In just a couple of months, some 13 million Australians are going to be looking at their private health insurance premiums to decide what cover they want moving forward. Insurance providers have been spending the later part of last year working out their insurance premium proposals to get approved by the Australian government. You may also know that these premiums are set to take affect on April 1, 2018.
Things aren't set in stone just yet, but this year's premium increases are shaping up to be the lowest in decades. A statement released by Minister for Health explained that the government is putting pressure on private health insurers to keep prices low, and it's working.
"Health funds will have average weighted premium increases from as low as 2.98 per cent, from 1 April 2017. The industry average weighted premium increase will be 4.84 per cent," the release explained.
This year's premium increases are shaping up to be the lowest in decades.
The government is also subsidising premiums with the private health insurance rebate which is worth about $6 billion each year. With all of that said, here's what you need to consider when you are reviewing your cover for the coming year.
Understanding premium increases
The fact that increases are shaping up to be at a record low this year is a big deal for health funds and the industry as a whole, but be careful not to get too caught up in the excitement.
When you're assessing the percentage, you have to take into account the initial cost of the premium. You might actually find that the higher premium that is increased by the smaller percentage actually ends up being more expensive than the lower initial premium increased at a higher percentage. These calculations can take some time, which brings us to our next point.
Don't wait to review your cover
Now, you won't officially find out about the increases until the end of February, giving you just about a month to review your cover. But that doesn't mean that you should wait to see what the official changes are going to be.
The time to start reviewing your health cover is now.
Rather, the time to start reviewing your health cover is now. It takes time and research to really delve into the different providers and their packages in order to find the one that is suitable for you and your family. Without needing to know the exact price of the policy, you can start shopping around with other providers to see if their inclusions are things that your family needs, like the level of cover each insurer provides for dental, optical, natural therapies, chiropractic and whatever else you need.
This way, once the government actually locks down the premium increases, you can select which provider and package is most suitable to you. During this time, be sure to see what other providers are doing in terms of things like the services mentioned above and many more, as well as what excess you'll pay.
Pay in advance and rebates
You have the option to lock in premiums by paying a year in advance. This also gives you the benefit of paying premiums before the rebates are reduced. Let's explain this further.
When paying a premium at the old rate for 12 months in advance, the increase doesn't take affect until the policy is renewed. If someone pays all their premiums 12 months in advance at the first of March, then that premium remains in affect until the first of March next year. This means that the April 1 increase in 2018 doesn't apply until March 2019 – letting them lock in premiums at the current level.
The government subsidies private health insurance in Australia by allowing you to claim a reduction in premium via the rebate system which can depend on things like your level of income and your age. The rebate is reduced on April 1 as well, so if families are able to pay premiums before then, they get the rebate at the higher rate.
Don't do your homework on your own
Put simply, you don't have to do any of this on your own. Health insurance brokers have innovative ways to help you with everything from deciding the appropriate cover for you and your family, as well as how to finance your premiums to take advantage of rebates.
To learn more about your insurer and the premium increases that are going to affect you, reach out to a health insurance consultant to schedule a consultation today. We'll help you find the best plan of action so you're prepared for the increases.