5 ways to avoid the private health insurance price hikes

Here are 5 fast fixes for the coming 3.03% health insurance prices hikes. Finance educator Nicole Pedersen-McKinnon explains the easy ways the 14.7 million Australians who have private health insurance cover can ease the wallet shock of the price rises, effective from April 1 this year.

By Nicole Pedersen-McKinnon

Though times are tougher than they’ve been in years, and health insurance is on the chopping block for many people, our premiums are about to go up the most in 5 years: we’ve just learned the average annual increase on April 1 will be 3.03%.

This follows 2.9% last year and almost equals 2019’s larger 3.3% increase.

And unlike the past 3 years, where insurers have delayed the rises by months due to COVID-economy hardships, they’ll kick in immediately.

Or they will unless you act now.

Here are 5 remedies to avoid health insurance premium pain:

Lock in 2023 prices

Now, this one involves pre-paying your premiums for the next year… so it’s a long shot in these short-of-money-times. But just be aware that, if you at all can, this will effectively earn you a discount: an extra year at existing prices.

You need to make the pre-payment by April 1 to lock in the saving, which might be some $250 over the year on a family policy.

Look at your existing health insurance

If you are single and earn more than $93,000 a year, or in a couple on more than $186,000, it is silly not to have private health insurance as you will pay a tax penalty if you don’t.

It’s called the Medicare Levy Surcharge and is up to 1.5% of your assessable income on top of the regular 2% Medicare Levy.

You only need hospital cover to be exempt but the thing is, buy extras too and your claims might even cover your whole cost. Think about it: there are two free dental cleans and checks for everyone on the policy each year, optical allowances, rebates for chiro, physio, osteo and remedial massage, and a raft of other medical practitioners… you might even be able to claim your gym membership!

If you use these services anyway, your payouts could cancel out your premiums, for both extras and hospital.

Stop paying for the wrong type of health cover

Are you paying for obstetrics or reproductive services, but far past the baby/kid phase? It’s well worth your time checking – these typically add $500 a year to your cover cost, which might be a whole month’s premium.

Many funds let you switch this off, though some cynically bundle it in with treatment you might conceivably need, like knee replacements.

Speaking of cover tweaking …

Up your excess

In 2019, in recognition that private health was becoming hard to afford, the government increased the allowable excess on policies that would still exempt you from the Medicare levy surcharge.

Remembering that an excess is only for hospital visits, only for adults on the policy and only once a year, if you agree to pay $750 or $1500 as a single or couple/family, respectively, your monthly premiums will plummet.

This is a great, sensible way to wipe the premium hikes.

Update your fund’s details… and fund?

Finally, make sure your insurer has your right bank account – that simple.

Many have dropped bonus bucks in members’ accounts in the past few years to simply say thank you… and naturally, to try and keep them loyal.

But if none of the above brings you any bottom-line benefit, and if you can’t ‘pick and mix’ your services a la No. 3 above, go to privatehealth.gov.au to find a policy that fits your needs.

And given the looming hikes take the surge in health insurance prices since 2000 to 204%, more than double the rate of inflation (86%), according to Finder, it’s high time.

^{Advice given in this article is general in nature and does not take into account your personal circumstances. It is not intended to influence readers' decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.}