Top Tips for Reducing Health Insurance Premiums
If you are looking to reduce your health insurance premiums, there are a few things that you can do to pay less without compromising on your cover.
Comparing health insurance options is a must if you are looking to save on your premiums. Carrying out a regular health insurance comparison enables you to see whether you can get more for your money elsewhere. You may be able to get a similar level of cover for less by switching to a different health fund but you won’t know unless you take some time to assess your options. It is a good idea to review your policy at least once a year to check that it is still the best one for your needs.Image credit: Tetsumo
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Take Advantage of Rebates and Tax Breaks
Although the Health Insurance Rebate has gone down and is now means-tested on income grounds, it can still be a useful way to decrease your health insurance premiums. You can use your rebate to get a reduction on your premiums, for example.
You can pay less for health insurance in general by buying it earlier in life. Under the Lifetime Health Cover scheme, Australians pay 2 per cent loading on top of premiums for every year that they were without hospital cover beyond their 30th birthday. Buying hospital cover at the age of 35 means that you will pay 10 per cent loading, for example. To lock in base rate premiums, you need to buy hospital cover before your base date – which is July 31st following your 31st birthday.
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Do You Need Pregnancy Cover?
You can cut your health insurance premiums by dropping benefits that are not relevant to you. Depending on your situation, pregnancy cover can fall into this category. If you are single and not expecting to need obstetrics cover any time soon or you already have your family, pregnancy cover is one of the areas that you could opt out of including in your policy. In fact, many singles policies do not include it at all on this basis.
Evaluate Your Cover and Future Needs
While it is a very good move to only include the areas of coverage that are most relevant to you right now, you also need to balance this out against your future needs so that you are not caught out as your situation changes. Obstetrics cover has a 12-month waiting period so you cannot simply wait until you are pregnant to arrange cover. To be fully safe, you need to have arranged cover at least 3 months before becoming pregnant. It is therefore something that you need to think about in advance of needing it.
There is also a 12-month waiting period for major dental treatment, which means that you need to have cover for this place before you need to have crowns, orthodontics and other major dental work.
For most people, your health needs will change as you get older. Young and healthy individuals can get away with excluding age-related benefits such as joint replacement surgery and cataracts cover but these may well become more important in the future. You may therefore need to upgrade your health insurance to reflect your changing situation but before then, you can save by restricting or excluding these and other types of cover that are not important to you right now.
Reassess Your Cover Regularly
As has already been mentioned, you should look to review your health insurance cover at least once per year to get the most out of your policy. This will ensure that your cover is still the best value for money and the most appropriate option for your needs.
Pre-Pay Premiums Upfront
Every April, the Health Minister approves health fund premium rises to counteract the rising costs of health care in Australia. In 2014, the average rate rise was 6.2 per cent – the highest in almost a decade. Not all health funds raised premiums to this extent, although some went beyond it.
Many Australians look to downgrade or even drop their cover as a response to this but there is a way to dodge the increase; temporarily, at least. Pre-paying a year’s worth of premiums will “lock in” the current rate for a further 12 months. Doing this before April 2014 would have “locked in” the previous year’s premiums and avoided the subsequent rate rises, for example. This option can be extremely beneficial if your health fund is one of those at the sharper end of the increases. Be aware though that pre-paying does not guarantee that your policy will be completely unchanged. Annual limits and benefits could still shift, for example.
At the very least, look at the rate rises as an ideal opportunity to shop around and compare health insurance policies to assess your options. If you are unhappy with the planned increases by your health fund, see what others are doing and whether you can pay less elsewhere without reducing your cover. Check with particular health funds with regards to when a policy needs to be pre-paid to take advantage of the “lock in” benefits.
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