12/10/2017 6:43 PM AEDT | Updated 12/10/2017 6:46 PM AEDT

Young People Will Pay Less In Major Private Health Insurance Shake-Up

Mental health services are also about to get a lot more accessible.

Stefan Postles via Getty Images

The private health insurance industry in Australia is about to receive the biggest shake-up it's ever received with plans from the Federal Government putting a focus on affordable premiums for young people and improvements for accessible mental health services for patients around the country.

From April 1, 2019 the plans will see private health insurance companies able to offer people between the ages of 18 and 29 access to reduced private hospital cover as well as premium discounts of up to two percent for each year a person is aged under 30 -- up to a maximum of 10 percent for 18-25-year-olds.

Further to that, from April 1, 2018 the government plans to make it easier for private health insurance holders to receive mental health services by introducing a one-off opportunity for patients to skip the standard two-month waiting period to access in-hospital assistance

Federal Health Minister Greg Hunt said in a statement on Thursday that the reforms will make private health insurance "simpler and more affordable" for Australians and encouraged young people to consider looking into private cover.

"We know that every dollar matters to Australian families and these reforms will get better value for families and make policies easier to understand," he said.

"We are encouraging younger Australians to take up private health insurance by allowing insurers to discount hospital insurance premiums for 18- to 29-year-olds by up to 10 per cent.

"People with hospital insurance that does not offer full cover for mental health treatment will be able to upgrade their cover and access mental health services without a waiting period on a once-off basis."

When it comes to mental health, the changes will also see the removal of "Benefit Limitation Periods", which currently see Australians only entitled to restricted benefits for a particular condition or treatment for a set period of time.

Additionally, the shake-up will prevent insurance companies applying limits for patients on the number of mental health treatments that they can access.

The major reforms come as part of a package of 14 measures all designed at enhancing Australia's private health insurance standards, which also includes the categorisation of different cover types, increases to maximum excess levels and the removal of natural therapy coverage.

"The Turnbull Government is committed to private health insurance and we're committed to supporting the 13 million Australians that have taken out cover," Hunt said in the statement.

"We know that many people would like to be able to select a higher excess in exchange for lower premiums. That's why we will increase the maximum excess consumers can choose under their health insurance policies for the first time since 2001.

"And we know that many people find private health insurance confusing. We will act to simplify private health insurance by requiring insurers to categorise products as gold/silver/bronze/basic, and use standardised definitions for treatments to make it clear what is and isn't covered in their policies."

The changes also follow the sixteenth annual private health insurance price hike that came in April this year, which had young people all around the country reconsidering taking up cover at all.In that increase, private health insurance went up by an average of 4.84 per cent with many Australians' individual policies rising by as much as 10 or even 12 per cent.

At the time, one in five 18 to 24-year-olds considered giving up their private health insurance, while a quarter of 25 to 34 and a third of 35-44 year-olds said that if their premiums reached an average of $3,000 a year they'd walk.