Are Private Health Insurance Premiums Set to Increase in 2026?
Published January 7, 2026
If you are feeling the pinch from rising health insurance premium costs, you are not alone. Today, approximately 40% of Australians hold hospital covers, while 60% hold some form of extras policy, figures that are only set to rise.
Millions of Aussies are insured for either hospital cover or extras, or both. The tiniest percentage increase might translate to an additional billion dollars down the track. The question is, whether premiums are going to rise in 2026, and what might be expected, rather, what might you be able to do?
Indeed, it is very likely that the premiums will again increase in the year 2026, but the rate of this increase and the implications of this, based on your plan, will solely depend on your action plan for today.
Why premiums continue to increase?
Premiums are going up for reasons that go beyond the fact that the funds feel it. There are a number of things that are pushing prices higher.
1. Higher claims and use
Health funds are paying out higher levels of benefits than in past years. The level of hospital benefits paid by health funds in 2024 rose by 8%, which is significantly higher than the health inflation rate of 4%.
When the rate at which benefits accruing to each member increase outpaces the rate at which it costs to deliver those benefits, eventually premiums must close the gap.
2. Preventive care
Aussies are living longer, but the population is experiencing more chronic diseases. Today, we are seeing:
- Increasing joint replacements, heart surgeries, and technical surgeries.
- More use of advanced imaging, devices, and biologics.
- Longer episode of care, including rehabilitation.
Each procedure costs in the region of tens of thousands of pounds per patient in the private sector and this, inevitably, lifts the costs of the total benefits payments to the funds.
3. Out-of-pocket expenses increase
Even with insurance, many people end up paying even higher out-of-pocket costs. Data released by APRA shows that the average cost gap per hospital episode was $426.80 at the start of 2024.
The AMA also shows that 87.7% of in-hospital services were delivered through ‘no gap’ billing in 2023-24, down from 89.3% a few years prior. Although this is not a premium-setting factor, it is clear that there is a real and evident rise in forces exerted on total healthcare spending.
4. Industry margins and regulation
According to APRA, the health funds recorded a staggering 16% profit and management expenses in the health premiums paid in 2024-25, while they only paid out the balance 84%.
It anticipates that the scheme will remain financially strong enough to meet the future costs, but at the same time, it also looks into the justification of the proposed rises. It is the tension that unfolds every year when the rises in premiums are reviewed.
Getting best value health insurance in 2026- Handpicked Tips
- Consider the little: The big funds aren’t always the best value. Not-for-profit funds are able to pay back more of the premium in benefits to members, in some instances the small funds also perform well in areas such as hospital insurance value.
- Compare Inclusions: When searching for health insurance, you and your family will have the ability to compare the hospital categories covered, reduced, or excludeable, and the extras benefits packages and the generosity of the extras benefits package based on the health services you use. We will show you the comparative result of the no gap and the known gaps of the health insurance scheme. Indeed, this is far better than searching the website of each health community one after the other.
- Check excess and co-payments: Your excess payments may be an easy change to make to lower your premiums, perhaps if you do not think you will make claims in the immediate future. But ensure that you could still afford to pay the excess in the event of an unforeseen incident and that tax benefits are not being affected.
- Review your cover at major life changes: Increases in premium are good reminders to check whether your policy still fits your life stage. If you are a young single, do you need pregnancy cover yet? If you have a family, are orthodontics and extras limits still appropriate? Or, if you are empty-nesters, are you still paying for child-centric extras you no longer use? A standard review every year or two, especially before April when increases land, can keep you ahead of the curve rather than reacting after the fact.
To conclude
On the basis of everything that is known at this time concerning government process, recent escalations, independent analysis, and more, it is likely that a cost-of-premiums increase will occur once again in 2026. The actual cost of health insurance 2026 will depend on the specific fund or policy being referred to; however, it is unrealistic to assume everything will remain the same. Utility Market can assist you with your present health care plan to discuss your options available to change to a plan more suitable to your needs.
With the increase in Private Health Insurance Premium in 2026, concerns are growing. Utility Market, a trusted health insurance broker Australia, helps Australians compare health insurance policies in Australia, reduce unnecessary costs, and choose better-value cover. Follow our LinkedIn profile for expert insights, premium updates, and practical health insurance savings tips.
