From 1 April 2016, private health insurance premiums will rise and, if previous year are anything to go by, we could be looking at an average increase of over six per cent. This rise may make many Australians question their level of cover, or the need for private health insurance altogether. While most of us know it pays to review our private health insurance annually, not knowing where to start can mean we often just roll over our policy.
For those who need to save on their premiums, why not consider the following?
Extras or ancillary cover
While nice to have, this is often where we are paying for things we don’t really need. To have a fair comparison between policies, make a list of the services you used in the last two years and the value of your rebate. Check that the policies you’re considering cover these services and find out if there’s a waiting period, or whether your new insurer will waive any such requirement.
Don’t forget to check the annual limits, whether they increase over time, and if there is a lifetime limit, which can often be the case on services such as major dental and orthodontics.
Another consideration is the relatively new offering of a ‘use as you wish’ allowance – where you have a limit of around $1500 to spend on any extras you choose. As you would imagine, while this is more flexible, it’s often more expensive.
If you have any loyalty bonuses, such as high benefits, these are generally not transferable. So consider the value of these before switching.
Remember, if you only have private health insurance to save on the Medicare Levy Surcharge, having extras cover makes no difference. So consider whether you need it.
It is important that this is set at the correct level for your age and life stage. Many people simply continue with the same cover, not realising that it covers pregnancy and assistive reproduction, when joint replacement and heart disease may be more crucial.
Another area people often get caught on is assuming they have full private cover when staying overnight in hospital. While you may have the option to choose your hospital and specialist, you may only be covered for a stay in a communal ward rather than a private room.
If you’re using your policy to avoid paying the Medicare Levy Surcharge, your policy must have a low excess that is equal to or less than $500 per annum for singles and $1000 per annum for couples.
Also, if you have a pre-existing condition that is covered by your current insurer, switching policies may result in this condition being excluded from your policy.
Make your private health insurance work for you
Making health insurance more affordable doesn’t have to mean reducing levels of cover. If you are concerned about developing certain conditions, or just being covered in general, you may wish to consider a higher excess rather than going without cover.
Ensure your premiums are up to date. Being more than two months behind can mean you’ll be no longer covered, and your bills won’t be paid.
If you have to go into hospital, or are referred to a specialist by your GP, ask for the corresponding item codes for the proposed services, and check with your insurer if you are covered and what level of benefit will be paid.
Before you make any decisions on whether or not to continue with private health insurance, shop around for the best deal and consider carefully the consequences of having no cover at all.