Health insurance premiums increase on April 1st every year. How much more will you pay? If you haven’t compared policies in the past year, you could be paying more than you need to.Compare and switch
The 2019 industry average premium increase is 3.25%. This is the lowest average increase in 18 years, down from the 2018 increase of 3.95%.
Increases for individual funds and products within those funds may be above or below 3.25%. The highest fund average for 2019 is 5.91%, while the lowest is 1.64%.Your insurer must inform you in writing of the premium increase for your policy.
2019 also marks the introduction of a new youth discount, designed to provide an incentive for young people to join a health fund. Insurers are now allowed to offer discounts of up to 10% on policies for members aged 18 through 29.
Premium increases are related to the rising cost of delivering health services in general. This includes inflation in cost for things like medical equipment, doctors’ fees, and wages for hospital staff.
Health funds increase their premiums to make sure that they can continue to provide member benefits and cover claims. The bulk of premium payments go towards paying out claims. As it costs more to cover claims, funds are forced to increase premiums to maintain their level of service.
Australia’s aging population means that more people are making claims through private health cover. In combination with the increased cost of hospital admissions, it is costing insurers more to provide the same level of benefits, and some of that cost gets passed on to members.
Each year, health insurers submit their proposed premium increase—and a justification for the increase—to the government for approval. If they cannot prove that the increase is necessary to cover their costs, then it will not be approved.
Many health fund members end up absorbing the cost of the premium increase rather than comparing their options to save money. After all, 3.25% isn’t that big of a number, right?
This rate rise is expected to cost the average single Australian an extra $1.14 per week. For families, it’s an extra $2.35 per week. Multiply that by 52 weeks and singles are paying an extra $59.28 while families shell out an additional $122.20.
To understand the real impact of the rate rise, we have to look at the bigger picture. It might seem like a few extra dollars over the course of a year, but remember that this is happening every year.
For example, a family policy that cost $2500 a year in 2015 would cost $2970 by 2019, according to industry average rate rises. So your policy might be costing you an extra $122 this year, but over time those numbers add up.
While you can’t avoid the rate rise entirely, there are ways to reduce its impact. First, see if your health fund offers rate protection when you pay your premiums in advance. This essentially locks your rate until the end of the rate protection period.
You may also be able to reduce the premiums on your policy by paying a higher excess or co-payment. While this can translate to lower premiums, it could mean higher costs when you have to make a claim.
The best thing to do when faced with a rate rise is to shop around for a better deal. You may be able to find a better rate on a similar level of cover from a different fund. It’s also a good time to review your level of cover and upgrade or downgrade as needed.
Compare policies online with Health Insurance Comparison to get a free quote on cover from some of Australia’s leading health insurers. It’s a quick way to see what other options are out there, and it could even save you some money.
The more you pay, the more you get, right? When it comes to the health insurance rate rise, this is rarely the case. While premiums increase each year, your level of cover may stay the same, or worse – decrease. If you find yourself paying more for less cover, it could be time to shop around for a better value policy.
Our team of friendly advisers know health insurance inside-out, so they can quickly figure out if you’re paying too much (or not getting enough). We’ll assess how well your policy fits your current needs to ensure you’re getting the most from your money. Our service is free for you to use and makes shopping around for health cover easy.
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