Healthcare costs, even with Australia’s robust system, remain a significant financial consideration for many households. Private health insurance premiums, unexpected medical bills, and navigating the complexities of Medicare and private gap payments can quickly add up.
By employing strategic thinking and being proactive about your policy choices, you can effectively manage and significantly reduce your annual health expenditure.
Here are five essential strategies for Australians looking to save on their health costs:
Every year, the Federal Government approves increases to private health insurance premiums, typically effective April 1st. You don’t have to absorb this increase if you plan ahead.
Most insurers allow policyholders to pay their annual premium in advance. If you pay before the April 1st rate rise, you lock in the current, lower price for the entire 12 months. Even if you can’t afford the annual premium upfront, consider a longer payment frequency such as half-yearly or quarterly (if your fund offers them) to delay the onset of new rates.
‘The ‘gap’ is the leftover provider fee you need to pay once your health fund has contributed i.e. your out-of-pocket cost.
Here’s some tips to reduce the gaps you pay each year:
● Ask for Informed Financial Consent: Before any procedure (surgery, treatment, etc.), ask your doctor for a detailed quote, including all potential out-of-pocket costs. This is your right and is crucial for planning.
● Utilise ‘Known-Gap’ or ‘No-Gap’ Arrangements: Ask your specialist if they participate in your health fund’s ‘No-Gap’ or ‘Known-Gap’ scheme.
○ No-Gap: The doctor agrees to accept the insurer’s benefit payment as full settlement, meaning $0 out-of-pocket for you.
○ Known-Gap: The doctor agrees to limit your out-of-pocket cost to a pre-agreed maximum amount (e.g., $500), which is far better than an unlimited charge.
● Check the Anaesthetist and Assistant: Remember that the surgeon is not the only provider. Confirm that the anaesthetist and any surgical assistants also agree to a No-Gap or Known-Gap arrangement.
When it comes to your extras services, many health funds will have arrangements with preferred providers to limit the costs they charge or increase the benefit they pay towards your treatment. Check with your health fund to see whether you have access to no-gap or discounted dental, optical and physiotherapy services.
The excess (or co-payment) is the amount you agree to pay towards the cost of a hospital admission before your private health insurer pays a benefit. Adjusting this figure is a powerful tool for controlling your premium costs. Increasing your excess may significantly lower your premiums. Before doing so, it’s important to consider your overall health and whether you have any expected admissions in the future – in which case this strategy may not be for you.
Many health funds offer incentives and discounts that are often overlooked by policyholders.
● Student and Youth Discounts: If you are under 30, you may be eligible for age-based discounts that can reduce your hospital premium by up to 10% (depending on your age when you first purchased cover).
● Wellbeing Benefits: Many health funds are invested in keeping you healthy to reduce costly hospital visits, by offering wellbeing programs that incentivise or reward you for healthy habits.
● Billing Discounts: Your health fund could offer a reduced premium for paying by direct debit or using an annual payment frequency.
Private health insurance policies change frequently, and so do your life circumstances. The most effective way to save money is to ensure you are not paying for cover you don’t need or missing out on better deals elsewhere.
● Review Hospital Cover: Are you paying for pregnancy, joint replacements, or cardiac services that you have no intention of using? Downgrading to a policy that excludes these services (e.g., moving from Gold to Silver Plus or Bronze Plus) can lower your premium immediately.
● Review Extras Cover Usage: Tally up how much you actually claimed on your extras policy last year. If your annual claims were significantly less than the premium you paid, consider downgrading to a basic extras policy or increasing the waiting periods to save on costs.
● Seek Advice: Make comparison shopping a yearly habit, particularly before the April rate rise. It’s the best way to ensure your cover is working for you.
IMPORTANT LEGAL INFO This article is of a general nature and FYI only, because it doesn’t take into account your personal health requirements or existing medical conditions. That means it’s not personalised health advice and shouldn’t be relied upon as if it is. Before making a health-related decision, you should work out if the info is appropriate for your situation and get professional medical advice.
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