By now, every Australian private health insurance member will begin paying more for their cover. Every year, health insurance premiums rise, and this year was no different.
Wait, have my premiums increased?
Yes. Every health fund increased its private health insurance premium rate by an average 5.59 per cent on April 1, 2016. This is due to the rising cost of healthcare, a growing and ageing population, the fact that the average person now receives more medical treatment than in the past, and a few other factors.
Your premiums will now be higher than last month, unless you paid for your health insurance annually and renewed before March 31. How much higher will be noted in a letter from your health fund, which you should already have received. It could be as high as 8.95 per cent as an average for your insurer, or as low as 3.76 per cent.
What can I do to keep my health insurance costs down?
The last thing you should do is buy a junk policy. Some of these "budget" health insurance options won't cover you for the most pressing risks, and may also include out-of-pocket expenses, so they're virtually useless.
However, fear not: you certainly are not short of options, though which route you take to limit your health insurance expenditure will likely require a chat with your health insurance broker.
As an example, here are just five ways to reduce your private health insurance costs:
1) Check the fit of your current insurer
Australia's health insurance market is deregulated, which means there's technically no minimum or maximum amount a health fund can charge you for cover. However, healthy business competition means that all 34 health insurers in Australia are trying to out-perform each other, and that generally keeps prices as low as they can be.
That certainly doesn't mean every health fund is the same; each offers different policies with different levels of cover for different prices. There are thousands of variations, so you'll need to make sure you get one that has been designed with your lifestyle and budget in mind.
So, compare private health insurance. It's one of the most fool-proof ways of seeing your costs decline, without compromising quality with a junk policy.
2) Take your current lifestyle into account
In a similar vein, your lifestyle can change, and your health insurance policy might no longer be the right fit, costing you more for cover you don't need.
A common example is maternity cover. If you have a family health insurance policy that was tailored for protecting your health needs during pregnancy, but you don't plan on getting pregnant again, perhaps it's time to drop it.
Other similar situations exist, so speak to your insurance broker about what you do and don't need.
3) Mix and match
You might go to your green grocer for fruit and veges, your baker for bread, and your fish monger for seafood. You'll expect each to offer you the best quality for a good price. But did you know you can do something similar with your health insurance?
Instead of using one health fund as a supermarket of insurance, you may find it economical to mix and match your health insurance products between competing insurers.
4) Restrict your benefits
You can limit your cover for certain medical procedures and/or treatments should you wish, greatly reducing the cost of your health insurance. For instance, you might not feel you need eye care, fertility treatment, psychiatric care or joint replacement surgery.
Conversely, if your employer offers restricted benefits as part of a corporate health plan, you can include the products you're missing and limit the rest.
"There is demand from consumers for more affordable policies, particularly from younger people who may be taking out a policy for the first time and from people who are purchasing health insurance primarily for tax purposes. One way insurers can reduce the cost of a policy is by restricting or excluding certain treatments on the policy," the Commonwealth Ombudsman (formerly the PHIO) advised in 2014. The same sentiment is true today.
5) Claim your rebate
This one is simple: Are you claiming your full health insurance rebate from the Australian Taxation Office? If you don't know what that is, we've gone through the specifics in our health insurance rebate table here.
Should I cancel my private health insurance?
The Motley Fool news website suggests around half a million Australians could cancel their private health insurance and rely on public healthcare only following the April 1 premium rise. There's a severe risk that this would put significant strain on public hospitals, and it opens the door for much higher premiums should a person go back to private health insurance later in life because of lifetime health cover loadings.
Before you cancel private health insurance, contact HICA and have a chat with one of our professionals. We offer free assistance for families, couples and individuals, and can help you find a more affordable cover option.
Contact us on 1300 44 22 01 to see what we can do.