Taking out your own health insurance might seem like the logical thing to do when you move out of home or get a 鈥渞eal鈥� job, especially if you鈥檝e been covered by your parent鈥檚 family policy until now.
The government starts providing incentives to buy health insurance once you turn 31 or start earning over $101,000 per annum (or $105,000 after June 30). But if you鈥檙e under 30, and don鈥檛 earn that much yet, is signing up for health insurance a savvy financial move, or a waste of precious funds?
We answer the key questions for under 30s thinking about taking out (or dropping) private health insurance.
Health insurance types and what they cover
The first thing you need to know is that there are two different types of health insurance: hospital and extras.
Depending on your circumstances you may not need either of them. But even if you decide you need both, you can buy two policies from two different insurers to get a better deal.
Hospital insurance
Hospital cover, pays for treatment in hospital. It doesn鈥檛 help with the cost of things outside a hospital like dental or physio – for that you鈥檒l need extras insurance, see below.
Hospital insurance can allow you to go to a private hospital, choose your own doctor and have shorter waiting times for elective surgery. However, if you have an accident you鈥檙e usually taken to and treated in a public hospital, which doesn鈥檛 require hospital insurance because it鈥檚 covered by Medicare.
Government stats show that younger people generally get a lot less benefit from hospital insurance than older people. APRA publishes how much benefit people receive from their health insurance when they go to hospital, and they found that 20鈥�29 year olds only receive a benefit of about $187 per year if they go to hospital, compared to $1655 on average for 80鈥�89 year olds (12 months to March 2026).
Younger people are less likely to need treatment in hospital and therefore less likely to benefit from health insurance than older people
Hospital cover is the only type of health insurance that affects Lifetime Health Cover loading (which kicks in once you turn 31) and the Medicare Levy Surcharge, which is an extra tax you need to pay if you earn over $101,000 per year and don鈥檛 have hospital cover.
So you could decide not to take out hospital cover right now, but revisit the decision when your circumstances change. Read more about these incentives below.
Extras insurance
Extras policies cover you for health care that you receive outside a hospital, and which Medicare does not cover, like dental care, glasses and clinical treatments like physiotherapy. Exactly which services are covered and how much money you get back for them varies from policy to policy.
An extras policy can help with dental costs, but it won’t cover 100% of the bill.
Unlike hospital cover, extras insurance has no bearing on the Medicare Levy Surcharge or the Lifetime Health Cover loading, so the only thing to consider is simply whether you’ll receive more in benefits than you’ll pay in premiums.
Extras insurance is more like a budgeting tool than traditional insurance.
Start by adding up how much money you’ve spent on ‘extra’ health services in the last year and comparing that with the premium you’d pay to see which option is cheaper. (But keep in mind that extras policies don’t cover 100% of the cost.)
The only thing to consider is whether you’ll receive more in benefits than you’ll pay in premiums
If you already have extras insurance, you can ask your insurer for a claims statement for the last year.
If you paid more in premiums than you received in benefits, you鈥檙e probably going to be better off cancelling your policy. Many Australians don’t get enough value from their extras cover to make it worthwhile.
Will I pay more for health insurance later if I don’t get it now?
Not if you鈥檙e under 31.
You may have heard about the Lifetime Health Cover loading, a government initiative which means that if you take out hospital cover for the first time after you turn 31, you’ll pay an extra 2% on your premiums for every year you waited.
This sounds scary, but depending on your situation, it may be a better financial decision to delay hospital cover and pay the loading later. Our experts explain how you can pay the Lifetime Health Cover loading and save money.
However, while you’re under 31, this loading doesn’t apply to you and there will be no effect on your future premiums if you don’t take out cover now. It also won’t affect you if you never take out health insurance.
Will I pay more in taxes if I don’t have health insurance?
Only if you earn more than $101,000 per year. Or $105,000 from July1, 2026.
