How to save money on health insurance

You can adjust your level of health insurance cover at any time, either online or over the phone. As your lifestyle and health needs change, you should adapt your hospital cover to best suit your current needs. Just be mindful of any waiting periods for new services if you add them to your cover.

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. There is also the option of plus policies (e.g. Silver Plus), which offer extra clinical categories beyond a tier’s minimum requirements.

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.

Age-based discounts and government rebates can both lead to a noticeable reduction in your premiums, so it’s worth checking your eligibility.

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 aged 30 or under? 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 age-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, from when it will be gradually reduced.

When arranging hospital and extras cover, you have the option of purchasing both as part of a combined policy or splitting your cover between two health funds. Combined policies are simpler to manage but split cover could potentially provide you with a better deal. The best choice for you, however, will depend on your specific circumstances.

There are two types of health insurance: hospital cover and extras cover. Hospital insurance pays a benefit towards inpatient hospital treatment as a private patient, 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 (optical), 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 cover. 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.

It’s worth shopping around to find the best health insurance option for both your health needs and budget. When you compare 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. Comparison websites help make this process quicker and easier for you.

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. You might be able to minimise the impact of the premium increase by finding a more cost-effective policy and nab yourself a good promotional offer at the same time.

Most health insurance providers offer different options for making payments, such as weekly or monthly premiums, or even annual instalments. While changing your payment frequency won’t typically change the total premium you pay, 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.

Depending on the health fund’s rules, adult dependants may be able to remain on their parents’ family policy until age 31, which could help delay the need to purchase their own policy.

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.

Having a higher excess on your health insurance will lower your premiums. However, the catch is you’ll have higher out-of-pocket expenses if you do make a claim. The maximum excess amount is typically $750 for single policies and $1,500 for couples or families.

The best choice of excess amount for your policy will vary depending on your specific circumstances.

Suspending your cover for a period provides a less permanent solution than outright cancelling your policy.

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. Depending on your insurer’s rules, suspension may allow you to pause your cover for a period while retaining your membership and any waiting periods you’ve already served. 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.

If you’re facing financial hardship, your health insurance options include suspending your policy, cancelling your policy or adjusting your level of coverage. While cancelling your health insurance might help your financial hardships in the short term, it could backfire if you or your loved ones require medical treatment. Without any private health cover, you’ll be left with higher out-of-pocket expenses.

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 comparison expert about options.