In April 2011, the Federal Government permitted private health funds to carry out changes in their pricing. The result is an average increase in health insurance premiums by 3.95%. For the average Australian family with private health insurance, that boils down to paying an approximate additional $138 a year. Being able to manage one’s budget and save money for this particular necessity has become, now more than ever, a serious concern.
Carrying out a health insurance comparison across various service providers is still the tried and tested way of finding the most cost-effective policy. Of course, with the numerous packages that combine hospital and general treatment coverage, regular consumers can find this quite a labyrinthine territory to navigate through. It’s a matter of asking the right questions:
- Which medical institutions and professionals have arrangements with the provider?
- How long is the waiting period?
- What level of benefits is offered?
- What does this policy cover that isn’t available with Medicare?
It’s also a matter of figuring out the other policy terms that have a direct effect on premium.
Excess and co-payments
When consumers compare health insurance policies offered by different providers, they may come across terms such as excess and co-payment. These are possible deductibles that one can opt for in exchange for a lower premium quote.
An excess is a fixed amount you agree to pay out-of-pocket and is part of a hospital treatment cost. Depending on the specific conditions set in a policy this could be for every instance of treatment or only the first one.
A co-payment works in the same way, except that the amount is set for every day stayed in the hospital. This is also sometimes referred to as overnight or daily excess.
Discounts and premium protection
Insurers may also offer lower premiums based on the manner in which the customer carries out his or her payments. The typical conditions that insurers may offer are:
- Advance payment for three months
- Payment through salary deduction
- Payment through automatic transfer from a bank account.
Generally, health insurance policies made available through an organization in which you are either an employee or a member, also have lower rates.
When a customer is able to pay the premium one year in advance, a feature called premium protection may be offered. Basically, this may exempt the insured from paying any balance that may be incurred if premiums were to increase within the one year period already covered.
Private Health Insurance Rebate
This is an initiative introduced by the Federal Government in January 1999. Essentially, the Private Health Insurance Rebate enables anyone with a private health insurance policy to have a certain percentage of their premium reimbursed. It’s the government’s way to encourage people to get private coverage and balance out the public and private sectors of the health care system. The current set private health insurance rebate percentages are up to 25% for anyone under 65 years old, up to 30% for those between 65 to 69, and up to 34% for those 70 years of age and above.
There are three ways to claim this rebate. One can get a direct payment from the nearest Medicare office, request the health fund to convert it into an equivalent reduction in premium, or claim it through tax return at the end of the fiscal year.
Lifetime Health Cover
If the government’s rebate is the carrot, then this other regulation works like the stick. When one doesn’t have a hospital cover by the 1st of July following one’s 31st birthday, an additional 2% cost is put on top of one’s premium for a policy taken later. The percentage is multiplied by the number of years above 30 that one didn’t have coverage. Someone who purchases a policy at the age of 35 then will unavoidably pay a premium for hospital coverage that is 10% higher than someone who already had coverage at age 30. The implication is that for average consumers it is much cheaper to get private health insurance while still young and maintain it up to later years.
As you can see, there are several ways to save money on your health insurance in Australia. When you compare health cover, be sure to take them into account.