Hit with a health insurance cost hike? Top tips to help soften the blow.
May 04, 2024
By Sophie Ryan, iSelect Comparison Expert
(This is a sponsored post by iSelect )
Blink and you may have missed it. On April 1, private health insurance prices went up for many Aussies. Have you checked to see if the cost of your policy increased? If the answer is no, take this as your reminder to check how much you’re being charged. If you have private cover, your fund should have let you know via letter or email if the cost of your cover just increased. It’s possible in the middle of eating your weight in chocolate eggs or packing for an Easter getaway, you overlooked the memo, and the date simply passed you by.
Don’t stress if you didn’t take any action before the price rise kicked in because it's never too late to sit down and take a few simple steps to determine if you could save money on your private health insurance.
Understanding premiums 🤔
Firstly, it’s a great idea to get yourself up to speed on what you’re actually paying for when it comes to private health insurance and why the cost can increase. The money you spend for the peace of mind of having private cover is called a premium, and every year, insurers can seek approval through the Federal Health Minister to raise them. Why? It can be due to several reasons, including increased wages for doctors, nurses and hospital staff, costs of medical equipment and technology or a rise in use of some health services.[1]
This year’s cost hike across the industry was an average of 3.03 per cent. Some health funds increased their prices by more than the average, and others less, so it’s important to know how yours stacks up. According to sales data from comparison service iSelect, the 3.03 per cent average increase means around an extra $71 for a singles policy and around $147 more for a family.[2]
We know what you’re probably thinking… “Another price rise?!”. If this is news to you, apologies to be the bearer. According to recent research from iSelect, only a third of policyholders say they can easily afford their cover, and more than a quarter (27 per cent) surveyed with private health insurance say they would not be able to afford to pay any more money for it.[3] The good news is, there are ways you can help mitigate this extra cost-of-living hit. Read on as we explain how.
Policy health check đź“‹
OK, now it’s time to dig out your weekly, monthly, or annual bill and familiarise yourself with how much you’re paying and what you’re covered for. There are two key reasons to do this. To begin with, you could be forking out hard-earned cash for things you don’t need or use. This could be paying for IVF and pregnancy when you’re not planning on having children (or any more of them). If you’ve got extras cover, ask yourself if you really need it. If you don’t need glasses, contact lenses or physiotherapy, then why pay for the cover? On the flip side, you may not be covered for things you do need and could be facing hefty unexpected out-of-pocket costs at claim time.
Understanding the value you’re getting versus the costs you’re paying is crucial. If your current policy doesn’t suit your needs, you could switch to one that gives you more bang for your buck.
Secondly, it could pay to shop around simply because you may be able to find a similar level of cover for a cheaper price with another provider. The study from iSelect also revealed that 75 per cent of policyholders saved money when they switched their health plan and/or provider within the last two years.[3]
iSelect General Manager – Health, Andres Gutierrez, said if you cancel your cover altogether and re-join later, you may have to re-serve waiting periods, which could be up to 12 months.
“However, if you switch, any hospital benefit waiting periods you’ve already served are protected by law,” Andres said.
“Unfortunately, many Aussies may stick with outdated or costly cover because they incorrectly think they’ll have to re-serve hospital waiting periods if they do switch. Thankfully, this simply isn’t true.”
Remember the Medicare Levy Surcharge đź’¸
Another reason to consider switching your cover – not ditching it – is the Medicare Levy Surcharge (not to be confused with the Medicare Levy, which is different). The Medicare Levy Surcharge (or MLS) is an amount you may have to pay on top of the Medicare Levy if you don’t have an appropriate level of private hospital cover and your income is over a certain amount. The more you earn, the more MLS you may have to pay. From July 1, 2024, to June 30, 2025, the MLS could be payable by singles who have a taxable income of over $97,000 or over $194,000 for couples/families.[4]
You’re probably thinking this is all too much admin to deal with, right? We know everyone is busy and comparing common household bills such as your health insurance policy can be super time consuming! Fortunately, iSelect has Health Comparison Experts on hand to help you out with the hard work by comparing your current health insurance deal with their range of funds and policies. And the real sweetener? If you do decide to switch, they’ll help take care of it.
