6 tips to get the most out of your private health insurance
PRIVATE health insurance premiums are set to rise by an average 5.59% on April 1, meaning Australian families could pay an additional $298 per year for the same level of cover.
This is the 15th year in a row that premiums have gone up, which equates to a whopping 142% cumulative increase in health insurance prices over the same time period.
In spite of skyrocketing costs, a survey of 1200 Australians by health insurance comparison service comparethemarket.com.au suggests that private cover is ingrained in the Australian psyche, with one third of policyholders saying they would continue to have health insurance no matter how much the price went up.
Comparethemarket.com.au reveals six top tips for getting the most value out of your private health insurance:
Two single policies in place of a couples policy can help you save - if you're a couple with basic hospital cover and you decide to start a family, then it can be more cost effective to take out two single policies (with only the woman's including birth-related services) than it is to go on a couples policy with birth-related services.
Do your homework on extras cover - The amount of money you can claim back from your extras cover varies from fund to fund, so make sure you research claimable returns. It can be better value to choose a fund that pays out a percentage of your bill for each treatment (e.g. 60 per cent) rather than a fixed amount (e.g. $30).
Choose a fund that is valuable to your particular life stage - if you've got kids then it can be beneficial to go with funds that throw in some helpful 'freebies'. Some policies offer free "scale and cleans" for kids or others will waive excesses for children altogether.
Remember to claim - the cost of your private health insurance is a balance between the premium and your potential returns through claims. You must claim to ensure your return on investment, particularly with extras policies. When booking treatments, check if they offer HICAPS as this gives you an immediate claim. The risk of claiming at a later date is you might forget altogether.
Tailor your health policy to suit you - Request your annual claims statement from your current health fund to find out what you claimed for over the last 12 months. If your claimable benefits were much lower than the premium you paid, then perhaps it's time to think about switching to a policy that's more relevant to your needs.
Make the most of payment discounts - Keep your eyes peeled for funds that offer a discount if you elect to pay by direct debit. Some funds offer up to 4 per cent off your annual premiums if you set up an automatic direct debit from your bank, building society or savings account.
The survey also showed that a similar number of respondents (32.8 per cent) had only used their health insurance once or twice (either their hospital or their extras cover). This is surprising given the vast majority (66.0 per cent) of respondents had held their insurance for ten years or more.
Spokesperson at comparethemarket.com.au, Abigail Koch, said, "Nearly two-thirds of respondents have seen the price of their policy double over the last 10 years. Household budgets are tight and there is no reward for loyalty, so it is astonishing that so many people pay hand over fist for policies they never use. If you haven't seen value from your policy, whether through peace of mind or in claimable returns, then it is time to switch to one that better suits your needs."
Those most determined to hold private health insurance regardless of cost tended to be from the older generations, with over half (51.9 per cent) of over 65 year olds and 40.1 per cent of 55 - 64 year olds saying they would never give it up. The older age group was also the most loyal to their health funds with 60.7 per cent of over 65s saying they've never changed health funds.
The younger generations - presumably less reliant on their health insurance and with a wider range of household budget pressures - are much less likely to keep their health insurance in light of rising costs. Fewer than one in five (19.2 per cent) of 25 to 34 year olds said they would never get rid of their private cover.
"Older people with more health needs are reluctant to switch their health insurance for fear of being without cover when they need it most. Unfortunately, this means that they miss out on better value policies or making savings when their premiums increase year after year," said Abigail.
Of the survey respondents who said they would be willing to ditch their health insurance when the price became too high, an 11 to 19 per cent increase on current prices seemed to be the tipping point for many, with one in five (18.0 per cent) saying this is when they would get rid of their cover.