With many medical procedures and elective surgeries cancelled in 2020 due to Covid-19, millions of people found themselves paying for private health insurance despite being unable to make full use of their coverage. Now, a major health insurer is set to pay customers back in the form of discounted premiums.
Private health insurer Medibank announced on Tuesday that about two million Medibank and ahm policyholders will be eligible for a discount on their next premium payment due to the pandemic. The insurer announced that it would be returning $105 million to customers who held hospital and/or extras cover at any time during the period between 1 July 2020 and 30 June 2021.
According to the Australian Medical Association (AMA), health funds around the country have saved over $1.8 billion from the bans and delays in surgeries, with Medibank and ahm customers set to see a reduction in premiums applied automatically in September as the fund moves to pay back some of the Covid cash stockpiles.
Customers can expect to see up to $52 returned for extras-only policies and up to $175 returned for hospital and extras policies. The health fund said the average customer will receive about $25 for extras only policies and $60 for hospital and extras policies.
The $10m will bring Medibanks total Covid-19 support to a total of $300m, with the fund previously committing $195m in Covid-19 support to policyholders, including a financial hardship support package and postponement of premium increases for six months valued at $185m.
The fund said it still has $21m in reserve to pay for catch-up surgeries that had been delayed due to Covid-19.
David Koczkar, Medibank CEO, said the health fund was adamant it would not profit from the pandemic and were intent on supporting their customers through the challenging time.
“Today’s announcement will return around $105 million in COVID-19 permanent claims savings back to our customers via premium relief, recognising that COVID-19 restrictions limited how our customers could use their health insurance,” he said. “We’ve been there for our customers to help them navigate through this challenging time, and this give back is just another example of how we are supporting our customers.
“This latest give back is the next phase of our broader Medibank financial support package and customer give back program. Today’s announcement will take Medibank’s total broader COVID-19 financial support package and give back program to $300 million so far.
“We said right from the start of the pandemic that we would not profit from COVID-19, and that we were committed to returning any COVID-19 savings back to our customers because it is the right thing to do. And today’s announcement shows that we have done what we said we would.
“Private health insurers have been required by the industry regulator to hold funds in order to be able to pay for an anticipated catch up in elective surgeries after COVID-19 restrictions were lifted. With the majority of claims normalising we have been able to allocate the excess funding to be returned to our customers.
“This latest phase of our package will be welcomed by our customers, some of who are still doing it incredibly tough as lockdowns continue in various locations across the country. We will continue to assess known claims savings and continue to return any savings back to our customers.”
Medibank is not the only insurer to make the call to refund premiums paid during the pandemic, with HBF being to first to announce plans to return $40m of Covid-19 savings back to its 500,000 policy holders in March. The announcement came following significant pressure on health funds with AMA President Dr Omar Khorshid calling on insurers to “do the right thing”.
“One fund’s doing the right thing, that’s for sure, and it does really beg the question as to what’s so different about the other funds,” Khorshid told ABC Radio Adelaide in March. “There is an opportunity for funds to really demonstrate their value, the fact that they’re not going to make windfall profits, and to give back this money to policy holders who didn’t get that value in the past year.”