Baby Boomers to be hit by health insurance rate rise
What can you do about it?
It’s almost that time of year where Australians are nervously anticipating the annual health insurance rate rise – and understandably so. Since 2010, the price of private health insurance has risen by an industry-weighted average of 54.6% in total.
After 1 April 2018, private health insurance premiums are set to rise for the 17th time. They’ll increase by an average of 3.95%.
What does this mean for baby boomers?
Older Australians tend to pay the highest premiums, which means that these yearly increases will impact them most. Many of these Aussies have had private cover for years. They’ve invested a lot of money already to ensure their health is cared for – no matter what.
Paying more for health insurance now – at a time in their lives when they will most likely need it most (see graph) – is a bitter pill to swallow.
How can I avoid expensive private health insurance premiums?
Many older Aussies don’t like to think about private health insurance because “it’s too confusing”. More baby boomers (without cover) feel this way than any other age group, according to 2017 survey results from IPSOS.
That’s fair – health insurance can be extremely confusing! How can you be expected to know how to save money on such a high-value product? This is why we’re able to help any Aussie customer uncover a solution that (a) suits their needs and (b) is priced fairly.
How? By making things simple.
Case in point: take action before 1 April with the following steps:
Review your current health insurance policy to see if yours is the most competitive for your needs, budget and lifestyle. If you haven't done this in a while, it's extremely likely your policy is no longer suitable.
Cut out services you don't need. Insurers tend to bundle up cover for different procedures in the one policy. This means you might be paying for services you don't need any more (i.e. obstetrics)
Update your health insurance. How has your life changed since you took out your current policy? Are you planning on having a family? Or maybe you've recently suffered a health scare. Whatever it may be, comparing health insurance and switching to the most suited policy to your needs means you're effectively safeguarding your health in the future.
Pay in advance. If you pay 1 years' worth of premiums up front before prices go up on 1 April you can avoid the rate rise this year.
How will I know if my premium increases?
You will be notified in writing if your health fund is increasing your premium, where you’ll be able to check over the updated policy information. If applicable, your fund should also explain to you why they have increased their premiums above the average rate rise.
Why are health insurance rates going up?
Before insurers can raise their premiums each year, they must submit the proposed increases to the Federal Government to ensure they’re sustainable, fair, and necessary. Some factors that lead to rate rises include:
an increase in medical equipment and changing technology,
the growing number of complex and expensive procedures available in private hospitals, and
the growing claim rate against private health insurance
These proposed changes are reviewed, and if the insurer can’t sufficiently justify why they need to increase their premiums, the proposal will be rejected.
As the premium rate rise is a weighted average, some health funds will increase their prices more than others. This weighted average is based on changes to a health funds entire portfolio of policies; this means the cost of some policies may go up a substantial amount, some may increase slightly, and some may not go up at all. For example, in 2018 one provider will raise their premiums by as much as 8.90%, whereas another raised theirs by as little as 2.28%.
A brief history of private health insurance rate rises
For over 15 years, the Department of Health has approved private health insurance rate rises. Since 2010, health insurance has increased by an industry weighted average of 54.6% in total. This means if your health cover costed $1,040 to maintain in 2010 (i.e. $20 per week), it will now cost, on average, $1,671 following the April 1 2018 increase. Take a look to see how health insurance rates have changed over the past decade.
How can I find the best policy?
With so many options available and differing levels of cover, it can be daunting to compare and find the right policy for your needs. We take the stress out of the process by offering a free health insurance comparison service, where you can easily see if there’s a better deal out there for you.
If you need to talk to someone about your options, call our health insurance experts on 1800 981 019. They’d be happy to help you find the value in your health insurance again.