How To Cancel Your Health Insurance in Australia

Thinking about cancelling your health insurance? You’re not alone. Premiums are increasing, and the cost of living is tightening budgets across Australia. While many are considering whether their private coverage is still worth it, don’t cancel before you understand what this involves and what it could mean.

In this in-depth guide, you will learn:

✅ Can You Cancel Your Health Insurance in Australia Anytime?
✅ How to Cancel Your Health Insurance Step-by-Step
✅ What Happens After You Cancel?
✅ Will Cancelling Affect Your Tax or Medicare Levy Surcharge?
✅ What About Lifetime Health Cover (LHC) Loading?
✅ Can You Rejoin Later Without Penalties?
✅ Smart Alternatives to Cancelling Completely
✅ Common Mistakes to Avoid When You Cancel Health Insurance

and much, MUCH more!

Can You Cancel Your Health Insurance in Australia Anytime?

Short answer: ☑️ Yes, you can. But—as with most things that involve contracts, money, and your health—it’s not always as straightforward as just walking away.

Most health funds in Australia will allow you to cancel your policy whenever you like. You’re not locked into a fixed-term contract like with a phone plan. However, depending on your funds and timing, there are a few conditions and quirks to remember.

Hospital vs Extras – Does It Matter What You Cancel?

Not really. You can cancel hospital cover, extras, or both; it’s up to you. However, if you’re only tired of a certain aspect of your health insurance, like dental or physio, not being worth the cost, you can cancel your extras and keep your hospital coverage. You don’t have to cancel everything.

Just Signed Up? There’s a Cooling-Off Period

If you’ve only just applied for a policy and already regret it, you don’t need to stress because there’s usually a 30-day cooling-off period. You can cancel during that time, and if you haven’t claimed, you can get a full refund. It’s the health insurance version of “buyer’s remorse.”

But Timing Does Matter, Especially at Tax Time

If you earn over a certain amount of income (±$93k for singles), cancelling your hospital cover could mean facing the Medicare Levy Surcharge. It’s the taxman’s way of saying, “Hey, you’re rich enough to go private—pay up.”

In addition, if you are currently over 31 and thinking that you can cancel now and get health insurance again later, beware of the Lifetime Health Cover loading. LHC could mean that you end up paying more later.

How to Cancel Your Health Insurance Step-by-Step

If you want to cancel your health insurance, here’s how to do it without accidentally leaving yourself in a precarious situation (because some people do, and it can be a pain to fix).

Cancelling is easy, but following the correct steps can make a difference. Let’s run through these steps.

Contact Your Fund (Do Not Ghost Them)

First, you need to inform your fund of your decision to cancel. While this step sounds obvious, many people assume that if they stop paying the premiums, it’s the same as cancelling their policy (Spoiler: it isn’t the same).

Most insurers will let you cancel via:

The online portal
Over the phone
Email or a written notice

When you cancel, have your member number ready. If you switch providers, ensure you have already contacted your existing provider before signing up with a new one.

The only reason for this (with switching) is to avoid gaps in coverage between cancelling the old policy and starting the new one.

Ask for Confirmation in Writing

Don’t rely on the agent’s verbal confirmation over the phone. Ask for an email or letter confirming your policy’s cancellation and the end date. This is your insurance cancellation receipt—keep it.

Check If You’re Owed a Refund

If you paid ahead (like quarterly or annually), there’s a chance that the fund might owe you. It might not be much, but you are entitled to it.

When you cancel, ask them directly: “Am I due a refund for unused premiums?” Never assume that the fund will know there’s money they need to pay back.

Switching Instead? Do It the Smart Way

If you cancel your current policy to switch to a cheaper provider, your new fund will usually handle the paperwork. Don’t cancel yourself—let them do it. This ensures you don’t trigger waiting periods again or risk losing continuity.

If you want to cancel, ensure you’re not doing it on a knee-jerk reaction after a premium increase or a single questionable claim experience. Take a breath, weigh your options, and think it through before making a sudden choice you might regret later.

What Happens After You Cancel?

