How to save money on health insurance

The first thing you should do when looking to save money on health insurance is to check that your current policy is still meeting your needs and whether you’re getting the right level of cover. While some people like the peace of mind that comes with being covered for anything, this sometimes isn’t a practical approach. Instead, it may be better to consider your lifestyle and health and choose your hospital and extras cover accordingly.

For example, if you and your significant other have a couple’s policy, it might be worth checking if this is any cheaper than having two separate single policies. Since a couple’s policy will offer the same level of coverage for both holders, it might mean one member of the couple is paying for a higher level of coverage than they actually need.

Things can change over time. This is especially true when it comes to your overall health and body condition. As your lifestyle and health needs change, you should adapt your hospital cover to best suit your current needs.

Hospital cover is available in different levels: Basic, Bronze, Silver and Gold. The higher the level you choose, the more comprehensive the cover will be. You can adjust your level of cover throughout your life to avoid paying for services you don’t need while still having the safety net of health insurance. For example, if you don’t plan to have any more children, you may not want hospital cover for pregnancy and birth. Therefore, you might not need Gold-tier health insurance for the time being, and you can change to a lower tier and potentially save some money; best of all, you won’t have to re-serve waiting periods when you downgrade your level of hospital cover. Looking at your policy annually will give you the chance to take stock of your current policy and make any necessary adjustments. It’s also a great opportunity to compare your policy to others on the market!

If you have private health insurance, you may be eligible for the private health insurance rebate. Your eligibility will be based on a few factors, particularly your income. This rebate can be claimed in two ways: either throughout the year as lower premiums or through your tax return. The discount you’d get on your premiums will be equal to the rebate you’d get on your tax return, so it’s really a case of what suits you best.

Are you 30 or under? If yes, there’s never been a better time to take out cover. Many people don’t realise that by purchasing insurance after they turn 31, they may have to pay Lifetime Health Cover (LHC) loading, which is a government initiative designed to encourage people to take out hospital cover sooner to reduce strain on public resources. The upside is that many insurers also offer an aged-based discount of 2% on your private hospital cover for every year you’re under 30 up to a maximum of 10%. So, if you’re 25, you could save 10% on one of these policies. Even better, this initial discount will last until you’re 41.

There are two sides to health insurance: hospital cover and extras cover. Hospital insurance does what it says on the label: it pays a benefit towards inpatient hospital treatment, including doctor fees and hospital accommodation. On the other hand, extras can pay towards out-of-hospital healthcare like dental, physio, counselling and prescription eyewear (optometry), just to name a few.

There is the option to take out combined hospital and extras cover, and this can work for lots of people. However, depending on your situation, splitting this cover between two health funds (i.e. hospital cover with one fund and extras with another) may be better than taking out a combined policy. This could be a great option for someone with quite specific coverage requirements, such as an ongoing medical condition. Split cover will require more organising on your part, but if it goes well, you could get the same or better cover than a combined policy and at a lower price. In most cases, you’ll be able to fund a suitable hospital and extras policy with the same fund.

Depending on which state in Australia you live in, you may also have to consider ambulance cover. If you’re a resident of Queensland or Tasmania, the state will cover ambulance costs in most cases. Every other state requires you to pay for an ambulance call-out, so you’ll need to consider whether you want to find an option that includes ambulance cover as part of your health insurance policy or get a standalone ambulance policy.

The number of health funds and different policies can be overwhelming, but it’s worth shopping around to find the best option for you. When comparing policies, don’t just look for the cheapest; look for the one that provides the best value for money by delivering what you need at a price you can afford. After all, there’s not much point in saving money if the policy doesn’t cover you when needed!

Premium increases usually happen on 1 April, so March is a popular time for people to look into their policies. The other peak time for policyholders shopping around is in June for 31-year-olds wishing to avoid paying LHC and high-income earners looking for Medicare Levy Surcharge (MLS) purposes.

Insurance providers are well aware of these peak periods and will often offer deals and incentives to attract new customers. Play your cards right, and you might just minimise the impact of the premium increase by finding a more cost-effective policy and nab yourself a good deal at the same time.

How you make your payments can actually save you money. Most health insurance providers offer different options for making payments, such as weekly or monthly premiums, or even annual instalments. Making full annual payments before the April price rise allows you to lock into the previous year’s premiums for 12 months. While it will hit your savings account in the short term, it’ll save you money in the long run.

Some health insurers may offer a discount on your premiums if you make your payments through automatic direct debit.

Are you under 31? In 2021, the government changed the rules so that dependants can remain on their parents’ policy from ages 24 to 31. A few factors will affect your eligibility which will vary by fund based on their dependant rules. Generally, you can expect your income and where you live to impact your eligibility. In some cases, it won’t cost your parents extra for more people to be on their policy, though you’ll still need to ask before you can jump back on their policy (remember to use the magic word when asking).

Even if you feel invincible, accidents and health issues can happen to anyone. Having cover tailored to your needs can provide a safety net that can help you avoid spending big on health care costs. Health insurance also allows you a choice of health care provider and the option of a private room.

Besides the peace of mind having health cover can provide, not having health insurance that includes adequate hospital cover can create trouble at tax time as you may have to pay a Medicare Levy Surcharge (MLS) if you’re a single who earns over $97,000 or a family earning over $194,000. This tax could negate any savings you were making by not having coverage.

Is your budget a little tight at the moment? We’ve all been there, but while it may be tempting to cancel your health insurance plan, you might have a few other options up your sleeve. Have a chat with your health insurer about whether you can temporarily suspend your policy. Cancelling your policy outright not only leaves you uncovered and vulnerable to out-of-pocket costs but could also mean you pay hidden costs such as the LHC when you join again.

Most of us face financial troubles at some point; however, cancelling your health insurance probably won’t be the quick fix you’re hoping for. By simply adapting your coverage to better suit your lifestyle and budget, you’ll potentially cut any unnecessary spending and ensure your money is being put to good use. Talk to your provider or an insurance expert about options.