Medibank lifts premiums by 5.10% from April 2026
Medibank Private Limited (ASX: MPL) has announced the Medibank 2026 premium increase of 5.10%, effective 1 April 2026, following approval by the Federal Health Minister. The adjustment applies to both Medibank and ahm branded health insurance policies, adding $2.14 per week to single cover and $4.46 per week to family policies.
The increase represents a routine component of the annual private health insurance cycle, though it comes amid ongoing cost-of-living pressures facing Australian households. For investors, premium adjustments are the primary revenue lever for private health insurers, and ministerial approval removes pricing uncertainty for the financial year ahead.
The 5.10% figure is an average. Individual policyholders may experience changes above or below this depending on their specific product, state or territory, cover type, excess levels, and claiming history.
How health insurance premiums work in Australia
Private health insurers in Australia operate within a regulatory framework that requires Federal Health Minister approval for all annual premium changes. This process gives investors unusual revenue visibility compared to most industries, as approved rates are locked in for the full year once confirmed.
Premium levels are not uniform across all customers. Several factors influence the actual increase individual policyholders will face:
- State or territory where the policy is held
- Type of cover, such as hospital only, extras only, or combined
- Policy structure, including single, couple, family, or single parent configurations
- Excess levels selected by the customer
- Claiming patterns on the specific product
The 5.10% average announced by Medibank reflects a weighted calculation across its entire policy base. Customers with high-excess policies in lower-cost states may see smaller increases, while those with comprehensive low-excess cover in high-cost regions could face larger adjustments.
Balancing hospital costs against customer affordability
Medibank Chief Customer Officer Milosh Milisavljevic framed the premium adjustment as balancing rising healthcare costs with the need to keep cover affordable. The company’s hospital payout ratio remains above the industry average, signalling continued financial support for private hospital partners who have faced significant challenges in recent years.
To mitigate cost pressures on customers, Medibank has removed approximately $125 million in internal operating costs over the past 8.5 years, maintaining one of the lowest expense ratios in the Australian private health insurance sector.
Milosh Milisavljevic, Chief Customer Officer
“Every dollar saved helps us keep premium increases down.”
For investors, the cost-out programme demonstrates management’s operational discipline in an industry where claims inflation is structural. Maintaining a low expense ratio protects margins even as hospital treatment costs rise, which is the key profitability challenge for health insurers. The ability to generate $125 million in savings whilst supporting above-average hospital payouts suggests balance sheet efficiency that supports dividend sustainability.
Reducing out-of-pocket costs through network expansion
Beyond the headline premium rate, Medibank is positioning its Members’ Choice and no-gap networks as customer retention and value delivery mechanisms. These initiatives address out-of-pocket costs, which are a major customer pain point and a driver of policy lapses in the sector.
Members’ Choice dentists offer 100% rebates on up to 2 dental check-ups per year, eliminating out-of-pocket expenses for routine preventive care. The no-gap network delivers more substantial savings on hospital procedures, with knee replacement surgery generating an average $2,100 reduction in out-of-pocket costs compared to non-network providers.
| Network Type | Service Example | Customer Benefit |
|---|---|---|
| Members’ Choice | Dental check-up | 100% rebate on up to 2 check-ups per year |
| No-gap network | Knee replacement surgery | Average $2,100 saving on out-of-pocket costs |
For investors, network expansion is a retention strategy in a sector where switching costs are relatively low. Policy lapses directly impact recurring revenue, making customer retention metrics critical. By reducing out-of-pocket costs through provider partnerships rather than premium discounting, Medibank aims to improve perceived value without eroding margin.
Hardship support and customer communication
Medibank has confirmed hardship support is available for customers facing financial difficulty. The company will review whether alternative cover levels might meet customer health needs at a lower cost, or assess eligibility for hardship arrangements.
Formal notification of the new premium rates will be distributed to customers via post or email from early March 2026. Customer contact channels include:
- Medibank customers: Call 132 331 or visit the Medibank website
- ahm customers: Call 134 246 or visit the ahm website
- Hardship enquiries: Contact via the above channels to discuss support options
From an investment perspective, proactive hardship provisions reduce regulatory and reputational risk. Cost-of-living pressures create elevated policy lapse risk across the sector, but accessible support mechanisms mitigate this by retaining customers who might otherwise cancel cover entirely.
What the premium change means for MPL investors
The approved Medibank 2026 premium increase of 5.10% supports revenue growth assumptions for FY26, as premium adjustments are the most direct lever for top-line expansion in the health insurance sector. With ministerial approval secured, pricing uncertainty for the year ahead is removed.
Operational discipline remains evident through $125 million in cumulative cost savings and an expense ratio among the lowest in the industry. This cost control protects margins as claims inflation continues, which is the structural challenge facing all private health insurers.
Customer value initiatives, particularly the expanding Members’ Choice and no-gap networks, function as retention mechanisms in an environment where cost-of-living pressures elevate lapse risk. The $2,100 average saving on knee replacements and 100% rebates on preventive dental care provide tangible value propositions beyond premium levels.
The announcement is routine but positive. Premium increases are the clearest near-term revenue catalyst for health insurers, and the 5.10% rate signals regulatory acceptance of pricing that balances insurer economics with affordability concerns.
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