The federal government has authorised a rise in private health insurance premiums that will cost families an extra $126 a year on average.

The 2.74 per cent annual increase is due to take effect from April 1 next year, and builds on rises of 2.92 per cent this year and 3.25 per cent in 2019.

Almost 14 million Australians will be impacted by the cost increase.

A single person will pay an extra $1.14 per week, and a family will pay $2.44 more a week.

But Health Minister Greg Hunt says it’s the lowest annual average premium increase in 20 years.

“Australian government reforms mean private health insurance will continue to offer Australian families affordable choice and flexibility in their health care,” his office said in a statement on Monday.

The government returns about $6.3 billion to private health insurance holders through the private health insurance rebate scheme.

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In 2019/20, Australians received a record $21.9 billion in benefits for medical services through the private health system, according to the government.

AAP