You’ve cancelled your health insurance. Now what? Do sirens go off? Does anything even happen?

The answer is yes and no. Here’s what to expect after you cancel to avoid being caught out thinking that you dodged a bullet, only to realise you walked into a new one.

Your Cover Ends When the Fund Says It Ends

In most cases, your cover stops either:

Immediately on the day you cancel, or
When your billing cycle ends (e.g,. if you’ve paid for the full month)

You can usually choose. Just ensure you know the exact date it ends. You can’t assume you’re covered for something and then receive a bill because your policy technically ended before you sought treatment.

You’re Back to Public-Only Healthcare

Once your private hospital coverage ends, you must use the public health system. While Australia’s public health system is decent, you may face longer wait times for elective surgeries or certain specialist treatments.

In addition, remember that extras like dental, physio, and optical are usually covered by private health insurance. Once you cancel, these are gone, too, unless you have another policy to cover this specifically.

Claims? Refunds? Loose Ends?

If you have a pending claim or a dispute about previous payments, remember to resolve this before cancelling. Once you’re no longer a member, sorting out the admin can be challenging.

Call or email your health insurance and ask, “Can you confirm if anything is outstanding before cancellation takes effect?” – simple, but it can save you a lot of back-and-forth later.

Will Cancelling Affect Your Tax or Medicare Levy Surcharge?

Here is where it can get tricky (in a tax-nerd way). Many Australians cancel private coverage, thinking it’s a personal financial decision. It is, but many don’t realise the ATO might also have a say.

What’s the Medicare Levy Surcharge?

The Medicare Levy is what most working Australians already pay (2% of their income). This is standard. However, if you earn over a certain amount and don’t have private hospital cover, the government adds an extra charge called the Medicare Levy Surcharge (MLS).

Who is Subject to MLS?

If you’re earning more than:

$93,000 as a single
$186,000 as a couple or family (combined income)

…and you don’t have private hospital cover for the whole financial year, you’ll likely pay 1–1.5% extra at tax time.

This tax is the government’s way of nudging higher-income earners towards taking pressure off the public system, and they don’t do it subtly.

How to Avoid It (Legally)

The easiest way to avoid the surcharge is to hold an eligible private hospital cover for the full financial year. If you cancel partway through, you might still face a partial charge based on how long you were uninsured.

However, not all policies count. It must meet a basic level of cover, so “cheap” policies won’t save you.

Bottom Line

Do a quick tax impact check if you’re currently “flirting” with the income threshold and considering cancelling. That “savings” from cancelling your policy can vanish quickly.

What About Lifetime Health Cover (LHC) Loading?

Lifetime Health Cover loading is the government’s (passive-aggressive) way of saying, “You should have sorted this out in your twenties.”

It’s one of those rules you might not know about until it’s too late. Let’s break it down into digestible parts because it can cost you a lot of money if you cancel and then try to reapply later.

What Is It, in Plain English?

LHC loading is a financial penalty applied to hospital cover premiums if you don’t have private health insurance by 1 July after your 31st birthday.

If you delay getting cover (or cancel and stay uninsured for too long), you will pay 2% more every year you are over 30 when you finally take out hospital cover again.

For example, if you first join at 40, it’s 20% extra, and it’s that for every year for ten years (no joking).

Does Cancelling Trigger LHC Loading Immediately?

Not right away. You have a grace period.

Before the LHC loading applies, you can be without hospital cover for up to 1,094 days (roughly 3 years). But the 1,094 days are counted across your entire lifetime. It’s not a fresh three years every time you cancel.

Unfortunately, the countdown starts even quicker if you have already used some of those days.

Is It Worth the Risk?

It depends. There’s no reason to stress (yet) if you are still in your 20s because LHC won’t apply to you yet. Are you 35 and have already dipped in and out of cover before? You must check how many “LHC-free” days you have left before you cancel.

Many make the mistake of thinking that cancelling now is nothing and they can reapply later, only to end up paying hundreds extra because of LHC.

Can You Rejoin Later Without Penalties?

Yes, but it’s not always as easy as “picking up where you left off.” The system won’t welcome you back like nothing ever happened. Let’s see what happens when you rejoin health insurance after cancelling.

