Paul's Insights: Time is running out to save on health cover
Late last year, the government announced that premiums will go up by an average of 3.25% from 1 April. That’s an 18-year low, but as always, averages don’t tell the full story.
Some funds, like CUA, Defence Health, HCI and HIF will raise their premiums by over 4%. Others including Westfund, HBF and GU Health will lift their premiums by less than 2%.
This difference makes it worth shopping around to check you have cover that suits your hip pocket as well as your healthcare needs.
The current year is especially important to review health cover because a number of reforms are scheduled to take effect between now and 1 April 2020. Many funds have already put the wheels in motion.
A key change is that hospital cover must be classified as either Basic, Bronze, Silver or Gold – each with specific minimum standards of cover that apply across the industry.
As a guide, dental surgery is only covered through silver and gold policies, but if you want to be insured for something like weight loss surgery, you’ll need to go with a gold policy.
The idea behind these reforms is that it will be easier to shop around and compare different policies, something that has been challenging in the past.
Under the new rules, most natural therapies like naturopathy, can no longer be covered through private health cover though some insurers may choose to pay for services like remedial massage.
In addition, funds will be able to raise their highest excess from $500 to $750, which can help to reduce ongoing premiums.
In a bid to encourage more young adults to take out health cover, age-based discounts of up to 10% will be available for 18-29 year-olds. That’s fair enough as this age group typically makes fewer claims than older Australians.
It can all sound confusing even with the new reforms in place. The privatehealth.gov.au website can shed some light, letting you compare funds, and also providing links to tables showing the average premium rise for your health fund.
Paul Clitheroe is Chairman of InvestSMART, Chairman of the Australian Government Financial Literacy Board and chief commentator for Money Magazine.
Frequently Asked Questions about this Article…
This year is crucial for reviewing your health cover because several reforms are set to take effect by 1 April 2020. These changes aim to make it easier to compare policies and ensure you have the right coverage for your needs and budget.
Private health insurance premiums have risen by around 50% since 2010. Although the government announced an average increase of 3.25% from 1 April, some funds will raise their premiums by over 4%, while others will increase by less than 2%.
Hospital cover must now be classified as Basic, Bronze, Silver, or Gold, each with specific minimum standards of cover. This classification aims to simplify the process of comparing different policies.
Under the new classifications, dental surgery is covered through Silver and Gold policies. For procedures like weight loss surgery, a Gold policy is required.
Most natural therapies, such as naturopathy, are no longer covered under private health insurance. However, some insurers may still cover services like remedial massage.
One way to reduce ongoing premiums is by opting for a higher excess, which can now be raised from $500 to $750 under the new rules.
To encourage more young adults to take out health cover, age-based discounts of up to 10% are available for 18-29 year-olds, as this age group typically makes fewer claims.
You can compare different health funds and check their average premium increases on the privatehealth.gov.au website, which provides helpful resources and links for consumers.
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