Private health insurers lure new customers with gift cards and extras waivers as battle for dollars heats up

Private health funds are trying to lure new customers with gift cards, zero wait periods and free insurance for up to 14 weeks as soaring premiums prompt Australians to consider downgrading or switching their cover. Health consumer advocates say the average 4.41 per cent insurance premium rise announced this week is a “triple whammy” for Australians already reeling from the recent interest rate increase and the Federal energy rebate coming to an end. And experts have warned there is more pain to come, with premiums set to increase again next year and at least one more interest rate rise expected in 2026. Consumers Health Forum of Australia chief executive Elizabeth Deveny said the premium hike — the highest since 2017 — came as health funds appeared to be increasing their exclusions, creating a “direct risk to public confidence in the private health system.” “As more consumers downgrade due to cost-of-living pressures, they face rising uncertainty about whether their policies will protect them when they need care,” Dr Deveny said. “Exclusions keep creeping up. At some point you ask: what am I paying for? People feel ripped off. You cannot have a system that only works if everyone buys the most expensive option. That’s not a well-designed system.” The group wants national action to strengthen consumer rights and improve transparency in the system. “Ultimately, the least powerful person in this transaction must be the most protected. Right now, they’re not,” Dr Deveny said. Before the above-inflation increase kicks in on April 1, private health customers are being encouraged to compare health funds and look closely at their policy. Insurers are hoping to win over new customers contemplating a switch, with HBF offering 14 weeks free membership and will also waive two month extras wait times. Medibank’s new member deals include 10 weeks free plus $300 in gift cards for those who take out hospital and extras cover. NIB is offering new members 12 weeks free and no waits on extras that would normally incur two or six month waits and AIA Health’s deal will reward new customers with six weeks premium cash back. The deals all expire before April 1, when the premium rise kicks in. HBF, WA’s dominant private health insurer, positioned itself to lure customers from more expensive rivals after revealing a 2.15 per cent premium increase for its 1.2 million customers. This was the lowest average of the five largest health funds in Australia, which HBF chief executive Lachlan Henderson said reflected its priority to support members by managing costs, improving access to care and delivering strong health outcomes. Premiums at Medibank, Australia’s biggest insurer, will increase 5.1 per cent or an extra $4.46 a week for a family policy. Bupa will lift its premiums by 4.8 per cent. Sarah Megginson, a personal finance expert from Finder, said now was the best time to shop around. “The insurers are really trying to get your business, it’s very competitive, so make sure you look at the incentives,” she said. Ms Megginson said many Australians were paying a “loyalty tax” to their health fund. “It’s that extra money that you’re paying by being loyal to a brand. For many people, (investigating their) health insurance falls into the ‘too hard basket’ and sits on the to-do list,” she said. “And health insurance is so confusing as there are rebates depending on your income, there’s the Medicare Levy surcharge, and there’s Lifetime Health Cover loading. “But it only takes 20 minutes and now is a really good time to look at whether you are getting value from your insurance because there’s a big difference in what they all charge.” Analysing extras cover, and determining if it is providing value for money, was a good place to start, she said. Health Consumers’ Council WA executive director Clare Mullen said the private health sector made it difficult for consumers to make informed decisions. “The gap between what people expect to pay, and what they are actually having to pay, is very challenging,” she said. “The mixed private and public health system can be quite a disempowering experience. Your wealth shouldn’t dictate your health.” Ms Mullen said some people would choose to “self-insure” by putting money to the side rather than pay for private health insurance. The sector’s peak industry body, Private Healthcare Australia, said health funds were “acutely aware of how tough many Australians are doing it right now”. However, they had to balance the affordability of health insurance with the rising cost of caring for an ageing population with increasingly complex chronic disease needs. Perth student Kushagra Rathore, 23, remains on his parents’ private health insurance policy while he is at university but he is already looking ahead to next year when he will be on his own. His family is currently with Australian Unity, and Mr Rathore recently benefited from physiotherapy sessions following a back injury. “(Health insurance) significantly reduced the cost, I paid about one third of the cost out of pocket for about eight sessions so it was really worthwhile,” he said. He also uses the dental and optical extras and would be shopping around to find the most value-for-money policy before signing up in early 2027. Announcing the increase this week, Federal Health Minister Mark Butler said he expected insurers and hospitals to work hard to bring down costs and keep future price increases to a minimum. More than 15 million people, or half of the Australian population, have some form of private health insurance, with 45 per cent holding private hospital cover.