Time to read : 4 Minutes
When the Minister for Health and Aged Care, Mark Butler, rejected the health insurance industry’s request for an average premium increase of 6% across the board (find these details here [https://www.compareclub.com.au/expert-analysis/insurance/health-insurance-premiums-set-to-rise]), last December, it was good news for those of us who have - or are considering - private health insurance.
It was also a signal that the health insurance premiums will rise. The only questions now are:
When?
By how much?
Two of Australia’s biggest funds have already flagged their premium increases will take effect from April 2024 - without specifying which policies will be affected, and how large the premium price hikes will be.
Why are they keeping secrets?
They’re likely not. The industry as a whole is still in negotiation with the government, but as the general direction for health insurance premiums is upward, it’s best to prepare yourself.
"If you've never taken out hospital cover before, it can be confusing," says Chris Stanley, Sales & Operations Manager for Health Insurance at Compare Club, the nation’s largest health cover comparison service. “If you already have a policy, it’s worth looking at how much value you get from it.”
What You Need to Know When Reviewing Your Health Cover:
Chris suggests starting with a thorough review of your current health insurance (if you have a policy), or a list of what you’ve paid out for medical care over the past year.
“Think ahead to any likely procedures or treatments you may face in the next year or two. Do you wear glasses? Do your kids? Are you likely to need dentures or hearing aids? This kind of planning is a good place to start.”
Know your hospital cover tiers:
Knowing which hospital tier covers the treatments and medical services you’re likely to need helps you avoid overpaying. The 4 tiers of hospital cover are:
Basic: The cheapest cover (includes ambulance and emergency services).
Bronze: Includes 18 categories of surgery and treatments, e.g. joint reconstructions, and dental surgery.
Silver: Includes 26 categories of surgery and treatments, e.g. dental surgeries.
Gold: Covers you for all 38 categories of surgery and treatments, e.g. hip replacements and pregnancy.
Top tip: Ask an expert about ‘Plus’ policies# that cover items from higher tiers at a lower cost.
For example, some health funds cover cataract surgery or joint replacements under their Silver Plus policy, so you may not need to keep paying your top-level and top price Gold premium after all. Gold cover may include care you don’t need, such as pregnancy and IVF.
“It’s worth remembering that not all health insurance policies are created equal,” says Chris.
"It's very easy to overpay for cover that's not actually a good fit for you, or be caught up with the same provider for years and wind up paying a loyalty tax as your premiums creeps up year after year."
Chris’s Top Tips:
Gap fees: Find out how to mitigate any out of pocket payments here.
Check your local hospital has an agreement with your preferred fund - or find a fund that does. This is especially important if you live in regional or rural Australia.
Compare, compare, compare. There are HUGE price differences between the 38+ funds on the market#.
Ask your insurer about waiting periods - particularly if you upgrade your level of cover.
A higher excess can reduce your premium to make a better value policy more budget-friendly.
Look for offers where waiting periods are waived, or you receive several weeks’ free cover for switching your cover.
Chris also has a message for younger Australians, suggesting they take out private health cover if they haven’t already. “You'll want to get cover before turning thirty-one, to avoid incurring the Lifetime Health Cover loading (LHCL).”
Read more about the LHCL here.
“Often people in their early 30s can get really good value Bronze or Bronze Plus hospital cover, which covers a large number of common procedures and means that you won’t be hit with high loading fees in the future.”
Compare to Save:
Chris advocates shopping around no matter your age, because the premium increase is coming - and it’s looking to be higher than last year’s (which was 2.9%). Don’t have time to shop around? Comparison services like Compare Club do this for you.
Remember that the average health premium increase is just that - an average.
Your health fund can actually raise your premium well above the agreed average premium price increase. Chris also offered these important notes on your impending premium price rise:
Last year, the average increases of the ‘big four’ health funds who account for just over 73% of all health insurance policies - Bupa, Medibank, nib, and HCF - worked out to 2.92%.
Internal Compare Club data suggests that a 4% price hike could add up to an extra $159 to your average health cover premium. This could edge up over $200 for elderly Australians and families.
The bottom line:
Private health cover is an essential for many of us - especially seniors and families.
Careful comparisons can save you from overpaying or ending up with health cover that doesn’t meet your needs.
If you’re over 32, your health cover can cost more if you’re taking out a policy for the first time - but there are still ways to save on the cost of your premium.
Speak to one of Compare Club’s experts to chat through your cover. My colleagues don’t compare all policies or funds on the market, but they can help you avoid overpaying.
Take action: Chris recommends reviewing your cover and checking for communications from your insurer. Plenty of funds offer good value for money.
