The cost of private health insurance for Australian families will increase by as much as $200 after the federal government approved plans by funds to increase premiums by nearly 5 per cent from April.

Health Minister Greg Hunt signed off on an average premium rise of 4.84 per cent, seeing the top tier of family hospital cover increase to about $4500 annually and singles cover to increase by about $100 to $1250.

Mr Hunt said the 13 million Australians with private health insurance would have seen higher premium increases if not for pricing changes on some procedures including hip and knee replacements and some prostheses.

Despite price rises at three times the rate of inflation, the federal government said the hike is the lowest in a decade.