Waiting Periods: The Big Catch

If you cancel and then rejoin a new fund later, you might have to serve waiting periods again, including:

2 months for most hospital treatments
12 months for pre-existing conditions
12 months for pregnancy-related services (if included in your cover)

Some funds will waive these when you switch policies without a coverage gap. But if you cancel completely and return later, you start from scratch.

Is “Pausing” an Option?

Not really. Health funds don’t usually let you pause your cover (like a gym membership). However, some will let you suspend your policy temporarily if you travel overseas or experience financial hardship. You must enquire about your fund’s process and meet certain criteria.

Can You Downgrade Instead?

Yes. If cost is the issue, downgrading your policy is smarter than cancelling. You keep continuity (no waiting periods, no LHC stress), and you can still prove that you have private cover if the tax office inquires.

Final Word on Rejoining

If you’re not certain you will want to stay uninsured long-term, think carefully. Cancelling is easy. Reapplying later—without delays, penalties, or awkward calls to your old insurer—isn’t as easy.

Smart Alternatives to Cancelling Completely

If you feel your health coverage is too expensive, don’t rush to cancel everything. Cancelling is an option, but it’s not your only option. Sometimes, you can tweak your health insurance to meet your budget and health needs. It’s about being covered where and when you need it most.

Here are a few smarter moves to consider before you cancel your health insurance:

Downgrade Your Policy

If you don’t use pregnancy coverage or don’t need private psych care, you might be paying for extras that have nothing to do with your life at this very moment.

Evaluate the lower-tier hospitals or extra options. You can often lower your monthly premium by cancelling what you don’t need, without starting from scratch or losing your LHC/tax perks.

Plus, this way, you keep your waiting periods intact, and you can always upgrade again later.

Switch to a Cheaper Fund

Loyalty doesn’t pay in health insurance. Staying with the same fund for years can lead to overpaying (by hundreds each year) for the same cover you can find cheaper elsewhere.

Comparison sites can help, but don’t rely only on them. Check independent reviews and compare similar plans (some “cheaper” options often have ridiculous exclusions).

When you switch, your new insurer can handle the entire process on your behalf for smoother sailing.

Trim Extras You Don’t Use

Be honest with yourself. When was the last time you used the acupuncture or podiatry benefit?

An extra cover can be worth it if you use the services. Otherwise, it might be better to scrap the extras or choose a tailored plan that only includes what you realistically need (like dental and optical, for many people).

Ask About Financial Hardship Options

If you face financial challenges, don’t just cancel—call your fund. Many have hardship policies that let you suspend or reduce your payments for a few months while your coverage stays active.

Funds won’t always advertise this, but if you ask, you might be surprised by what the fund will offer to keep you on board.

Common Mistakes to Avoid When You Cancel Health Insurance

Cancelling health insurance might seem simple. However, there are a few traps people fall into that can cost money and time or could turn into an admin nightmare. Let’s ensure you don’t end up in one of those situations.

Here are common mistakes you should avoid if you want to cancel health insurance.

Assuming You’re Covered Until the End of the Month

This is not always true. Some policies end immediately once you cancel. Others continue until your next billing cycle. Don’t ever guess! Confirm the date and get it in writing. You don’t want to get a hospital bill because your coverage ended two days earlier than you thought.

Forgetting About Tax Impacts

Cancelling hospital cover when you earn over the MSL threshold could cost you more during tax time than you saved in premiums. Consider your income bracket and whether LHC loading or the surcharge will apply before you cancel.

Cancelling Before a Claim Clears

If you have a pending claim, wait until it has been processed and paid before cancelling. Trying to sort out a rejected claim after you’re no longer a member can be a nightmare.

Not Keeping Proof of Cancellation

Always keep this in writing. It can be an email confirmation or a formal letter from your fund; save it somewhere.

Cancelling When You Could’ve Just Switched

Many people cancel because they think it’s too hard or expensive to switch. But switching is easier and less risky than cancelling, and you keep your waiting periods. Cancelling without looking around first is an avoidable mistake.

