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3 in 4 parents support easing of health cover restrictions to keep kids on their policies longer

5 min read
25 Aug 2020

With an alarming number of young Aussies continuing to abandon private health insurance, the Government is considering a proposal backed by the health funds to allow dependant kids to stay on their parent’s private hospital policy until age 30. Now, new research reveals three-quarters of parents would support this potential move by the Government.

The finding comes from a survey of an independent panel of 508 Australian parents with private health cover and 507 under-30s Aussies without health cover[1], commissioned by us.

Currently, family health insurance policies automatically cover children until age 18, as well as some policies offering coverage for Aussies up to age 25 if they are not living with a partner and earn less than $25,000. However, the restrictions are being reviewed as health cover drop-off figures grow among young adults. More than 11,000 Aussies aged 25-29 and nearly 10,000 30-34-year-olds dropped their private hospital cover in the March 2020 quarter.[2] The drop off numbers were similar in the December 2019 quarter.[3]

Eighty-six (86) per cent of parents in the survey have a family health insurance policy. Among these, with the current restrictions in place, 34 per cent of parents did, or would,[4] remove their child from their policy at age 18. Fifty-two (52) per cent did, or would, remove their child from their policy between the ages of 18 and 25.

The Federal Government will consider the proposal to loosen restrictions in the lead-up to the October Federal Budget.

If the move goes ahead, we found that three in four (78 per cent) parents would keep their children on their family health policy up to age 30 if they met conditions stipulated by the health funds. Specifically, 51 per cent would take their child off their policy at age 30.

Affordability a key concern for younger Aussies

We also asked under-30 adults without private health insurance why they have not taken up health cover. A hospital-only single policy for under-30s could cost around $19 per week.[5] However, the survey found that a third (35 per cent) of this age group says the main reason that they don’t have cover is because they can’t afford it. A further 34 per cent said they don’t have health cover because of our free public hospital system, 15 per cent don’t have any ongoing medical issues and don’t expect to have any soon, and 12 per cent haven’t thought about it or got around to taking out private cover.

Anthony Fleming, health expert at comparethemarket.com.au, says: “It is concerning that thousands of young Australians feel they can’t afford private health cover and as a result don’t enjoy the benefits it provides.

Our survey results show that there is real appetite from parents for their children to be able to remain on their family policies for longer, so it will be interesting to see if it is included in the next round of government changes to the private healthcare system.

“While the under-30s may think they’re saving money in the short term by not having private health insurance, if they need to access treatment and services through private health insurance down the track, then their decision to avoid health cover until they’re older could leave them thousands of dollars out of pocket. The government’s Lifetime Health Cover loading initiative is designed to encourage Aussies to take out cover earlier in life to avoid paying a two per cent loading on the policy premium for each year the policy holder delays purchasing cover after 1 July following their 31st birthday.

“There are various savings initiatives and incentives in place to encourage younger people to take out private health cover. The age-based discount allows insurers to offer premium discounts on hospital cover of two per cent for each year an individual is aged under 30 when they first take out cover, capped at 10 per cent. Health funds are also currently offering incentives to attract customers of all ages, including waiving waiting periods, providing gift cards on sign-up or free periods of cover. Aussies of all ages can find a competitively priced policy for their specific needs by using comparison services such as comparethemarket.com.au.”

What about under-30s who left their parents’ health policies?

Elsa, 25, Business Analysist, Melbourne

Up until age 25 (in May this year), Elsa was on her parents’ Medibank family health insurance policy, as it was cheaper than taking out her own policy. She and her sister split the $70 additional premium it cost their parents to include dependents on their policy.

At age 25, Elsa was no longer eligible to remain on the policy, and signed up for private health insurance with AHM. She pays $140 per month for hospital and extras cover, and finds value in her policy through frequently accessing extras such as optical, dental, osteo and physio multiple times a year. Her main motivation to purchase health cover – apart from peace of mind – was to avoid the Medicare Levy surcharge.

Sachi, 25, nursing student, Melbourne

As a full-time nursing student who lives at home with her family, Sachi says taking out her own private health insurance when she was no longer eligible to remain on her parent’s policy was a big leap, as she is still quite dependent. However, as someone who wears glasses and keeps on top of her dental check-ups, Sachi says signing up for her own hospital and extras policy was a no brainer. Sachi remained on her family’s Bupa policy until age 25, before taking up a NIB policy. Currently, she pays $98 per month for her premium. Sachi is glad to have organised her own health cover as soon as she was removed from the family policy, as she has already had an emergency dental procedure in the past month.

Sources

[1] Survey commissioned by Pureprofile, June 2020
[2] APRA, 2020, https://www.apra.gov.au/sites/default/files/2020-05/Quarterly%20private%20health%20insurance%20statistics%20March%202020.pdf
[3] APRA, 2019, https://www.apra.gov.au/sites/default/files/2020-02/Quarterly%20private%20health%20insurance%20statistics%20December%202019.pdf
[4] ‘Would’ denote parents whose children are under the specified age
[5] Averaged price calculated from policies available on comparethemarket.com.au for a 30-year-old single NSW person earning less than $90,000 a year choosing to compare hospital cover for dental surgery in hospital. Policies included Basic +, Bronze and Bronze +, using annual premiums which provided an average annual premium that was then divided weekly. Age-based discounts were not included.
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