5 tips to increase value from health insurance
New findings suggest that almost 60 per cent of Australians with private health insurance would consider axing their cover if government rebates did not exist, despite 80 per cent seeing value in their policies. This is according to comparethemarket.com.au, a popular health comparison website, which surveyed 1000 Australians[i] with private health insurance.
Currently, Australians aged 65 and under are entitled to a private health insurance rebate of 28 per cent, as long as they have an income of $90,000[ii] or less. However, Australians have also faced premium increases totalling 32 per cent (on average) over just five years, effectively wiping out the impact of the standard rebate[iii].
Comparethemarket.com.au spokesperson Abigail Koch says Australians need to be looking further than Government rebates when it comes to getting value from their private health insurance.
“Health insurance isn’t a cheap commodity, and if premiums continue to increase at this rate Australians may need to consider where else they can make savings and find value within their policies. By doing their homework and having a better understanding of how their policy can work for them, people could save hundreds every year, before rebates even come into consideration.”
Keeping this in mind, here are Abigail’s five tips for Australians looking to get the most value from their health insurance:
- Make the most of payment discounts – Keep your eyes peeled for funds that offer a discount if you elect to pay by direct debit. Some funds offer up to 4 per cent off your annual premiums if you set up an automatic direct debit from your bank, building society or savings account. If you’re a family paying $3500 per annum, that’s a saving of $140.
- Tailor your health policy to suit you – Request your annual claims statement from your current health fund to find out what you claimed for over the last 12 months. If your claimable benefits were much lower than the premium you paid, then perhaps it’s time to think about switching to a policy that’s more relevant to your needs.
- Do your homework on extras cover – The amount of money you can claim back from your extras cover varies dramatically from fund to fund, so make sure you research claimable returns. It can be better value to choose a fund that pays out a percentage of your bill for each treatment (e.g. 60 per cent) rather than a fixed amount (e.g. $30). Also, funds that offer a combined annual limit, as opposed to sub-limits for individual treatments, are often much better value as you have more flexibility over which treatments you want to claim on.
- Restricting your benefits could help you save – Consider switching to a fund that restricts benefits for a set time in order to bring down the price of your premium. If you know you want to be covered for certain treatments such as assisted reproduction or eye surgery, but don’t expect to claim for these for another couple of years, then a fund with benefit limitation periods on these items may be an option and could help you save in the meantime.
- Make the most of free comparison sites – Comparing and switching health insurance policies can seem like a minefield, but with up to $1500[iv] in potential savings it could make sense to switch. Many people don’t know that if they switch suppliers, their old fund will refund any premiums paid in advance. The new policy will start the day after the old policy ceases. So, there’s no need to wait to switch policies.
[i] An independent survey carried out by Pure Profile on behalf of comparethemarket.com.au. The 1000 respondents were individuals living in Australia with private health insurance. Respondents were an equal ratio of male to female, aged over 18 years old. Respondents were a representative of the Australian population NSW (303%), VIC (26%), QLD (18%), WA (11%), SA (7%), TAS (2%), ACT (2%), and NT (1%).
[iii] Average private health insurance premium increases over the last five years: 2011 – 5.56%; 2012 – 5.06%; 2013 – 5.6%; 2014 – 6.2% and 2015 – 6.18%. Compound annual increases = $100 + 5.56% = $105.56 + 5.06 = $110.90 + 5.6% = $117.11 + 6.2% = $124.37 + 6.18% = $132.06.
[iv] Families with the highest level of health insurance cover could save $130 a month by shopping around for a better deal without forfeiting their level of cover said Shaun Gath, CEO of the Private Health Insurance Administration Council.