5 ways to beat imminent private health insurance hikes
25 Feb 2020
Worried about private health insurance premiums rising again? From April 1, private health insurance premiums will rise by 2.92 per cent on average. Although it’s the lowest increase in 19 years, it is still twice the rate of inflation, according to consumer organisation Choice.
It’s worth noting that the increase, approved by the Commonwealth Minister for Health in December 2019, is only an average. Some policyholders can expect to receive notification of even larger increases, with some premiums set to rise by as much as 5.6 per cent.
At Medibank and ahm, premiums will increase by 3.27 per cent on average.
David Koczkar, chief customer officer, Medibank, explains: “Despite overall inflation remaining subdued in Australia, the cost of healthcare is increasing a lot faster, with medical and hospital services CPI at 3.8 per cent. This continues to put pressure on customers’ premiums.”
For other insurers the average rise in premiums will be below the industry average. At HBF and NIB the average rise in premiums will be 1.98 per cent and 2.9 per cent respectively.
Private health insurers are required to inform policyholders in writing of the premium increase.
However, if the premium price hike seems too much for the budget to bear, there is time to do something about it.
Here are five ways to beat the private health insurance premium hikes.
1. Shop around and switch
Any shopping-around exercise should begin with a review of your benefits. Think about the benefits you require and which ones you could afford to lose. The free and independent website managed by the Private Health Insurance Ombudsman, PrivateHealth.gov.au, offers a handy starting point for comparing policies. It is important to understand not only the benefits, but also any conditions or restrictions that may apply before making the decision to switch to a cheaper policy.
If you are switching, make sure any payments on your existing policy are up-to-date and check whether any waiting periods will apply on any additional benefits or better conditions on your new policy.
2. Check your insurer
If switching to another insurer seems too hard, you may still save by switching to another policy offered by your current insurer. Consider whether you’re really getting value out of any extras cover. A good rule of thumb is to check if the premium you’re paying for extras cover is more than you’re claiming.
The Private Health Insurance Ombudsman recommends putting a priority on maintaining good quality hospital cover to protect you against the risk of high hospital bills.
3. Agree to a higher excess
Another way to reduce the premium on your current policy is by agreeing to pay a higher excess in the event of a claim.
4. Pay now, not later
Avoid the premium increase for another year by renewing your policy in March before the price hike takes effect on April 1.
5. Direct debit
Opting to pay your premiums by direct debit can also save you some money. NIB, for example, offers policyholders a discount of up to four per cent if they set up a direct debit to pay their premium.
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