Why do premiums keep going up?

Private Health Insurance premium increases are necessary to ensure health funds have adequate capital and income to pay for what they will be expected to fund in the next 12 months. The amount needed to cover costs continues to climb due to a number of factors, including;

  •  The increased cost of an episode of hospital treatment
  • The increasing cost of a service provided by health professionals which may be reflected as higher benefits paid for services
  • Increases in the number of services claimed against a policy
  • Introduction of new medical technology and equipment
  • Consumer expectations (e.g. seeking better quality care, more thorough testing etc.)
  • Ageing population

Other factors that may impact your premium include changes made by the Department of Health to the Australian Government Rebate on private health insurance and the application of the Lifetime Health Cover Loading (LHC).

How will changes to the Australian Government Rebate on private health insurance (Rebate) affect the cost of my health insurance?


If eligible, the Rebate is a contribution the Government makes towards the cost of your private health insurance to make it more affordable and accessible.

The Government adjusts the Rebate on 1 April each year based on a calculation referred to as the ‘Rebate Adjustment Factor’ (RAF) which incorporates any changes to the industry weighted average increase in premiums and the Consumer Price Index. The RAF is set out in the Private Health Insurance (Incentives) Rules 2012 (No.2).

This year the Rebate Adjustment Factor is 0.9680, compared to 0.963 in 2016.  Other than for the income tier that attracts no rebate, this means that the available percentage rebate has reduced.

Therefore if you’re eligible to claim the Rebate, be aware that this change will affect how much you pay for private health insurance. To find out how the change in Rebate will affect you personally, refer to the personalised premium increase information sent to you by Police Health, or visit health.gov.au to view the updated Rebate tiers. 

Why is the premium increase more than the increase in the Consumer Price Index (CPI)?

It’s a common misconception that CPI is related to health insurance costs. Health insurance increases are not directly correlated with increases in CPI because the two figures are indicative of different things:

  • CPI is reflective of price increases for a wide range of goods (with healthcare being a subset), and the CPI does not take into account frequency of use; while
  • Changes in health insurance premiums usually reflect the increased cost of healthcare (which traditionally runs above the rate of CPI), as well as any increased frequency of use. 

Why is my premium increase different to Police Health’s average increase?

Premium increases differ between policies based on the type of cover, how many people are insured on a policy and in what state or territory a policy is purchased. The figure quoted as Police Health’s average premium increase by the Department of Health is an average increase across all policies, and so it may be different to the increase applied to your situation.

What extra benefits do I get for the extra amount I pay in premiums?

We’re glad you asked, because value for money is extremely important to us. Over the 5 year period to 2016, Police Health has increased benefits paid per policy by 31.7%. In the same time period, increases in premiums totalled 25.5% (weighted average) – meaning benefits have increased more than premiums.  So you can continue to be confident in the value for money our products provide. 

Who authorises an increase in premiums?

The Board of Police Health Limited considers and applies for proposed changes to premiums. Under the Private Health Insurance Act 2007, private health insurers must obtain approval from the Commonwealth Minister for Health before applying a rate increase.

If the private health insurer does not provide sufficient information to the Minister to demonstrate that an increase is necessary, then approval is not given. Likewise the Minister has the power to increase premiums beyond what is requested if it is believed that the private health insurer does not have enough funds in reserve to pay the required amount of member benefits.

In the submissions to the Minister, private health insurers must provide detailed financial information and cost and benefit projections to justify any increases. An independent review of this information must also be undertaken by an Appointed Actuary prior to submission.

The proposed increases are examined by the Department of Health and by the Australian Prudential Regulation Authority (APRA).

As a Police Health member, do my premiums help pay for the new health fund Emergency Services Health?

No. The two private health funds are run independently of each other. Each fund sets its premiums based on past claims experience and anticipated future experience. These factors differ between funds. The Department of Health assesses the premium increase of all funds independently.

Why do couples pay the same premium as families?

There are some covers on the market that have a lower premium for couples than for families, but they are generally policies with a lower level of cover or exclusions.

The reality is that a large portion of couples are in the older age bracket where they generally have greater health needs. It is likely that if Police Health made a quality couple's cover available, it could actually cost more than the family cover.

Shouldn't large families pay higher premiums?

The Private Health Insurance Act 2007 provides that all families be treated the same. So whether there is just one child or ten, health funds cannot treat them differently.

Also, children are an important part of a balanced health insurance system. Without a younger generation coming through and into private health insurance, we would simply have a membership that is aging and the cost of premiums would rise rapidly. It is likely larger families from the past help keep premiums down today, as will today's large families do so for the future.

How does Police Health’s premium increase compare to other health funds?

We’re pleased to advise that Police Health’s average industry increase is again lower than the industry average for the 7th year in a row. A breakdown of the premium increases by each private health insurer in Australia can be viewed HERE.

Why don’t you offer pick & choose cover options?

Police Health only offers top level cover because we genuinely care for the health and wellbeing of the police community and it is important to us that our members know they will be comprehensively covered for health services they may require, especially the unpredictable.

Complaints against health insurers are commonly related to misunderstandings about what is covered for hospital treatment in a policy, and so we keep our products simple by only offering top level hospital coverage which boasts no excesses, restrictions or exclusions, plus you have your choice of recognised provider.

I hardly ever make claims, what’s the point of keeping my cover.

It’s important to remember that the point of insurance is to be a safety net for the unexpected. You can never predict what health issues or injuries you or your family may be faced with in the future, but by maintaining your health insurance through Police Health you can enjoy the peace of mind of knowing that we’ll have your back if or when you need us most. 

Of course preventative health is also important to consider, and can help ward off more serious health issues down the track, so if you feel like you’ve not been getting the most out of your cover now is a good time to think about what measures you could be taking to maintain your good health. If you have Extras cover with Police Health you may consider booking in a dentist appointment, a consult with a dietitian or visiting a podiatrist. If you’ve got hospital cover with us, take 30 minutes out of your day to complete our online health risk assessment.

I haven’t received my premium change notification. How do I get it?

A copy of your premium change notification will be sent by email or post (depending on your preference) from the 7th of March, but it will also be made available online. Simply head to our Member Login area and enter your user name and password. You’ll find a copy of your letter available once you’ve successfully logged in. If you’re not yet registered to use our online membership service, or have any trouble logging in, just give us a call on 1800 603 603 and we’ll be happy to help.   

I’m currently with another health fund but would like to switch to Police Health. How do I do that?

We make it really easy for you to switch, simply fill out an application form and complete the section called `Transferring from another health fund' and we will inform your previous insurer that you wish to cancel your cover with them. If you were paying them by direct debit, you may also need to cancel any direct debit arrangement.

Rest assured there are no penalties in switching to Police Health; continuity of cover is provided for new members transferring from another registered Australian health insurer.  Police Health will honour any waiting periods served for equal or greater cover with your previous insurer.  To get continuity of cover you must have already served the relevant waiting periods for the benefit payment involved, join us within one month of ceasing membership of the previous private health fund and pay premiums from that cease date.

For more information give us a call on 1800 603 603.