Finance Your Budget What you need to know before private health insurance premiums rise on October 1
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What you need to know before private health insurance premiums rise on October 1

private-health-raise
Private health insurance costs are set to rise on October 1. And some policy holders in particular have been urged to shop around. Photo: TND
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Private health fund members reeling from the pandemic’s financial fallout are being urged to shop around before premiums are hiked later this week.

One hour spent reviewing health cover could save consumers hundreds of dollars before a price hike on October 1.

The out-of-cycle increase will see the average premium climb 2.92 per cent, despite customers making fewer claims on their policy due to bans on elective surgeries and extras treatments.

The premium increases were initially slated for earlier in the year, but were delayed by six months due to the coronavirus pandemic.

Only the West Australian-based not-for-profit HBF, Health.com.au, AIA  and TUH are withholding a price rise until next year, while the other major insurance providers are inflating their premiums between 2.90 and 3.39 per cent.

Some customers with lesser-known firms face increases in excess of 4 per cent, with HIF policyholders stung by a 5.58 per cent rise.

iSelect spokesperson Laura Crowden told The New Daily although pricing concerns were front of mind for many, policy holders should also consider inclusions and exclusions to see if their policy still holds up.

“Most funds should have a very easy-to-read policy summary document in the form of a table that ticks all the things you are covered for, and clearly shows things you aren’t covered for,” Ms Crowden said.

“If there are a lot of items you’re currently paying for [that] you’re not going to use, that should be a prompt to shop around, and vice versa.”

However, Ms Crowden warned customers to be particularly vigilant when assessing the market, after a tiered-policy scheme was introduced in April last year by the federal government.

Despite intending to simplify the system by creating basic, bronze, silver and gold categories, the addition of ‘plus’ options makes the process of comparing “apples to apples” far more difficult, Ms Crowden said.

“Think carefully about what you want to ensure you’ve got cover for, such as pregnancy or hip replacements or cataracts, rather than getting distracted by labels,” Ms Crowden said.

Ms Crowden said switching does not necessarily mean policy holders are compromising their level of cover, or affecting any ongoing care.

“A lot of people also put off switching because they believe they have to re-serve hospital waiting periods, but they are protected by law so long as they switch to an equal or lower level of cover,” Ms Crowden said.

Australia’s private health sector has been battered by an exodus of young people, with recent Australian Prudential Regulation Authority figures showing 56,000 people between the ages of 20 and 49 axed their policies entirely in the year to June.

Grattan Institute health economist Dr Stephen Duckett told The New Daily policy holders dissuaded by elective surgery pauses due to the pandemic should think twice about abandoning private health.

“Although providers have accumulated a whole lot of money during this period of inactivity, most of those procedures will eventually be carried out,” Dr Duckett said.

“If private health insurance was good value for you before the pandemic, it’s probably still going to be good value – and the same goes if you felt it was bad value.”

CEO of peak representative body Private Healthcare Australia Dr Rachel David told The New Daily ‘plus’ policies are “entry-level products” that cater towards people hoping to minimise their losses to Lifetime Health Cover Loading.

With insurers raising their premiums by the slowest rate in almost 20 years, Dr David said providers are still offering affordable products.

“What we suggest is people who want a product suitable for their life stage [should] go to privatehealth.gov.au and evaluate all health plans on the market to choose one suitable for their needs,” Dr David said.