How to negotiate a better private health insurance deal after premium rises
Petrol. Groceries. Electricity. Rent. Household budgets are being squeezed from multiple directions, and private health insurance premiums have become another pressure point. From April 1, the average premium rose by 4.41%. Consumer group Choice has also noted that average premiums for some gold cover policies have risen by 7.89% to 25%.
When prices rise, many people respond in one of two ways: they absorb the increase without changing anything, or they consider cancelling their policy altogether. But there is a third path that is often overlooked—negotiating with your insurer to get a better deal. In practice, “negotiating” does not usually mean haggling over the sticker price of the same plan. Instead, it means reshaping the policy so it better matches your needs, and using information about comparable products to push for improved value.
For many consumers, a better deal may be as close as a phone call. The key is to do some preparation first, understand why it is easy to do nothing, and know what to ask for when you speak to your fund.
Why so many people renew without questioning the price
Private health insurance is one of those household expenses that can drift into “set and forget” mode. Even when premiums rise, many people keep paying because changing feels risky, confusing, or time-consuming. Several well-known patterns in human behaviour help explain why this happens.
One is “loss aversion”—the tendency to fear losses more than we value equivalent gains. In the context of health insurance, this can translate into a reluctance to remove items from an existing policy, even if those items are rarely used or could be replaced by more suitable cover. The anxiety of making the “wrong” change can be enough to stop people from making any change at all.
Another factor is “bounded rationality”. Health insurance policies are complex documents, often requiring significant legal and health literacy to interpret. When decisions feel complicated and the stakes feel high, people commonly rely on simplified rules of thumb rather than detailed analysis. That might mean sticking with a familiar plan, choosing a level of cover because it sounds reassuring, or assuming that a higher tier must automatically be better value.
The sheer number of options can also be a barrier. Research looking at elderly people suggests they would make better decisions if policies contained fewer options to choose between. When faced with too much choice, it becomes easier to settle for a decision that feels “good enough” rather than truly optimal.
Over time, this leads to “status quo bias”—a tendency to stick with the current situation simply because it is the current situation. Once a policy is chosen, many people rarely revisit it, even as their health needs, household structure, and financial circumstances change.
Cancelling is not the only alternative—and it can come with costs
When reviewing your premiums feels too hard, cancelling can look like a quick solution. Whether that makes financial sense depends on your age, health, and income. But cancelling can carry several “stings” that are important to understand before you make a final decision.
Medicare Levy Surcharge: If you cancel hospital cover, you may face the Medicare Levy Surcharge, which can be up to 1.5% of your income.
Lifetime Health Cover loading: If you cancel now and return later, you may need to pay the Lifetime Health Cover loading. This adds 2% to your premium for hospital cover for every year you are aged over 30, and the penalty lasts a decade.
Waiting periods: If you cancel and then rejoin later, you may have to serve waiting periods again for certain conditions.
These features mean that “dropping cover” is not always a clean reset. For some people, it can create a more expensive and restrictive path back into private cover later on.
Why insurers may be willing to keep you—and what that means for your call
Health funds have a strong reason to try to retain members, particularly healthier members. When healthy people cancel, the remaining pool of insured people becomes older and sicker on average. That can push up premiums, which can encourage even more people to cancel. Economists refer to this dynamic as a “death spiral”.
This matters for consumers because it helps explain why funds may be motivated to offer retention deals, promotions, or alternative configurations of cover that keep you insured. However, there is an important practical constraint: plans tend to have set prices, which makes it difficult to negotiate the headline price of a given plan directly. The more realistic approach is to negotiate the structure of your cover and ask what offers are available for your circumstances.
Tip 1: Optimise your excess to balance premium and out-of-pocket risk
One of the most direct levers you can pull is the excess. The excess is the amount you pay before the policy pays out on a claim. If you are willing to accept a higher excess, your premium can be cheaper.
This is not a universal solution—higher excess means higher out-of-pocket costs when you need to claim. But for people who rarely claim on hospital cover, or who can manage a higher upfront payment if they do need care, adjusting the excess can be a practical way to reduce ongoing premiums.
When you call your insurer, it can help to be specific: ask what premium changes would apply at different excess levels and what that means in real terms. The goal is to find a balance between affordability now and financial comfort if you need to use your cover later.
Tip 2: Reassess hospital cover and extras separately
Many people assume their hospital cover and extras cover must be aligned at the same “level”. In reality, the level of cover does not have to be the same. For example, you can have basic hospital cover with top level extras cover.