The Medicare Levy Surcharge (MLS) is a tax-time surcharge the federal government charges high income earners who don’t have hospital cover. If you’re a single person earning less than $101,000 per year, or a couple earning less than $202,000, here’s no tax benefit to having health insurance
If you’re a single person earning up to $101,000鈥� there’s no tax benefit to having health insurance
If you earn over the threshold and want to calculate if having hospital cover will save you money at tax time, check out .
If you’re under 32 and a full time student, many funds (including Bupa, Medibank, HCF and NIB) allow you to stay on your parents’ policy for free.
With some policies, you can stay on your parents’ policy for free.
If you’re not a full-time student, many funds still allow you to stay on your families鈥� policy, but charge an extra fee of between 15% and 50% of the total policy cost for an 鈥渆xtended family鈥� policy.
If there is an extra cost, it’s important to consider the health needs of everyone in the family to make sure they align, otherwise it鈥檚 probably cheaper to take out your own policy.
Read more about things to consider and the different conditions funds have for dependents in our article of extended family policies.
If you do decide to take out health insurance before you turn 30, insurers can offer you a 2% discount off your premium every year you’re under 30, up to a maximum of 10% for people aged 18鈥�25.
Not all insurers offer the discount and not all policies are eligible for the discount, so shop around.
The good news is, if you stay on that policy, you’ll keep getting the full discount until you turn 41. Some funds will even let you keep your discount when you switch to a different policy, so it’s worth doing your research.
You鈥檙e also probably eligible for the health insurance rebate. If you earn $158,000 a year ($164,000 from 1 July) or less you get a discount of between 8% and 24% off health insurance premiums – depending on your income level – for hospital and extras cover.
Make sure you tick the right income box when comparing policies to make sure you鈥檙e seeing the correct price for you, both in our comparison tool, and health fund websites.
What if I have a family or I鈥檓 planning to start one?
Pregnancy and birth
Luckily in Australia, both public and private hospitals offer high quality care for pregnancy and birth.
The main advantage of using hospital insurance for private care is that you can choose your obstetrician and can give birth in a private hospital, which may be more comfortable. The downside obviously is private cover costs more.
Private cover allows you to choose your obstetrician and give birth in a private hospital
Note too that specialist fees for appointments outside hospital aren鈥檛 covered though, so you will end up paying more than just your hospital insurance premium.
Read more about the pros and cons of private insurance for pregnancy. If you decide you want to go private, you’ll need to take out hospital cover 12 months before you give birth because of the standard waiting period.
Family
Family policies generally cost the same as couples policies. This means that, for two-parent families, children are included on the policy for free.
However, single-parent families often pay the same as two-parent families, which makes it harder for single parent families to get good value from health insurance.
If you’re under 30 and not a high income earner, there’s no benefit to taking out private health insurance unless you plan to use it. If you do decide you need health insurance, you’ll want to get the best policy for your needs.
Our experts have created a tool to help you compare health insurance policies from dozens of funds 鈥� no sponsored results, no pesky phone calls, just impartial advice.
Text-only accessible version
6 health insurance tips for under 30s
Hospital cover and extras insurance are different products. You might need one, both or neither.
Lifetime Health Cover loading doesn’t kick in until you’re 31.
The tax-time Medicare Levy Surcharge affects high-income earners only. You won’t pay it until you earn over $101,000 (as a single person).
Some young people can stay on their parents’ policy for free (check with the fund).
If you do want health insurance, youth discounts are available on some policies.
You don’t need private health insurance to have a baby.
Jane Bardell is a Content producer in the Insurance and utilities team. She writes about home, car, pet and health insurance.
Previously at 糖心Vlog, she checked facts, figures and statistics as a Verifier with the Editorial and investigations team.
Jane has a Bachelor of Science from the University of New South Wales.聽
Jane Bardell is a Content producer in the Insurance and utilities team. She writes about home, car, pet and health insurance.
Previously at 糖心Vlog, she checked facts, figures and statistics as a Verifier with the Editorial and investigations team.
Jane has a Bachelor of Science from the University of New South Wales.聽
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