If you choose to take out private health insurance in Australia, it is an expense that needs careful consideration.
You can compare health insurance online and while this may give you an idea of what you might pay, these comparison sites do not show you how to save money on your cover. It makes sense to dig into how health insurance works and what goes into making up your premium. This will enable you to see where you can save money on health insurance and still get the cover you need.
1. Only pay for the cover you need
Many people buy their health insurance on a premise of better be safe than sorry. This is just piling on the cost. It doesn’t make sense to pay for the cover you do not need. The younger you are, the less likely you are to need coverage for certain things unless you have specific medical conditions. Health insurance policies are flexible enough for you to add the cover as you need it. Each year you renew your policy, check what you are paying for, and adjust as necessary.
2. Get the timing right
There are two major annual milestones in Australian health insurance: the annual price increase in April and the Lifetime Health Cover (LHC) loading initiation date of July 1st. This leads to March and June being the busiest months of the year for people signing up for a new health insurance policy. These are good times to look for health insurance as companies compete over new customers by offering discounts, bonuses, and incentives.
3. Avoid the LHC charge
Under the current Australian healthcare system, if you do not take out private insurance before you turn 31, you will pay the LHC loading charge. For every year after the age of 31, you do not have insurance, you will be charged an extra 2% on your premium. This will be applied for up to 10 years and can reach a dizzying 70%. Simply, the best way to save money on health insurance is to take out private cover before you turn 31.
In the same respect, you can save money by taking out health insurance between the ages of 18 and 29. There are age-based discounts of up to 10% on Hospital Cover premiums.
4. Pay your premium in full before April 1st
If you can afford to, it is better to pay your health insurance premiums in one go rather than spread them by direct debit. If you can do this on a policy that expires before April 1st, you can avoid the annual price increase. Also, some health funds offer discounts for paying the full 12-month’s premium in one go. You can save up to 4% by paying in full.
5. Compare the cost of family policies
There are some perks to family insurance policies, especially if you have young children. Some health funds include items in their family insurance such as no excess charges for hospital admission for children. Some funds will also allow older children to remain on the policy once they are past the age of eighteen if they are studying full-time at university. You may also be able to get a discount on a family policy if you are a single parent.
6. Don’t have a couple’s insurance policy
Whereas a family policy may equal savings, a couple’s policy may actually inflate the costs. In most cases, two singles policies are cheaper than a couple’s policy. The “Community Rating” system instigated by the Australian government means that all health funds charge the same premiums for the same level of cover. Plus, you may both be paying for the same things and things you don’t need. For example, if your cover includes pregnancy, you are both paying for it, whereas with two single policies, only the woman in the couple would pay it.
7. Pay a bigger excess
For most health funds, if you increase your excess, premiums are reduced. This strategy could work very well if you are young and fit and rarely need to access healthcare. It is, however, a risk if you are older and have health issues. If you need to claim on your policy regularly, it is probably not cost-effective as you will be paying the excess each time you claim.
8. Do you need private health insurance?
It is always worth asking this question considering that every Australian is entitled to a certain level of healthcare as provided by Medicare. It is entirely the individual’s choice to take out private health cover but, do remember when considering your options that the government would prefer that you do have cover. To incentivise you to do so, there is the Medicare levy surcharge and the LHC Loading.
As well as the above you can check to see if you are entitled to corporate health insurance, always shop around, and do your best to stay fit and healthy.