What to do when your health insurance premium increase letter arrives

Every Australian health fund changes its premiums once a year, from 1 April, after the federal Health Minister approves them. Before that date each member gets a letter or email with the new price. This page explains what the letter has to contain, what the figure on it means in dollars, and the choices people in this position usually weigh up.

When do health insurance premium increase letters arrive?

Usually in February or March, a few weeks before the 1 April start date. The Department of Health, Disability and Ageing says insurers cannot give “definitive information” to members until the Minister has approved premiums and the December quarter Consumer Price Index has set the new rebate, and “this is usually not until February or March”.

The 2027 round is running to this timetable, from PHI circular 78/26 and the Department’s application page, read 8 November 2026:

There is no fixed number of days in law. The Department’s page says the notice “should be provided with sufficient time for policy holders to review their current cover and consider a different product”.

What does the premium increase letter have to tell you?

Australian law sets out what a fund owes you, and the letter is usually where it arrives:

• Written notice of your own policy’s change. The Department’s dataset page says insurers “must inform their members in writing of the exact premium price change for their particular policy”.
• Reasonable notice before a change that may leave you worse off. Section 93-20 of the Private Health Insurance Act 2007 requires members to be told “a reasonable time before the change takes effect”, and to get the updated Private Health Information Statement.
• A statement at least once every 12 months, also under section 93-20.
• Your Lifetime Health Cover loading. Rule 15 of the Complying Product Rules makes the fund state your loading as a percentage and the time left until it is removed, when it sends the statement.

Behind the scenes, rule 14 makes the fund report your policy’s old and new premiums to the Private Health Insurance Ombudsman. The Minister’s 17 February 2026 release puts it plainly: it is each insurer’s responsibility to explain any change, the reasons for it and “their policy holders’ options”.

How much are health insurance premiums going up?

The industry average rise was 4.41% on 1 April 2026, after 3.73% on 1 April 2025. As at 8 November 2026 the 2027 average had not been announced. The Department of Health, Disability and Ageing publishes the yearly averages:

Source: Department of Health, Disability and Ageing, average annual price changes dataset, published 17 February 2026. Last verified 8 November 2026.

Insurers cannot set these alone. The Ombudsman’s factsheet explains that the Act requires insurers to submit proposed increases, with actuarially certified figures, to the Minister, who must approve them before they apply. For the 2027 round the Department’s page says the Minister must approve an application “unless satisfied that a premium approval is not in the public interest”.

What does your increase mean in dollars?

A percentage on a letter is hard to judge. The table converts the lowest, average and highest 2026 rises among open insurers into dollars a year, on four yearly premiums. Find the row nearest your own premium before the rebate.

Plain Cover arithmetic: premium times rate. Rates are each insurer’s 2026 average across all its policies, from the Department’s dataset of 17 February 2026, so an individual policy can sit above or below them. Last verified 8 November 2026. Per-insurer figures for every fund are in the Department’s dataset.

Worked example: why the net rise was bigger than 4.41% in 2026

The Australian Government Rebate is a percentage of the premium, and that percentage is reset every 1 April too. On 1 April 2026 the ATO’s base-tier rate for a single under 65 fell from 24.288% to 24.118%. Take a single person under 65 on the base tier, with a policy at A$3,000 a year before the rise, and an increase equal to the 4.41% average:

The amount paid rose by A$105.49, which is 4.64%, not 4.41%, because the rebate share fell at the same moment. Plain Cover arithmetic on the ATO rates (last updated 22 June 2026). Last verified 8 November 2026. The tiers and thresholds behind each rate are explained in rebate tiers.

Why your letter can show more than the average

This is the most common misreading of the letter. The 4.41% headline is an average across every policy in Australia, weighted across insurers. The Department’s dataset page warns that it “is not indicative of what every policy holder may experience”, and that some products change by more or less than the industry or insurer average.

The Commonwealth Ombudsman’s factsheet explains a higher figure: if your increase was above average, the fund “has been able to demonstrate that the rise is necessary to cover the benefits offered by your policy”, which it says is “generally an indication that the particular health fund policy has been previously underpriced”.

So the useful comparison is not your rise against 4.41%. It is your new premium against what the same cover costs elsewhere, from statements dated the same day. If the policy on your letter is no longer sold to new members, that comparison has extra traps, set out in the related guide on closed policies.

What are your options after the letter arrives?

The Ombudsman’s factsheet lists the realistic choices, and suggests giving “priority to maintaining a good quality hospital cover, to protect you against the risk of large hospital bills”.

1. Do nothing. The new premium starts on 1 April and is deducted as usual.
2. Pay ahead before 1 April. PrivateHealth.gov.au says that if you can pay 12 months in advance, some insurers offer “rate protection”, charging the rate on the day you pay for the whole prepaid period. Limits and deadlines differ by fund; prepaying before the 1 April rise sets them out.
3. Change the cover within your fund. A higher excess, or dropping services you do not use, lowers the premium. PrivateHealth.gov.au lists excesses, co-payments and exclusions as the usual levers.
4. Move to another fund. Waits already served carry across for treatments both policies cover; how to switch health insurance covers the steps and the 14-day transfer certificate.

Each choice trades price against cover. People in this situation typically compare the full Private Health Information Statement for each option, not just the monthly figure.

Should you drop hospital cover because of the increase?

For some people the increase prompts a bigger question. The Ombudsman’s factsheet notes that “you may need to maintain hospital cover if you wish to preserve your Lifetime Health Cover status and to avoid the Medicare Levy Surcharge”.

Two costs can follow from dropping hospital cover in Australia in 2026–27:

• The Medicare Levy Surcharge, charged at tax time on higher incomes without appropriate hospital cover. The thresholds and rates are in the Medicare Levy Surcharge for 2026–27.
• A Lifetime Health Cover loading if hospital cover is later taken out again after more than the permitted days without it, explained in Lifetime Health Cover loading.

Changing tier or excess keeps hospital cover in place, which is why the Ombudsman puts it first, but a higher excess only avoids the surcharge if it stays within the ATO’s excess limits for appropriate cover. This page is general information, not personal advice; it does not take account of anyone’s objectives, finances or health.

What the September 2026 law changes about next year’s letter

The Health Legislation Amendment (Improving Choice and Transparency for Private Health Consumers) Act 2026, Act No. 90 of 2026, received assent on 18 September 2026. Its premium rules began on 19 September 2026.

Until then, the yearly increase on an existing policy needed the Minister’s approval, but a newly launched policy did not. The Minister’s 17 February 2026 release described the loophole as insurers that “close a product and open an identical one at a higher price”. Under the Act:

• From 19 September 2026, a newly launched policy needs the Minister’s approval of its premiums before it is sold.
• From 2 April 2027, a change that reduces cover or benefits on an existing policy needs approval too.

For a member reading the 2027 letter, the practical effect is that a policy first sold on or after 19 September 2026, if offered as an alternative, has also had its price approved. The yearly increase itself still follows the same round, with approved premiums starting on 1 April 2027.