Individuals and families with health insurance were slumped with another round of premium rises from 1st April 2016.
Despites private health insurance premiums increasing by 72 percent over the past decade, consumers have more options than ever before to personalize their cover. In doing this, it is essential that you tailor the policy to suit your individual needs making sure to exclude any cover that you will unlikely need and ensuring to include extras or hospital cover that is appropriate for you, partners and family members.
Majority of health funds rose 5.59 per cent this year, which is three times the inflation rate, despite health funds rationalizing this as an adequate amount. Some providers have hiked their premiums even further, meaning it’s even more important to make sure you consider the following when reviewing you private health insurance:
Shop around and compare
Seems like an obvious one, but compare policies and see what’s out there on the market. If waiting periods have you wanting to put it on the backburner, bear in mind that policyholders are protected by rules that ensure that if the new cover is the same or less than what they previously had, they don’t need to serve out the waiting periods again. There are fantastic tools available to consumers comparing different health funds such as iSelect and Comparethemarket.com.au
Exclude cover on items you don’t need
Policies are often designed in a manner where it’s difficult to drop particular coverage you don’t need without having to forgo coverage you actually do need. There are some areas that can dramatically reduce premiums, like excluding birth-related serviced if you don’t plan on having any/ more children.
However, it’s important to bear in mind that while low premiums may seem attractive, particularly to those who don’t plan on using the health insurance and just want to avoid the Medicare Levy Surcharge, have caution to not overdo the exclusions. Cheaper policies can often have very limited benefits and hold little value, so ensure you weigh the benefits for having it.
Consider that you can go with different providers for hospital and extra’s cover, and splitting with two providers can help to reduce premiums while maximizing your coverage.
What happens if you don’t go private?
For those earning over certain income levels and who don’t take out a basic hospital cover (with an excess of $500 or less), are susceptible to paying the Medicare Levy Surcharge.
Singles: Surcharge applies to those earning in excess of $90,001 at 1 per cent and is tiered in income bands to a limit of 1.5 per cent.
Families: Annual incomes of $180,001 and over, with $1500 additional for each child after the first, the surcharge starts at 1 per cent and also increases in income bands to a maximum of 1.5 per cent of their taxable income.
Another important consideration is the age you commence taking out a policy. If you take out your first health insurance policy after the age of 30 then you have to pay the lifetime health loading on the basic premium, irrelevant of income amount. This loading increases by 2 per cent for every year after the age of 30, with a cap of 70 per cent and the loading is removed after 10 years.