April’s premium increase was the steepest average rise in a decade.
Only a fifth of Australians with private health insurance — equivalent to 3.37 million people — have used Buy Now, Pay Later (BNPL) or a provider payment plan to cover healthcare gap fees for services like dental work, physio, specialist appointments or surgery.
Amongst this group, 63% used a BNPL provider such as Afterpay, Zip Pay or Humm to spread out healthcare gap fees, whilst 50% used a payment plan offered directly by their medical or service provider.
“With health insurance premiums continuing to rise, many households simply have less spare cash to cover out-of-pocket medical expenses, which are also becoming more expensive,” Chris Whitelaw, general manager of Health Insurance at Money.com.au, said in a report.
“As a result, more people are turning to payment plans or BNPL services to manage some gap fees they can’t comfortably afford upfront,” Whitelaw added.
On average, health insurance premiums rose by 4.41% in April. This was the steepest average in a decade.
Younger Australians are the primary users of these payment methods.
Gen Z leads the uptake, with 38% using instalment plans for healthcare gap fees, followed by 28% of Millennials and 22% of Gen X.
In contrast, only 7% of Baby Boomers have used these services. Gen Z and Millennials also showed the highest preference for BNPL platforms specifically, whilst provider-direct plans were more common amongst Millennials and Gen X.
Whilst 74% of Australians still pay their medical gap fees upfront, the rise in financing indicates growing pressure on household budgets.