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Keep your health insurance in check

If you’re concerned about rising private health insurance premiums, take the time to review what you’re getting for your money.

Private health insurance premiums are set to rise an average of 3.25 per cent from April 1.

Medibank and AHM confirmed its premiums will increase by an average of 3.3 per cent in 2019, while NIB will hike premiums by an average of 3.38 per cent. Bupa will increase premiums by 2.99 per cent on average.

Policyholders can be hit by a premium change above or below the average, depending on the state or territory where they live and the type of cover.

Announcing its average premium increase, Medibank CEO Craig Drummond acknowledged the rise was unwelcome, adding that it’s a product of ongoing pressure on the health system. “Healthcare costs in Australia have been tracking at an average of 4.6 per cent above inflation each year over the past 10 years, largely driven by more frequent and more expensive hospital admissions and a population that is getting older,” Drummond says.

This year will also see the introduction of private health insurance reforms including the mandatory gold, silver, bronze and basic classification tiers for hospital insurance products. What each of these tiers covers will be based on new minimum standard categories of treatment defined by the new regulations.

There are also voluntary reforms that include offering youth discounts for those aged 18-29 years; regional and rural travel and accommodation benefits on some hospital covers; and higher levels of excess.

Should you make the switch?

If you’re considering a switch, start by running a health check over the benefits, exclusions and limits of your current policy. Basing a decision to switch solely on price may not serve you well. Make sure you understand any impact on benefit waiting periods.

When you change funds, you’re entitled to keep the waiting periods you’ve already served and receive a refund of any premiums paid in advance. If you upgrade your cover or lower your excess, you’re likely to have to serve a new waiting period for the difference in cover.

Waiting periods for extras can vary. While they can be two months for most services, it can be 12 months for major dental services and 36 months for hearing aids.

Extras have limits on what you can claim depending on the level of cover. The more comprehensive the cover, the higher the limits.

The website is one way to check out the full range of hospital cover and extras cover options. Comparison sites can make it easier to check policy features offered by insurers, but they may not reflect all the offerings in the market such as restricted membership options offered by the likes of the defence and education sectors.

Ask yourself: could you reduce your premium by mixing and matching insurance, taking out hospital cover and extras cover with different providers?

Are you using the benefits you’re paying for? When it comes to extras cover, people aged 55-79 are one of the groups, along with families, that are the most frequent users of extras. But remember this insurance rarely covers the full cost of your treatment. According to the Australian Prudential Regulation Authority (APRA) figures for the year to September 2018, the average benefits paid per service were $64 for dental; $31 for chiropractic; $36 for physiotherapy; and $76 for optical.

If you want to assess whether you’re getting value for your extras cover, check your benefit claims in the past year. If you’re paying a premium that’s higher than your claims, it may be better to self-fund extras. Likewise, make sure you’re not paying for extras you wouldn’t use, such as obstetrics or IVF.

Further, ask yourself: can you increase your excess to reduce your premium? Could you get a discount if you pay by direct debit?

Another way to keep a lid on your annual premium is to renew your policy before April 1.