Your renewal letter arrives some time in March, and one number on it is printed larger than everything else.
That’s the annual premium, and most of us do the same thing with it: glance, wince, compare it to last year, put it in the drawer.
Yet the premium is the least useful of the four numbers that decide what your cover actually costs you.
The other three sit outside the letter altogether. One is the government rebate paid towards your policy, which steps up as you get older.
Another is the industry-wide increase that lands on 1 April whether you notice it or not, and the last is the gap: the part you pay yourself every time you actually use the cover.
Whether chasing the difference is worth an afternoon depends on how big the difference turns out to be, and it can be sizeable: people who compared and switched through Compare Club saved an average of $295.
The 4.41 per cent rise is an average, not necessarily your rise
The Government has approved an average premium increase of 4.41 per cent from 1 April 2026, up from 3.73 per cent the year before.
Average does a lot of work in that sentence.
Each fund sets its own increase and spreads it across its own products, so two policies priced within a few dollars of each other today can sit noticeably further apart by winter.
Yours might come in under 4.41 per cent. It might land well over.
Which is why comparing your current price against another fund’s current price tells you very little; both are about to move, and not by the same amount.
Ring your fund, or read past the headline of the letter, and get your post-April figure in writing. While you have someone on the phone, ask whether the fund lets you prepay twelve months before 1 April at the old rate, because some do and it’s rarely advertised.
Your rebate depends on your age and your income, and it steps up twice
The Australian Government rebate is a discount on your premium, either applied by your fund before you pay or claimed back at tax time.
Nationally it’s a very large sum: $7.9 billion this year. Individually, what you receive turns on two things, and both of them tend to change in retirement.
Age is the first. On the base tier, someone aged 65 to 69 receives 28.337 per cent, and someone 70 or over receives 32.385 per cent. Under 65 the figure is lower again. Two birthdays you probably didn’t think of as financial events quietly cut what you pay.
Income is the second, and it pushes the other way. Base tier covers singles on $101,000 or less and families on $202,000 or less.
Above those thresholds the rebate tapers down through the tiers, and at Tier 3 (singles from $158,001, families from $316,001) it reaches zero.
Retirement tends to move people down through those tiers rather than up, and a bigger rebate follows, but only if your fund has the right tier recorded against your policy.
Check the tier you nominated. Nominate too high a tier and you’ve been quietly paying more than you needed to all year.
The gap is where the real money is
The premium is what you pay to have the cover. The gap is what you pay to use it, and nobody prints that one in bold.
On the hospital side, the gap is your excess plus whatever your surgeon and anaesthetist charge above the amount your fund and Medicare cover between them.
On extras it’s blunter: every service carries an annual limit, and once you’ve reached it, the rest of the bill is yours.
Dental is where that bites hardest after 60. Seniorocity’s own guide puts a single-tooth implant at $3,000 to $6,500 per tooth.
Set that figure against the annual limit your extras policy carries for major dental, and the shape of the problem is obvious straight away. A policy advertising a generous percentage back is worth very little if the annual cap is exhausted in one visit.
So the useful exercise isn’t rereading the policy brochure. Pull twelve months of claim statements and add up two columns: what the fund reimbursed you, and what you paid out of your own pocket.
That second column is the one that belongs in your calculation, and it’s usually the one people underestimate.
Four numbers to work out before you renew
None of this takes an afternoon, and the answer ends up as a single line alongside your rates, your power bill and everything else in a practical money checklist for Australians over 50.
- Your premium from 1 April. Not today’s price. The post-increase one, confirmed in writing by your fund.
- Your rebate percentage. Age bracket and income tier together. If you’ve turned 65 or 70, or your income has dropped since you stopped working, this figure has moved and your policy may not have caught up.
- Your net annual premium. The April figure less the rebate, where your fund applies the rebate up front. That is the number worth putting beside any other policy, and it’s rarely the number quoted in an ad.
- Your gap over the past twelve months. Excess, out-of-pocket specialist fees, and every extras claim that ran past its limit.
Add the third number to the fourth. That total, not the bold figure on the renewal letter, is what your private health cover costs you in a year.
It will be higher than you expect, and that’s the point of working it out.
A policy that looks expensive on the letter can be good value once a decent rebate and a low gap are counted in, and a cheap-looking policy with a low dental limit and a high excess can quietly cost you more.
Only one of those two facts is visible in March. The other one takes roughly twenty minutes and a shoebox of claim statements.
