Debunking the April Fool's Day health insurance myth

23 Mar 2015

Sponsored article by Covad

You could be forgiven for wondering why everyone seems to be running around like Chicken Little about health cover cost increases from 1 April onwards.

While health insurance will have increased in cost, changing health cover before 1 April changes nothing. Unless you are able to afford paying a year in advance, life will continue as it is.

The bottom line for consumers is they need to be making a considered assessment about their health cover and, rather than happily paying for cover just because they've had it for years, they should be analysing what they've got and ensuring they're getting the best value and not paying for things they just don't need. Product composition is crucial and that’s what we look closely at.

People shouldn't panic about simply changing their health cover because they're under the impression they'll save money. If it’s going up, well, it's going up and whether you change cover or not, it will happen.

The fact is, changing your health cover before 1 April offers no guarantee whatsoever of a cost outcome, unless you pay for a full year upfront.

Why the Government chooses to increase rates on April Fool’s Day each year is anyone’s guess. That they also choose it as the day on which to introduce the previous Government’s means testing of the rebate is a double whammy.

We caution people to stop, breathe, think and make a really carefully considered assessment and to do so based on all factors, not just the cost increases from 1 April. Besides, not all funds are increasing by the same amount - the 6.18 per cent often quoted is just an average.

As the vast majority of health insurance consumers are insured by one of two health insurers, being the two largest, we're finding at least more than 85 per cent of consumers are paying too much. In most instances, the savings people can make can meet if not exceed the cost of this year’s increase.

This article is brought to you by Covad.