Private health insurance premiums are set to rise for the fourteenth year in a row, with premiums going up by an average 6.18 per cent from April. This will push up the cost of health insurance for Australian families by an average $151 per year*.
Insurance comparison website comparethemarket.com.au has used internal data* to calculate that couples will be hardest hit by the premium increase, paying out an extra $160 per year. Single parent families will find themselves forking out an additional $115 per year and singles will see $68 disappear from their annual budgets.
“This year’s premium increase may push Australians who are already struggling with cost of living pressures over the edge. We expect some people will choose to downgrade their cover or drop their health insurance altogether, putting them back into the already-stretched public system. Most probably, we’ll see more people remove their extras cover or choose to pay a higher excess to keep costs down,” said Abigail Koch, spokesperson for comparethemarket.com.au.
This year’s 6.18 per cent approved premium increase is only an average, meaning there are a number of health funds that are putting their prices up by more. The average increase is over three times the rate of inflation, which is currently just 1.7 per cent.
“Consumers can ‘lock-in’ their private health insurance premiums at their current rate, but it means paying for the next 12 months of their policy in full before 1 April. With family premiums averaging out at $2445 a year, this simply isn’t an option for many,” said Abigail.
Some consumers’ hip pockets will face a double hit. Not only will they have to pay more for health insurance, but as the Government has frozen the health insurance rebate income thresholds, this means if people get a pay rise then they could receive less money back at tax time.
“Private health insurance premiums have shot up by an average 31.56 per cent since 2010. This effectively means the impact of the Standard government rebate for those aged under 65 years old has been wiped out due to price increases over the last five years,” said Abigail.
Abigail explains that there are many ways to save on your private health insurance. She recommends people use this price rise as a reason to work out whether they’re on the best value policy for their “First, look at what’s included and excluded from your policy and see whether this suits your life stage. If you’re a healthy thirty-something, then you may not want to be forking out for joint replacement services. Next, look at what you were able to claim for in the last 12 months, as well as what you wish you’d been able to claim for. Once you have all of this information, it’ll be easier to balance the cost of the premium with the potential return in claims. If the numbers don’t add up then you might be better off switching policies to one more valuable to your needs,” said Abigail.