Health care premiums are monthly payments rendered to insurers for the purchase of health insurance – a form of insurance which covers illness, injury and other medical expenses. Premiums function as the chief source of revenue for health insurance providers. Insurance company actuaries consider a range of factors in determining these premiums.
Such factors would include the cost of payment to healthcare practitioners, advertisements, and sales and profit margins. Consumers, however, are also able to determine the cost of their insurance premiums to some degree. The ten factors that can impact health insurance premiums are discussed below.
Varying Options From Varying Funds
To ensure that you are getting the best value for your money given your needs and circumstances, it is recommended that you compare all your options from different funds before committing to a health fund. An informed decision will likely save you money on your premiums.
Get An Early Start
Depending on your age, if you are eligible for Medicare benefits, then you could receive up to 34% in rebate from the Federal government to help you with the cost of your private health insurance premium. Further, if you opt for hospital cover before your thirtieth birthday (or the first July following it), then you will be eligible for the lowest base rate health insurance premiums.
Deductibles Can Vary
This is the annual amount that you pay out of pocket before being reimbursed for any medical expenses incurred. These tend to vary from one policy to another, and the higher the deductible that is paid, the lower your premium becomes in the end.
With co-payment, policyholders pay a set amount daily every time a medical service is provided. For example, a co-payment clause in a policy may require a patient to pay the first $50 for private hospital accommodation each day. Therefore, a person is able to reduce his or her premiums by agreeing to co-payment on health insurance.
Some funds offer hospital cover for which there is “excess”. This is the amount paid when a person is admitted in to a private hospital. It is usually paid once and covers hospital admissions for that year, although some funds may stipulate that it may apply to each admission. The sum, however, is typically larger than what a person would pay for co-payment. Both co-payment and excess are ideal if you are relatively healthy as they reduce the amount of premium you would have to pay.
By excluding benefits for certain forms of treatment – for example, maternity treatment or knee replacements, a policyholder will pay a lower premium. However, policies with exclusions will not cover a patient being treated for the relevant condition.
A policy with restricted benefits will grant a person coverage for treatment in a public hospital, but only some of the costs will be covered if a person opts to receive treatment in a private hospital.
Benefit Limitation Period
A limitation period entitles a person to restricted benefits for particular conditions or treatment during a stipulated time period. For example, you could take out an insurance policy that pays full benefits for several conditions but only offers restricted benefits for hip replacement surgery for the first 3 years of the policy. After 3 years, you will be entitled to full benefits. Taking a policy with a benefit limitation period will reduce premiums.
Premium rates could rise up to 5% every year to compensate for ever increasing medical costs. The majority of health insurance providers allow you to pay your premiums in advance to take advantage of the previous year’s rates for the following 12 months, thus saving you some money.
If you will be traveling or living abroad for an extended period (longer than a few weeks but less than 2 years), some health funds will permit you to suspend membership for that period so that you do not incur increased premiums while you are away. You will be able to restart membership without additional waiting periods on your return.
Policies vary between different providers, so it is always best to consult with the relevant hospitals and your health fund first before making any decisions. But by following some of the guidelines above, you are guaranteed the best value and savings on your premiums.