Private health insurance can be a big expense but if you are aged 18 to 29 you may be able to get up to 10 per cent off hospital premiums.
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Taking out private health insurance can become a bigger priority for Australians once they turn 30 because of what’s called the Lifetime Health Cover loading.
The loading is a government penalty that means you have to pay an extra 2 per cent on your hospital cover premium for every year you’re without hospital cover once you turn 31.
If costs are a worry for you and you’re looking for a way to reduce your health insurance payments, a few small changes can make a big difference.
CEO of Private Healthcare Australia Dr Rachel David said finding the right health insurance cover has never been easier.
“People should remember that it’s actually much easier to shop around for an affordable health fund,” she said.
How to save money on health insurance
Here’s 9 ways you can keep more money in your pocket but still have valuable health cover.
1. Chose a cover that suits you
If you want to get the best value for your money, a good place to start is by reviewing your cover to ensure you’re not paying for treatments you don’t need.
Dr David said people should pick a level of health cover that’s appropriate for their life stage and medical needs.
“If you are young and healthy, review the product tiers and make sure you’re not covered for things you’re highly unlikely to need,” she said.
For example, if you’re in your early 20s and don’t have a pre-existing condition, Dr David said it’s highly unlikely you’ll need cataract surgery or joint replacements which are covered in silver and gold tiers.
Instead, consider where you are financially and whether you have a history of certain medical problems.
“The idea that you’d go straight up to top hospital cover without a pre-existing medical condition … that’s not necessary so you could stick with a lower level of cover until you need to upgrade,” she said.
2. Shop around
If you’re looking to purchase private health insurance, it’s important to do your research and compare prices and value between companies.
Dr David said reviewing the four levels of cover can help you better understand “what things aren’t and are included” in your insurance.
She recommends visiting the government ombudsman website for “good information about what different companies offer at each of their product tiers.”
“Once you’ve got an idea, then you can also go to aggregators like iSelect and see what they can offer,” she said.
iSelect spokesperson Sophie Ryan said customers concerned about the affordability of their health insurance shouldn’t simply cancel their cover altogether, but start by exploring more affordable options.
“Saving money doesn’t have to mean compromising your level of cover, with many customers able to ease the budget strain by switching to a similar level of cover with a different fund for a cheaper price,” Ms Ryan said.
She also said its good to know that if you decide to switch to a new health fund you won’t lose the hospital waiting periods you’ve already served at your current fund.
“Any hospital benefit waiting periods you have already served are protected by law if you switch to an equivalent or lower level of hospital cover with another insurer.”
3. Look for health insurance discounts
You might be able to save money on health insurance by keeping an eye out for any discounts on offer by your fund, or others who may be offering incentives to switch, especially around premium rate hike season.
“Some funds offer a discount for paying by direct debit rather than credit card while others have special introductory offers such as waiving some extras waiting periods or several weeks free,” Ms Ryan said.
“Some funds offer free dental check-ups while others waive excesses for kids going into hospital.
4. Pay a higher excess to lower your premiums
If you pay a higher excess on your health insurance you will probably find you can pay a lower premium. This is a good option if you know you can afford the higher excess amount if you ever need to pay it.
“As part of the government reforms to make private health more affordable consumers can opt for a higher excess to reduce their annual premium,” Ms Ryan explained.
“If you think you’re unlikely to be admitted into hospital in the near future, increasing from the excess on a family policy from $1,000 to $1,500 could save a family up to $350 a year.”
5. Lock in your premium
You might be able to grant yourself a premium ‘freeze’ by locking in your health insurance premium each year before prices increase.
“If you are in a position to do so, prepaying your annual premium upfront for the full year before your increase takes effect will lock in your current rate and help you avoid the 2022 premium increase for another 12 months,” Ms Ryan said.
Just remember that your policy must start and payment be processed by the bank before your insurer’s premium hike comes into effect.
6. Take advantage of youth discounts
Ms David advised that recent changes have made it easier for young people to join, thanks to the age-based discount.
Since April 2019, insurers have been able to offer people aged 18-29 years discounts of up to 10 per cent on their hospital premiums that will continue until they turn 41.
Once you turn 41, the discount policy will be gradually phased out at a rate of 2 per cent per year.
“People should check with their current health fund or one they’re considering joining about whether the discount is offered,” Ms David said.
7. Check your extras cover
Once you’ve decided which level of health cover is appropriate for you, it’s important to check your extras cover for any hidden costs.
“Regularly reviewing the number of things that you’re covered for under extras and what you actually need is a good idea,” Dr David said.
If you’re paying for dental check ups or physiotherapy appointments, take some time to see whether you’re taking advantage of your extras cover.
“Make sure you’re getting the most out of your payments and that you’re attending the services you’re covered for and using them,” she added.
Ms Ryan suggested you might like to consider flexible extras products that combine your separate extras limits into a single annual limit for you to use across different services, enabling you to get more back on the services you use most.
8. Change from couples to singles cover
Ms Ryan said another hack you could try to save money is changing from couples cover to singles.
“You may be able to save money and better tailor your cover by splitting your cover from a couples policy to two singles,” she said.
“For example, a couple could save by splitting to two singles policies if they have different health needs such as the woman needing pregnancy cover (but remember to switch a family policy before bub arrives to ensure you’re all covered).”
9. Stay on parent’s health insurance until 31
Health funds can now choose to develop policies that allow dependent children to remain on their parents’ policy until the age of 31.
Ms David said this isn’t an option for everybody but is worth discussing with your health insurer to see if they offer a family policy for people aged 20 to 30 years.
“For people whose parents already have health insurance and they’ve had trouble keeping or finding a job during the pandemic, this is a really good option,” she said.