Need to know
- Bupa, Medibank, HCF, NIB and many smaller funds have increased the age cap for young adults on family policies to 31
- While full-time students are often covered for free, you may have to pay up to 30% more if you want other young adults covered
- Whether it makes financial sense to stay on your parents' policy depends on your health needs (and the needs of your parents)
With Australians feeling the pinch as the cost of living increases, many young adults are still living with their parents and now they can stay on the family health insurance policy.
As of 2021, the government has increased the age cap for adult children on their parents' policy from 24 to 31. At the same time, the age limit was removed for dependants living with disability (NDIS participants).
But if the young adult isn't a full-time student, parents will cop an extra cost on top of their policy, so is it actually worth it?
On this page:
- Will it save you money?
- Do all health funds cover young adults on family policies?
- What the big five health funds cover
- How much does it cost to add your adult kids to your family policy?
- Cover for people with a disability
Will it save you money?
While children and full-time students up to age 31 can often stay on the regular family policy for free, there is usually an additional cost to keep older dependants and non-students covered – depending on the insurer, this can add up to 30% to your premium.
Given that a single policy usually costs 50% of a family policy, it's a good idea to keep your kids on your family policy while there's no additional cost.
But once you need an extended family policy, it's time to carefully consider everyone's cover needs. If you're on a top cover policy it could be cheaper insuring your adult dependant on their own low to medium cover policy – especially if you have a family income of $194,000 or higher and don't get the full health insurance rebate.
Your adult dependant would be eligible for the rebate and a youth discount.
If you're a young adult under 32, the main questions you need to ask yourself are: do I need health insurance? And does my parents' cover meet my needs?
Is the level of cover appropriate?
If you're considering taking out an extended family policy it's important to consider whether the young adult in your family needs the same level of cover as the older family members. Here are some things to consider.
- Older adults may have chronic health conditions or need cover for knee replacement or cataract eye surgery, which is only available through expensive Gold-tier health insurance policies.
- Healthy young adults may only need Bronze cover, which includes cover for broken bones, flu, and skin and breast cancer. This level of cover is significantly cheaper, so it may make sense to take out a standalone policy.
- Extras cover may also be overkill for some healthy young adults. If they're only using it for dental check-ups and a few physio sessions now and then, they're better off paying as they go.
Do all health funds cover young adults on family policies?
The changes to the age cap are not mandatory for private health funds, but most funds have adopted them. Health insurers can also set different age limits, so while some funds only allow young adults on family policies up to age 20, others may allow them to stay up until their 32nd birthday. And some funds have extended the age for students but not for non-students or vice versa.
Funds also have different conditions when it comes to dependants and family policies. Normally you can't be married or in a de facto relationship, but with some health insurers you also need to live with your parents and be financially dependent, or the insurer sets a cap on how much you can earn. There may also be a requirement to take out a combined policy, or the dependant may need to take out their own extras policy to be covered under their parents' hospital policy.
There are also differences in the definition of a full-time student (who can usually get insured for free), so it's important to check the individual policy for details. For example, Bupa excludes apprentices while Teachers Health includes apprentices, interns and cadets.
It's best to check with your fund and make sure you understand the rules. If your adult child is no longer covered with your fund but another fund covers them, you could consider switching health insurance.
What the big five health funds cover
Bupa, Medibank, HCF and NIB have already extended the age limit for adult children, while HBF hasn't changed their age cap. But there are rules and requirements for dependants, for example, they cannot be covered on a family policy if they are married or in a de-facto relationship. Here are the age limits set by the funds.
- Adult children are covered on family policies for free until they turn 21.
- Full-time students are covered on family policies for free until they turn 32.
- Adult children younger than 32 can be covered on extended family policies for an extra cost.
- Adult children are covered on family policies for free until they turn 22.
- Full-time students are covered on family policies for free until they turn 31.
- Adult children younger than 31 can be covered on extended family policies for an extra cost.
- Adult children are covered on family policies for free until they turn 21.
- Full-time students are covered on family policies for free until they turn 31.
- Adult children younger than 31 can be covered on extended family policies for an extra cost.
- Adult children are covered on family policies for free until they turn 21.
- Full-time students are covered on family policies for free until they turn 31.
- Adult children younger than 32 can be covered on extended family policies for an extra cost.
- Adult children on your family policy for free until they turn 21.
- Full-time students are covered on family policies for free until they turn 25.
- Adult children who earn less than $24,500 per year are covered on family policies for free until they turn 25.
How much does it cost to add your adult kids to your family policy?
Using Medibank as an example, let's look at the difference in premiums between family and extended family policies for a family with a high income and high health cover needs.
Medibank covers adult children until they turn 21 and full-time students until they turn 31 on a family policy for free. Adult children younger than 31 who are not full-time students can be insured on extended family policies for an extra cost.
Insuring the young adult on a lower cover policy can end up being substantially cheaper not only because of the cheaper policy, but also as they qualify for the full health insurance rebate and a youth discount of up to 10%.
Example: Family with a 25-year-old non-student
A family with Medibank Gold Complete ($750 excess) and Top Extras, earning above the health insurance income cap and therefore not eligible for the health insurance rebate, with a 25-year-old non-student dependant who is eligible for the full health insurance rebate.
They want private health insurance for their 25-year-old and are asking themselves if they should take out:
- an extended family policy, or
- a separate Bronze cover policy and a budget cover extras policy.
The best option? Insuring the 25-year-old on their own with a lower cover policy will be almost $2300 cheaper per year.
The policies on offer from different funds will vary, so it's important that you carefully consider your personal circumstances before opting for an extended family policy just because it's available.
The policies on offer from different funds will vary, so it's important that you carefully consider your personal circumstances before opting for an extended family policy just because it's available.
Cover for people with a disability
While most funds have extended the age limit for student and adult dependants, cover for NDIS participants aged over 31 on their parents' policy is currently only available from five insurers:
- HCI
- Doctors' Health
- Emergency Services Health
- Police Health
- Reserve Bank.
There is no age limit if a policy allows you to add an NDIS participant.
Stock images: Getty, unless otherwise stated.