How to cancel Bupa Health Insurance

Ways to cancel Bupa Health Insurance:

Phone: The most direct way is to call Bupa on 1300 478 138 (Monday to Friday, 8 am to 8 pm AEST/AEDT). Be prepared to provide your policy details and the reason for your cancellation.

Request a Callback: You can also request a callback via the Bupa website.

Visit a Bupa Store: You can speak to a representative in person at a Bupa store across Australia.

WhatsApp or iMessage: You can also cancel your Bupa policy via WhatsApp or iMessage.

Email: You can send a written cancellation request to Bupa

How to cancel NIB Health Insurance

Ways to cancel NIB Health Insurance:

Phone: The most direct way is to call NIB health insurance on 13 16 42 (Monday to Friday, 8 am to 8:30 pm AEST/AEDT). Be prepared to provide your policy details and the reason for your cancellation.

NIB App: You can also request a cancellation through the NIB app.

Online: You can log into your online account and navigate to the cancellation section.

WhatsApp: You can also cancel your NIB policy via WhatsApp.

Email: You can send a written cancellation request to NIB

How to cancel Qantas Health Insurance

Ways to cancel Qantas Health Insurance:

Phone: The most direct way is to call Qantas Health Insurance on 13 49 60 (Monday to Friday, 9 am to 7 pm AEST/AEDT). Be prepared to provide your policy details and the reason for your cancellation.

Live chat: You can also cancel your Qantas Health Insurance policy through the live chat on the website.

Email: You can send a written cancellation request to Qantas Health Insurance at [email protected]

Request a Callback: You can also request a callback via the Qantas website.

How to cancel AHM Health Insurance

Ways to cancel AHM Health Insurance:

Phone: The most direct way is to call AHM Health Insurance on 1300 560 313 (Monday to Friday, 8 am to 8 pm AEST/AEDT). Be prepared to provide your policy details and the reason for your cancellation.

Request a Callback: You can also request a callback via a message.

How to cancel HBF Health Insurance

Ways to cancel Bupa Health Insurance:

Phone: The most direct way is to call HBF on 133 423. Be prepared to provide your policy details and the reason for your cancellation.

Request a Callback: You can also request a callback via the HBF website.

Visit a HBF Store: You can speak to a representative in person at a HBF store across Australia.

In Conclusion

Don’t think of health insurance as a life sentence. If your health insurance is no longer aligned with your budget or needs, you could walk away (anytime), but it’s worth doing so fully aware of the facts.

Before you cancel, review the basics, including the cover end date and the tax and LHC implications. You can also consider switching or downgrading so that you don’t throw away waiting periods you might need later.

In addition (most importantly), don’t “set and forget” your cover. Whether you stay insured, switch, or cancel, ensure it’s a decision you made after considering all the factors, not just because the premium went up again and you were fed up. Always ask questions, weigh your options, and do it the right way if you do cancel.

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Frequently Asked Questions

Do I have to tell the government I’ve cancelled?

No, you don’t. Your health fund handles it. However, the ATO will consider that you cancelled when assessing the Medicare Levy Surcharge. Thus, your cancellation will be noticed during tax time.

How long can I go without health coverage before LHC applies?

You can be without hospital cover for up to 1,094 days (3 years) across your lifetime without triggering Lifetime Health Cover loading. The loading kicks in once you’ve used these days and will remain on your premium for 10 years.

Is it better to downgrade my policy instead of cancelling?

Often, yes—especially if you want to save money without losing your benefits. Downgrading lets you avoid waiting periods, LHC loading, and tax penalties while you are covered for basics.

Can I cancel just my extras and keep hospital coverage?

Yes, you can. Hospital and extras are separate components of your policy; most funds allow you to cancel one without affecting the other. If extras are useless, dropping them could help you save without losing your tax benefits or LHC continuity.

What if I cancel and then need surgery later?

You rely on the public health system if you don’t have hospital coverage. This often means longer wait times for elective procedures. If you try to sign up again for health insurance before surgery, you could face waiting periods (often 12 months for pre-existing conditions).

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