Over the last few years, Australians everywhere have been flooded with news of the health insurance rate rise…and then we all panic that bills are about to go up.
Health insurance prices usually increase on April 1 each year, but there’s a way to keep this rate rise at bay: pay your insurance premium upfront for 12 months before April 1 (or – better yet – switch to a better value policy, and then lock that premium in).
You can get the whole thing done in 2 simple steps!
- Step 1. You’ll receive notice from your insurer that rates are going up (i.e. you’re about to get more expensive insurance bills!). Now is the perfect time to compare health insurance policies, to see if you could find a better deal for your household.
- Step 2. Once you’ve found a policy suited to your household, get in touch with your insurer and ask them how you can pay for the entire year upfront.
You’ll maintain your existing premium for 12 months, and therefore won’t be liable to pay that new premium until next year. Your insurer could still change your policy slightly (e.g. your annual limits might change), but you won’t have to pay the increased price.
Is locking in my premium for an entire year worth it?
We’ll put it this way. On average, families paid an average of $5,239 per year on their health insurance in 2014/2015. Following this year’s rate rise, they paid an additional $293*. Saving money is by far the biggest upside to locking in your premium for 12 months; you won’t pay more until next year. By then, you may have found a better price for your insurance anyway!
The only downside is that paying upfront is a significant expense – hundreds for some, but thousands for others. Ultimately you save, but it’s an expense you need to factor into your annual budget.
Is there anything else I need to know?
There’s something important to note when opting to lock in your rate: you need to ensure you leave enough time for this payment to be processed by both your insurer and your bank. Depending on who you bank with, your payment may not be processed for several days, so you need to make sure you account for this.
Additionally, some health funds have payment processing dates that cut off a day or two before April 1st each year. That means if you’re trying to beat a health insurance rate rise, for example, you’ll just need to make sure you don’t leave it until the very end of March to lock in your rate – because it may mean you miss out.
* Calculations based on the average national price of combined (hospital and extras) health insurance policies listed on privatehealth.gov.au. Policies were categorised using life-stages pre-selected by customers based on: single, couple, family and single parent family, using all levels of policy cover.