New research: Nearly 50% of Australian households to cut expenses and 42% to switch policies to afford hike in health insurance premiums
Research by a leading health-insurance comparison website reveals 47 per cent of households would cut back on household expenses to afford the upcoming increase in private health insurance premiums. Nearly 42 per cent would shop around for a new policy.
Commissioned by comparethemarket.com.au, the survey of an independent panel of 1000 Australians* explored their sentiments and reactions around the average 6.2 per cent increase in health premiums to take place from 1 April. The findings show that of the respondents surveyed, 87 per cent are eligible for the full Australian Government rebate and 62 per cent currently have private health insurance.
When asked how they felt about the price hike, 54 per cent of the full respondent pool said they were angry or annoyed. Among those with private health insurance, 50.8 per cent felt the cost of private health insurance would no longer be worthwhile, 47 per cent indicated they would need to cut other household expenses to afford the new premiums, and 41.6 per cent said they would shop around for another policy. Surprisingly, only 10 per cent indicated they would let their policies lapse, suggesting that most recognised the value their private health insurance provided.
Grant Waldeck, spokesperson at comparethemarket.com.au, says, “With premiums increasing from every health fund, now is not the time to be complacent about health insurance costs. Where previously some Australians may have been comfortable with their health insurance, the survey reveals that now many have become uncomfortable with the cost to their household budget.”
Grant says Australians must consider a number of factors when assessing their existing policies or shopping around for another. “You can’t choose private health insurance based on premium prices alone – you need to know how you will use that policy, as the potential returns you receive in claims can save you thousands,” he says. “For instance, two policies might have $3 between them in their premiums, but one can give back thousands more a year in ancillary services and claims.
“We recommend Australians assess the services their policies provide – particularly the extras. Up until now, some Australians were happy with a more comprehensive policy that afforded them some ancillary ‘luxury’ services – many will now look to compare policies and trim the fat off extras they no longer need.”
Grant says there are many policies that offer exceptional value. “The more you understand how to use your policy, the better you will be at finding savings.”
Comparethemarket.com.au’s top 7 tips for managing private health insurance costs:
- Remember to claim. The cost of your private health insurance overall is a balance between the premium and your potential returns through claims. “You must claim to ensure your return on investment, particularly with Extras policies,” Grant says. “When making a booking with your healthcare provider, check they offer HICAPS – this gives you an immediate claim. The risk of claiming at a later date is you might forget altogether – which we think many do.”
- Know a policy’s returns in potential claims before buying. “When speaking with policy holders, we find most people forget what they’re insured for and what amount they can claim back,” Grant says. “For these, the cost of private healthcare becomes a liability, not a benefit. You cannot buy private health insurance and file it away.” When assessing the value of a policy, know the services you claimed for in the last 12 months, how often you claimed, your spend on health services which you didn’t or couldn’t claim for, and any new services you might want to claim for in the following year.
- Take advantage of discounts. Some funds will discount premiums by 4 per cent for direct debit payments, while others will discount by 4 per cent for annual payments and 2 per cent for bi-annual payments.
- Look out for promotions. Some health insurers will offer the first month of cover for free for a limited time, while others may offer vouchers of up to $200 if you refer a new member.
- Switch and receive a refund from your old policy. “Many people don’t know that, with health insurance policies being contract-free, they can switch at any time, and their old policy will refund any premiums paid in advance. The new policy will start the day after the old policy ceases,” Grant says.
- Have someone support you to compare. With more than 13,000 health insurance policies available for comparison on comparethemarket.com.au alone, choosing the most suitable policy and knowing how to maximise the benefits can be daunting. Choose a free service that provides a range of customer supports (such as online chat, phone and email support) to help you find the best policy to suit your needs.
*Survey of an independent panel of 1000 Australians aged 18+ years conducted by Pure Profile. Questions answered online by approximately 40 per cent males, 60 per cent females across all Australian states (80% in NSW, Vic and Qld). Respondents are an equal split of singles without kids, young couples preparing for a family, families with young kids, families with older kids and empty nesters.