This flexibility can be useful if your priorities are uneven. You might value certain extras more than hospital features, or vice versa. The important step is to review what you actually need and how you actually use your policy.
It is also worth remembering that you do not need to include all extras on offer. Extras can be tailored to reflect what you use, and removing extras you never claim can save money. If you are paying for benefits you do not use, you may be funding peace of mind rather than practical value.
Tip 3: Remove features that no longer match your life stage—and add them later if needed
Health needs change over time, but policies often stay the same unless you actively update them. Many people set up a plan in early adulthood and do not review it as their circumstances shift. That can lead to paying for cover that no longer fits.
A simple example is paediatric care. If you have no children, paying for paediatric-related cover may not make sense. The key point is that you can add that onto your policy later if you need it. The same logic applies more broadly: as your household and health priorities change, your policy can change too.
Household composition is another common source of mismatch. As relationships change, dependants age out, or people move in and out of the household, it is important to add and remove people from the policy accordingly. Paying for the wrong membership type can mean paying more than necessary.
Tip 4: Use competitor premiums as a bargaining tool—after doing careful comparisons
If you want leverage in a negotiation, you need information. Knowing the cost of competitors’ premiums for similar policies that suit your needs can strengthen your position when you speak to your current insurer.
Comparison sites can help you identify a comparable product. But it is important to treat this as more than a quick glance at a cheaper number. Your insurer is likely to ask for details of the comparison product, and you should be prepared to explain why it is a fair comparison.
Before you call, gather the key points you may be asked about, such as how the hospital cover and extras compare, and whether the product is truly similar to what you have now. This preparation helps keep the conversation focused and reduces the chance that the call ends with a vague suggestion to “think about it” and no concrete outcome.
Tip 5: Ask directly about deals and promotions—and make annual reviews a habit
Many consumers feel uncomfortable asking for a better deal, but insurers may have retention offers available. Do not be afraid to ask what deals and promotions your existing health insurer can offer to keep your business.
Timing also matters. Reviewing your policy annually is recommended, and the period immediately after policy increases can be a particularly practical time to do it. It is when providers may be more willing to negotiate, and when deals for switching to a different provider can be more generous.
Even if you decide not to switch, the act of reviewing your policy once a year can help prevent the gradual drift into over-insurance (paying for features you do not use) or misaligned cover (keeping settings that no longer fit your household).
If you do switch, read the new policy closely before committing
Switching providers can be a useful option, but it should be approached carefully. Before you move, take time to read the new policy and compare it to your old one. Pay close attention to differences that can affect your access to care and your costs later.
Waiting times: Watch for differences in waiting times, including for certain conditions.
Pre-existing conditions: Compare how cover applies to pre-existing conditions, and do not assume two similar-looking policies treat these the same way.
Customer support and service: Check reviews for providers about their customer support and service, because the value of a policy is not only about what is written in the brochure, but also how the fund handles queries and claims.
If you want free, general advice on private health insurance, including comparing policies, you can contact the Commonwealth Ombudsman.
A practical way to structure your negotiation call
Once you have reviewed your needs and gathered competitor information, it helps to approach the call with a clear agenda. The aim is to leave the conversation with a concrete set of options and their costs, rather than general information you still need to interpret later.
Start with your goal: Explain that the recent premium increase has prompted you to review value and affordability.
Ask for alternative configurations: Request pricing for different excess levels, and discuss adjusting hospital and extras cover separately.
Remove unused extras: Identify extras you do not use and ask what the premium would be without them.
Use competitor comparisons: If you have found comparable products, provide the details and ask what your insurer can do to match value.
Ask about promotions: Request any retention deals or promotions available for staying.
This approach also helps counter the behavioural traps that keep people stuck. By turning a complex decision into a structured set of questions, you reduce the cognitive load, avoid defaulting to the status quo, and make it easier to act on the information you receive.
Getting to “better value” without taking unnecessary risks
Premium rises are frustrating, especially when other living costs are also climbing. But the choice does not have to be limited to paying more without question or cancelling in frustration. Negotiating can mean making deliberate, informed changes: adjusting the excess, separating hospital and extras priorities, removing features you do not use, and using competitor pricing as leverage.
Because private health insurance is complex and decisions can feel high-stakes, it is normal to hesitate. Yet a careful annual review—particularly after premium increases—can help ensure you are not paying for cover that no longer fits your life. With preparation, a single phone call can be an opportunity to bring your policy back into line with your needs and budget.