April Premium Increases: Prepay or Pay More!
As you’re now probably all too aware, health insurance premiums will rise on April 1st. The announcements confirming average premium increases across the industry are in practice, merely a guideline. Some health funds will increase their premiums in excess of this average and this is usually the case for many of the big names in health insurance. On the flip side, not all health funds raise their rates as far as the industry average.
You should receive a letter from your health fund to let you know how much your premiums will go up. If your health fund confirms a rise in line with or above the industry average, you may be one of the many Australians who plan to review their health insurance and adjust their cover or drop it completely.Photo by 401(K) 2013
If the rate rises will have a big impact on your budget going forwards, you may want to think about other options that are available to you. Before you make any hasty decisions regarding your health insurance cover, remember that you can get around the premium increases by paying a year’s worth of premiums upfront. Here’s what you need to know about the prepay option.
The Benefits of Prepaying
Prepaying your health insurance premiums allows you to “lock in” your current rate so that the premium increases are postponed for another twelve months. This can avoid the need to downgrade your health insurance policy or opt out of private health insurance altogether but it will depend on your situation. If your budget can stretch far enough, it’s definitely worth having a serious think about paying your premiums upfront so that you can take advantage of the financial benefits.
What to Do
Time is of the essence here. You don’t have long to act if you do decide to prepay your health insurance premiums. To successfully “lock in” your current health insurance rate, you need to prepay in March prior to the increases coming into play. Bear in mind that your payment needs to have been processed by your bank before April 1st so don’t forget to factor this in when you arrange payment. It could take several working days for your payment to be processed. If your payment isn’t processed in time, you lose the benefits of prepaying.
Not everyone will be in a position to prepay their premiums before this cut-off. For those who can, it’s an option worth taking advantage of. If you can afford to do so, it can be hugely beneficial to prepay your health insurance premiums and avoid the dreaded rate rises. This can be particularly invaluable if you know that your health fund is due to introduce premium increases that are higher than the industry average as it means that you can effectively delay the premium increase for another year. Of course, the big downside of prepaying is that you will need to have the necessary “wiggle” room in your budget to free up enough money to pay upfront – and you have less than a month to get the cash together and arrange payment.
Disclaimer: The above information is correct and current at the time of publication.
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