Overview

Over the past decade, health insurance premiums have increased by 57%, including April 2022’s average rise of 2.70%.

So if you’re trying to save some money, cancelling your policy may have crossed your mind. While this may reduce your expenses at first, there are a few more things you should be aware of before you decide to follow through.

  • Canceling your health insurance may mean you have to serve fresh waiting periods if you rejoin the system.

  • It’s worth comparing policies to see if you can get a better deal.

  • Leaving private health insurance may mean you’ll be liable for the Medicare Levy Surcharge.

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Can you cancel your health insurance policy at any time?

Yes, you can. Cancelling your health insurance is an easy and simple process. 

Depending on the provider, you may have to call them, send an email, complete an online form, or log into an online portal to lodge your cancellation. 

You can’t restart your health cover when you cancel it, so this is a decision you really have to think through.

What happens if you cancel private health insurance?

If you want to move to another provider, ask your current insurer to issue you a clearance certificate within 14 days. This way, you can skip the waiting times on your new equivalent policy.

Otherwise, it’s just a case of contacting your provider and letting them know you’re cancelling, then making sure that you’ve cancelled any direct debits. You should get a refund on any premiums you’ve paid in advance, minus any admin fees.

Can a health insurance company cancel your policy without notice?

Yes, they can cancel your policy if you fall behind with your payments for a couple of months or more. 

Can I get a refund if I cancel my health insurance?

Your insurer is obliged to refund any premiums you may have paid in advance. You also may be eligible for a refund if you cancel within your cooling off period. That said, they may also charge you an administration fee.

Will I have to re-serve waiting periods?

It depends. You don’t have to restart the waiting periods already served if you’re switching to an equivalent or lower cover. However, you have to serve the waiting period for new services or higher benefits that weren't covered by your old policy when you upgrade your cover. 

If you cancel your health insurance and don’t switch to another provider, you will have to serve fresh waiting periods if you decide to sign up again in the future.

What should I consider before cancelling my private health insurance policy?

There are a few things to consider if you’re thinking about cancelling your private health cover. 

First off, you may incur additional costs. Cancelling your policy may affect how quickly you can get medical treatment, high dental out-of-pocket costs, being liable for ambulance call-out charges in certain states, and possible tax obligations. 

For example, if you earn over $90,000 - or $180,000 as a couple - you’ll likely have to pay the Medicare Levy Surcharge.

You may also face a longer wait if you need elective surgery - one of the biggest advantages of holding private hospital cover is that you usually get seen quicker through the private hospital system, especially for items such as joint replacements.

Finally, you’ll probably need to serve new waiting periods if you decide to rejoin a new health fund.

The good news is there are basic and bronze hospital policies that include things like ambulance cover. These are low cost hospital cover policies that may help you get around the Medicare Levy Surcharge and the Lifetime Health Cover loading.

If you’re travelling overseas for a significant period of time or you just find health cover too costly right now, a good alternative is freezing or suspending your cover instead of cancelling it. This allows you a temporary break from paying premiums and being covered while retaining any waiting periods served, loyalty bonuses, and other perks.

Is it better to cancel or switch health insurance?

It depends on your situation. If you’re not happy with your current policy but don’t feel that you can give up health cover then switching may be the more sensible choice. For example, you may need elective surgery and want to use private health cover for this.

The good news is that if you switch to a lower cost equivalent or lower cover policy, you won’t have to serve any new waiting periods. This means you can start seeing the benefits of your new cover straight away.

How do I find the best private health insurance for me?

Everyone has different needs. We know the key to getting the most out of your policy is to find one that complements your individual circumstances and lifestyle.

That’s why our team of experts is here to help find the right health insurance for you from our panel of trusted insurers in just a few clicks.

Click below to get started on finding a better policy - or give us a call on 1300 757 819.

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This article is opinion only and should not be taken as medical or financial advice. Check with a financial professional before making any decisions.