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Last Updated on 21 March 2018

Health Insurance Rate Rise Survival Guide

Health funds will be raising their rates again in April, which can prompt many consumers to think about downgrading their existing cover or dropping it altogether. Before you make any hasty decisions, you’ll be pleased to know that you are not obliged to just accept your health fund’s new rates. Here are our tips for surviving the annual rate rises!

What to Expect This Year

Insurers apply to the Health Minister to raise their premiums. In previous years, the average increase has been 5.35 per cent.

Rate rises for 2017 aren’t anticipated to be as steep as last time but nib boss, Mark Fitzgibbon, has predicted that consumers should not be surprised to see annual increases of 5 to 6 per cent for the foreseeable future.

How to Help Yourself

If your health fund was one of those that implemented above average premium rises in 2016, you’re probably wondering whether the same will happen this year and if there is anything that you can do to negate the impact on your budget. Here are a few of the things that you can do to offset the rate rises.

Shop Around

It’s a good idea to compare health funds at least once every 12 months and with the rate rises just around the corner, now is the perfect opportunity to look at your options.  

While some health funds have been raising their premiums in excess of the average rate rise over the last few years, others have consistently been way below it. There is therefore some good scope for finding a health fund that won’t leave you significantly out of pocket every time a rate rise occurs; just make sure that you go with one that will work well for you in terms of your cover and only use premium increases as part of your decision. In the long run, it can actually cost you more if you switch to a health fund that doesn’t cover what you really need or that includes lots of things that you don’t need.

Review Your Cover

While you’re shopping around, think about how well your cover is really working for you  right now. If you’ve not had a close look at your policy recently, there is a good chance that you’re currently paying for some services that you don’t use or are unlikely to need to claim for any time soon. 

You can get better value for money by switching to a policy that fits your needs and doesn’t include additional services that aren’t relevant to your circumstances. Some health funds already do this by offering policies that are aimed at particular life stages, such as excluding age related and obstetrics Hospital services for cover that is geared towards young and healthy singles that are not planning to start a family in the near future.

This is true for Extras services too, particularly with regards to annual limits. The amount that you can claim per year is different depending on your health fund, which can make a big difference if you use certain services on a fairly regular basis. Generally speaking, basic Extras policies will include popular choices such as general dental, optical and chiro but won’t have big annual limits for them. The broader Extras services tend to include a wider range of services with slightly more generous annual limits but it’s definitely worth shopping around to see what kind of Extras are included and how much you can claim for on each service.

If you know that you will be using certain Extras services quite a lot, it’s worth seeing if you can find a policy that has more generous annual limits for the ones that are most relevant to you. For example, some health funds offer unlimited general dental with no annual limits.

Pay Premiums Upfront

If your budget is flexible enough, you can “lock in” the current cost of premiums with a particular health fund – and effectively delay the impact of the upcoming rate rises for another year. The downside is that you’ll have to pay a full year’s worth of premiums upfront in or before March. Your bank will need to have processed the payment by April 1st for you to take advantage of this option.

Pay Premiums By Direct Debits

You will often get a discount of up to 4 per cent if you choose to pay your premiums by Direct Debit. A lot of health funds offer this but this won’t necessarily always be available.

Frequently Asked Questions About Health Insurance

There are three types of health insurance in Australia. They are:

  • Hospital Cover
  • Extras Cover (also known as general or ancillary cover)
  • Ambulance Cover

Hospital cover can ensure any unexpected surgeries, treatments or hospital stays you may require will be covered. With appropriate cover you will have the flexibility to choose your own doctor and the option of receiving treatment in a private hospital.  Most hospital covers allow you to stay in a private room. One other perk is skipping the public hospital systems’ waiting list, which can be lengthy for non emergency treatment.

Extras cover pays benefits for a a range of services, often including treatments and procedures related to the fullowing:

  • Dental/oral health
  • Glasses and contact lenses
  • Podiatry
  • Physiotherapy
  • Psychulogy
  • Acupuncture
  • Remedial massage
  • Chiropractic
  • Hearing aids
  • Travel vaccinations

Ambulance cover, as the name suggests, will cover you should you require emergency ambulance transport. In an emergency, there is enough to worry about. Having the expenses covered for provides security and peace of mind. Many hospital covers include emergency ambulance transport If yours doesn’t, you will need to shop for this separately.

Life is unpredictable. You never know when you might need cover. No matter what life stage you’re in, there’s a policy out there for everyone. You can select as much or as little cover as you want, depending on your health needs and requirements. It’s a small price to pay for the peace of mind health cover provides.

There is no one answer here. Costs vary across providers and policy types. Just because a policy is cheap, that does not mean it is ‘value for money’ and vise versa. Make sure you check what’s included and excluded in a policy before signing up, as you want to purchase a policy that best fits your specific needs.

Premium: A premium is the price you pay for your insurance policy (it may be paid annually or on an ongoing basis).

Policy: An insurance plan. In other words, it is the type of insurance you choose to select.

Policy Holder: The owner, or ‘holder’ of a policy.

Claim: In the event that you require treatment for a service covered by your policy, you can lodge a claim for reimbursement of all or part of the cost of that treatment.. These days, most claims are submitted electronically by the health care provider (dentist, physio etc)

Lifetime Health Cover: Lifetime Health Cover was put in place to encourage young Australians to seek out and maintain ownership of private health insurance early in their lives. If you do not take out a policy before you turn 31, extra charges will be applied should you take out a policy at a later time.

This means you will pay a 2% loading on top of your premium for every year that passes after you turn 30. For example, if you take out a policy for the first time at age 32, you will be charged 4% of your premium as an extra, then at age 40, 20% and so on, up to a maximum loading of 70%.

The loading is payable for 10 consecutive years of cover - after which it is removed and you premiums will be reduced.

Pharmaceutical Benefits Scheme (PBS): Medicare offers assistance for Australians with many of their their prescribed medication costs through the PBS. This assistance is in the form of subsidies towards the cost of many medications. You can check if your prescribed medication is on the list of subsidised items here.

Medicare Levy Surcharge: The Medicare Levy Surcharge is an additional charge (tax) applied to single Australian taxpayers who earn over the income threshold of $90,000 per year, or families/couples who earn over $180,000 per year. This surcharge is only applied to those who choose not to have a private health insurance policy.

The surcharge is designed to reduce pressure on the public health system by encouraging those with higher incomes to invest in private health cover.

Private Health Insurance Rebate: The government’s Private Health Insurance rebate lowers premiums for most Australians with private health insurance Older Australians may enjoy an even higher rebate. Our calculator can help you estimate the Government health insurance rebate you may receive.

Disclaimer: The above information is correct and current at the time of publication

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