Time to read : 4 Minutes
Why 75 Of Australian Health Insurance Holders Are In For An Unpleasant Surprise This Spring
Anybody who holds health insurance in Australia knows the drill by now.
In March a blandly-written letter or email arrives from your health fund saying something like: “You’re a valued member so we want to let you know that we’ve done our very best for you and your new monthly premium will now only be this much, and did we say how much we really, really value you.”
🔍 You’ll then spend a bit of time working out if this is a big increase or if it’s on par with everyone else, all while being bombarded with adverts from every health insurer spruiking their own policies.
🛍️ Normally this is all condensed into a few short weeks and on April 2 those households who worked out they weren’t getting a good deal can feel satisfied that they’ve switched to a much better value policy.
😕 Except 2022 is different. It’s a bit confusing, unexpected, and comes with a slightly nasty sting in the tail.
What you need to know about the delayed 2022 health insurance increase
A lot of health funds opted to postpone their April increase until October or November. It’s why you’re seeing a big advertising push from all the insurers right now.
Medibank, Bupa, HCF, and nib are all putting their premiums up on 1 November. Between them, they account for just under 75% of all health insurance policies in Australia.
Some of the better known restricted funds like Defence Health, Doctor’s Health and Teacher’s Health are all putting premiums up on 1 October.
The health funds who postponed their increase mostly cited a desire to give their customers a little financial respite after the pandemic.
It sounds worthy, but… by my estimations, most members who’ve had their increases postponed will have only saved around $50 - $60.
⬆️ Premium increases this spring for many members could be double or triple that amount.
💰 And the amount people can save by switching to better value cover is often several hundred dollars (the average saving of a Compare Club customer is $320, for example).
🤏There’s also a grim irony that a delayed premium increase was meant to help our members financially, but now lands as the cost of living is soaring in Australia.
🥬 From lettuces to loans, everything is going up. The health funds weren’t to know this back in March, but it’s really unfortunate timing.
But aren’t health insurers giving money back to their members?
They are, but this shouldn’t be confused with the premium increases as it relates to something different.
Lockdowns and elective surgery bans during the first two years of the pandemic meant that many members couldn’t actually use their policies, especially those of us in Melbourne.
Fewer claims meant the health funds made more money as customers were paying for services they couldn’t use.
This wasn’t the health funds’ fault – they had no control over Covid outbreaks or state government restrictions - but it did mean the health insurance industry came out of the pandemic looking… well, healthy.
Customers - rightly - pointed out they should get some form of refund given they were paying for cover they couldn’t use.
Some health funds moved relatively quickly to return some of their profits back to customers. Others have only recently announced they’ll be giving their members cash back.
🤔 I’ll leave you to draw your own conclusions about the timing of these announcements.
Be aware: the no-strings-attached modest premium refunds relate to the past two years. They’re very different from October and November’s increases, which ask customers to pay higher premiums for their insurance moving forward.
What you really need to watch out for this spring
You’ll hear a lot about the average premium increase – across all health funds in 2022, it’s 2.70%, or around an extra $140 for most middle aged couples and families.
Yes, but… it’s only the average increase. The amount premiums will go up varies from fund to fund. For example, Latrobe Health Services are putting their premiums up by an average of 3.41%
And there’s more… premium increases also vary by product as well. Some members will only have a very modest increase. Others will see a huge spike, like my colleague who found out his HBF cover was going up by 10.6% back in April.
Our calculator can help you work out if your premium increase is too much.
It’s worth reviewing your health cover if you’ve not switched policies recently – you’ll have been through several increases since you last took out a new policy.
If you switch to a policy that’s cheaper but largely the same, it’s unlikely that you’ll have to serve new waiting periods.
One last thing: Anybody with a fund that’s increasing premiums in November could be hit with another price rise in less than six months, assuming the majority of funds revert back to 1 April as their annual increase date.
The bottom line
Health cover is expensive to provide, so there is a good reason why funds increase premiums. But 2022’s increase has come at a particularly unfortunate time for households looking to balance their budgets as inflation keeps rising.
There’s usually a better value policy available.
If you feel like you’re paying too much, you probably are or you are not getting the best value that you could.
The information contained on this web page is of general nature only and has been prepared without taking into consideration your objectives, needs and financial situation. You should check with a financial professional before making any decisions.
