Average cost of health insurance for family of four

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How Much Does Family Health Insurance Cost?

An average two-parent family spends about $97 per month ($1,167 a year) on health insurance.

Your family’s overall health costs will depend on a few factors:

  • Premiums for private hospital cover
  • Premiums for extras cover
  • Premiums for ambulance cover
  • Medicare levy & medicare levy surcharge
  • Out-of-pocket costs for medical procedures not covered by the insurance
  • Qualifying government rebates

Private Health Fund Premiums - Hospital Cover, Extras and Ambulance

If you opt in for a private health insurance fund, the premiums will depend mainly on how many of your family’s present and future needs you want covered by the plan.

Since 1 April 2020, all private health funds offering hospital cover were required to implement a new tiering system by the Private Health Insurance Ombudsman: Gold, Silver, Bronze, and Basic. This effort was designed to standardise the hospital treatment categories and the extent of coverage of each plan to make comparison easier. For instance, the Gold plan would cover more complicated or niche procedures such as plastic reconstructive surgery, dialysis, and weight loss surgery. The Basic fund only covers rehabilitation, hospital psychiatric services, and palliative care.

Most providers also offer extras cover which helps pay for services not covered by Medicare such as dental and physio. The providers may no longer include natural therapies starting April 2020, as part of the nationwide health insurance reforms. Family extras are more competitive - insurance providers provide different packages so families have more flexibility in the market options.

Ambulance cover is another elective available which you can get through a private health fund or the state ambulance service. You can sign up as an individual or a family. Given how children are accident-prone, it might not hurt to include ambulance cover in your family’s health plans.

Picking the right hospital and extras cover can lower the overall medical costs of your family. Australians spend about $4 billion on out-of-pocket hospital expenses, which have been steadily increasing since 2017. That comes out to an annual cost of $4290 per household. Having likely medical conditions and emergencies covered could help your family say significantly. There’s always a maximum cap on the benefit the providers will pay for various treatments. Understanding whether or not the maximum benefit applies to per person or per policy (combined benefit) is crucial in assessing whether or not the fund is the best deal for your family. Family health funds could have additional restrictions on benefit payout such as 1 claim per person and 2 per policy, so make sure you understand the fineprint before signing up!

Medicare Levy & Medicare Levy Surcharge

Medicare levy is a 2% tax most Australians have to fund Medicare. Medicare levy surcharge is an additional 1% to 1.5% tax charged for people earning income above a certain threshold and do not have an appropriate level of private hospital cover. For families, the appropriate level of cover is an excess of $1,500 or less. If your total household income is above $180,000 and your family doesn’t have the proper private health cover, your family could owe two grand or more a year in taxes.


Government Rebates

For certain families that have lower combined income, the Australian Government will provide rebates to help you cover the cost of private health insurance. The rate of coverage is set on 1 April each year. You can check with the Australian Tax Office (ATO) to see if you qualify and the applicable rebate rate.