Health insurance increase: How you can save before April 1

Health insurance premiums are due to rise on April 1 and, according to recent research, millions of Australians may miss out on potential opportunities to save before the increase comes into play.

Federal Health Minister Greg Hunt announced the increase to health insurance premiums in December last year, with premiums due to rise by an average of 2.74 per cent. While this is the average amount, some health funds have already announced increases far higher than that average, including NIB, which announced an average increase of 4.36 per cent.

HCF announced that its average increase will be 2.95 per cent, Bupa will see an average increase of 3.21 per cent, Medibank 3.25 per cent and Peoplecare 3.9 per cent.

Although this increase is the smallest in 20 years, it’s the second hike in about six months for some members, due to Covid-19 related delays of the annual increase in 2020. It follows the October 2020 increase of 2.92 per cent and a 3.25 per cent hike in 2019, and is expected to cost some members an estimated $112 a year.

Health funds are required to notify you of exactly how much your premium will rise, prior to the increase.

So, how can you save?
According to a recent survey by Finder, 41 per cent of respondents haven’t done anything to save money on their policy, with about 11.3 million Australians currently holding private health cover, Finder said it is the “equivalent of 4.6 million people who could be missing out on saving this health insurance season”.

Taylor Blackburn, Finder’s insurance expert, said there are things people can do immediately to beat the increase. “Now is the perfect time to reassess your health cover and lock in the best possible price before the April increase,” she said. “Not all health funds are equal, particularly when it comes to price increases, so see what’s out there and leave the loyalty behind.

“Reviewing your level of cover, splitting your hospital and extras, and looking at what other funds have to offer can all give you potential savings on your premiums.”

The survey found that 59 per cent of health insurance customers had taken steps to save money on their policy, which included paying up front for the year ahead, regularly reviewing and adjusting cover, and regularly switching health insurers.

However, according to the findings, the most common way people saved money on premiums was by going for the most basic policy. Blackburn said it was important to consider your cover needs, and not only look at the final price.

“Choosing a more basic policy is one way to save money, but it won’t be the right fit for everyone and can leave you underinsured,” she said. “Having health insurance is more than just a formality, it’s there to offer a financial buffer should you fall ill, so choosing the best policy for your needs is really important.”

Finder listed some changes you can make to save on your premiums, before the April 1 increase, including:

1. Split out your hospital and extras – Bundling cover can be convenient, but isn’t always best for your wallet. Looking at hospital and extras cover separately will give you more choice and more opportunities to save.
2. Increase your excess – Your excess is the amount you will need to pay when you make a claim. Increasing this amount will lower the cost of your monthly premiums which can save you money over the course of the year. If you choose to do this, make sure you are comfortable paying the higher amount should you need to make a claim.
3. Ditch the couples policy – It may seem more convenient for you and your partner to share a policy, but it can actually end up costing you more. One reason for this is that both you and your partner need to be on the same level of cover, e.g. pregnancy cover is only available on the Gold tier so you will both be paying for Gold cover even though only one of you is likely to need that level.
4. Compare your options – Regularly comparing policies and funds and switching when necessary will ensure that you are getting the best deal on your health insurance. Fortunately, if you’re switching to a similar level of cover you often won’t have to re-serve waiting periods. The Finder app can also look at what you’re paying and suggest where you could switch and save money.

Why is it going up?
Health insurance premiums rise by a different amount each year. According to the Australian Ombudsman’s website,  premiums increase when hospital, medical or other health-related costs rise, as well as if their members have an increase in the use of health services. The website adds that things such as wages for nurses and hospital staff, doctors’ charges and the cost of medical equipment and technology are all factors that can lead to increases.

IMPORTANT LEGAL INFO This article is of a general nature and FYI only, because it doesn’t take into account your financial or legal situation, objectives or needs. That means it’s not financial product or legal advice and shouldn’t be relied upon as if it is. Before making a financial or legal decision, you should work out if the info is appropriate for your situation and get independent, licensed financial services or legal advice.