and future needs. Similarly, your health may improve and things that were important to you in the past may be able to come off your cover to help save you money.
Your life stage changes
So much of your health insurance needs can depend on the life stage you’re in, with many health funds and products targeted towards attracting members of particular demographics. Are you thinking of starting a family? You may need cover for pregnancy related services. Do you have young children? You may need access to speech and occupational therapies. Perhaps you need orthodontics for teenagers. If you’re entering your older years maybe your eyes and joints are starting to need a bit more attention. Whatever your life stage, there are policies that exist to give you what you need, when you need it, and the best way to ensure you’re well prepared for what’s ahead is to continue reviewing your insurance.
Your financial circumstances change
If you’re struggling to keep up to pace with the cost of private health insurance, it’s important to review your cover before you cancel. A health insurance expert can provide advice around what’s the most economical way to minimise your expenses while maintaining a suitable level of cover.
Your premium and/or product changes
Health insurance premiums change each year on the 1st of April, and many products may also have benefits added or removed around this time. Premiums don’t change at the same rate, so you may be able to find a new product with the benefits and services you need at a lower overall cost.
There’s really nothing to lose by reviewing your health insurance, with the worst case being that you’re already on the best product for you, giving you some added peace of mind.
Hospital products were reformed in 2019 to make them easier to understand for consumers. Now, all hospital products must be classified as either Basic, Bronze, Silver or Gold – with Basic products having minimal private cover and Gold covering all in-hospital MBS items.
Each tier has a minimum standard it must meet, based on the clinical categories it includes. Where a product covers more than the minimum requirements, but less than the tier above, it will be labelled as a Plus (+) product e.g. Silver Plus will cover some Gold tier categories.
Clinical categories are groupings of MBS items by type. To make things simpler, a product must fully include or fully exclude all items within a clinical category.
In order to keep premiums lower, most hospital policies will include an excess. This is the amount that you are expected to contribute towards the cost of your hospital admission. Hospital excesses are typically capped to the first admission in any given membership year. Some policies may have a co-payment in lieu or in addition to an excess, which is a daily charge per day in hospital. Many providers waive do not apply excesses when dependents are admitted into hospital.
What is the Medicare Levy Surcharge?
The Medicare Levy Surcharge (MLS) is an initiative by the Australian Government to penalise higher income earners that do not hold private hospital cover. If you earn above $101,000 per annum (or $202,000 for couples or families), you’ll pay an additional tax of 1% to 1.5% of your income for any days during the financial year where hospital cover was not held. To avoid MLS, you simply need to be covered by any level of hospital cover throughout the financial year.
Lifetime Health Cover (LHC) loading is an Australian Government initiative to encourage Australians to take out and hold private hospital cover at a younger age. It works by increasing your hospital premiums by 2% for each year that you have delayed taking out a hospital policy after age 30. For example, if your entry age is 35, your hospital premiums will be loaded by 10%.
To avoid LHC, you simply need to take out and maintain hospital cover prior to July 1st following your 31st birthday. If you join at a later age, you will need to pay your loaded premiums continuously for 10 years before the loading will be removed. The maximum LHC loading is 70%.
The Australian Government Rebate (AGR) is an income and age tested discount from the government to make private health insurance more affordable. The rebate applied depends on the income tier you or your family fall into, and can be applied either as a discount off your premiums or claimed as a tax credit when submitting your tax return.
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