Publication: The Sydney Morning Herald
Date: 1 December 2010
Section: Money; Planning
Related link: Tips to save money on health insurance
Lesley Parker
Health-fund members should brace themselves for a premium increase that's twice the rate of general inflation - again.
Premiums rose by an average of 5.8 per cent this year and health funds are reportedly seeking permission for, on average, an increase of 6 per cent to 7 per cent next year.
Consumer price inflation was running at 2.8 per cent in the year to September 30.
Advertisement: Story continues below
However, funds say ''claim inflation'' - the increasing amount they're paying out to policyholders - is higher than general inflation because of rising healthcare costs and an ageing population.
The federal government has the final say on whether a fund can increase its premiums and the health minister usually announces those decisions in February, with the new rates to apply from April.
As well as the usual premium increase, fund members will also have to consider the possibility that Labor will finally get through parliament its plan to means test the health-insurance rebate.
The rebate currently reduces premiums by 30 per cent if you're under 65 - more if you're older.
Labor wants to limit the rebate to single people earning up to $124,000 a year and couples on less than $248,000 but the opposition has so far blocked the proposal. The Greens are no fans of the rebate, arguing the money that goes to funding the tax rebate could be better spent on healthcare itself.
With that in mind, here are 10 ways that you could trim your health insurance costs:
PAY ANNUALLY
If you can afford to do so, pay your entire annual premium before the new rate takes effect in April. By doing so, you will be paying the previous lower rate for the ensuing 12 months. If you manage to avoid, for example, a 6 per cent premium increase on what's already a $1200 policy, you will save $72. Another good reason to pay your premium annually is that you may earn a discount for paying upfront. A 5 per cent discount on a $1200 premium equates to another $60 in your pocket.
REVIEW WHAT YOU'RE PAYING FOR
Surveys show that most people never review their health insurance. Even those who do so leave it for years at a time. That means you could be paying for things you no longer need, such as obstetrics cover. By the same token, check that it includes things you may need as you age.
DROP THE EXTRAS
Do you get back what you pay for extras? You wear glasses and go to the dentist regularly but do the caps and limits on the amount you can receive each year, per person and per policy, actually leave you out of pocket? Have a look at what you paid for extras last year and what you got back, plus likely future claims, then decide whether you need this cover.
INCREASE YOUR EXCESS
The excess is the upfront amount you're prepared to meet before your insurance kicks in. If you can afford a higher excess, you'll pay a lower premium. And it's better to increase your excess than drop cover you may one day need. A rule of thumb: you would need to go to hospital every 18 months or so not to be better off with a $500 excess.
MOVE TO ANOTHER FUND
Not all health funds will increase their premiums by the average amount. Look around for one offering a better premium for much the same cover. Be careful that the lower rate doesn't mean you're getting shabby cover.
CONSIDER SMALLER FUNDS
The big funds often come out on top when funds are compared on a national basis but smaller funds can have strengths in particular states. In Canstar Cannex's latest star ratings report, Westfund's packaged cover stood out in NSW, the ACT and Western Australia, as did Peoplecare in Victoria. Central West topped hospital cover in WA, as did CUA in Queensland, HealthPartners in South Australia and GMHBA in Victoria.
SEE IF THE DOOR'S OPEN TO A 'CLOSED' FUND
Check whether you can get into a closed fund - one that's limited to members and family - of a particular organisation, industry or employer. If you're a teacher, doctor or bank employee, for instance, there's a fund for you. You could qualify even if you're a former teacher, a retired doctor or an ex-employee. It's worth asking because smaller funds tend to have very high satisfaction rates and can afford to offer lower premiums because of their younger, healthier members.
USE A COMPLETE COMPARISON SITE
Be aware that health insurance comparison websites don't necessarily compare every fund on offer - or even every product offered by the funds they do cover. Check for reference to ''participating health funds'' and then find out how many of those there are. An independent source is the government website privatehealth.gov.au, which lists the 30,000 policies available from all 37 private health insurers.
ASK YOUR EMPLOYER TO PAY
Health funds offer better ''corporate'' rates to companies with group policies for staff. Your employer could elect to pay premiums as a benefit for staff, or you could at least gain access to a cheaper premium through such a plan.
TAKE OUT COVER BEFORE TURNING 30
You can save money on health insurance if you take it out sooner rather than later. The Lifetime Health Cover provision means you need to take out hospital cover by the time you turn 30 or you'll pay a 2 per cent loading for every year after that. For example, if you take out hospital cover at the age of 40, you'll pay 20 per cent more than someone who took it out at 30.
Back to health insurance news articles
