Australians use healthcare BNPL as premiums rise 4.41%

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.