How to cut costs on your health cover
FIFTEEN years of private health insurance price rises has left household budgets looking crook.
Government figures show that private health premiums have grown more than three times faster than overall inflation over the past 15 years. Health insurance costs rose 154 per cent since early 2002, while overall inflation has climbed 49 per cent.
Adding to the pain for many people is that the government penalty taxes for not holding hospital cover can be greater than the annual cost of cover.
However, households do not just have to sit back and take bad medicine. There are several ways to cut the cost of health cover for those willing to spend a little time on it.
Health insurance specialist iSelect said factors behind Australia's ongoing health insurance hit included:
• Australia's ageing population requiring more medical services;
• A decline in younger people taking up health insurance, which squeezed funds' finances;
• Huge advances in medical technology that came with hefty costs.
"Insurers rely on young people to balance out the claims of older customers," said iSelect spokeswoman Laura Crowden.
The result is ever-increasing premiums, but some experts believe health insurance costs are now at a point where it's becoming too expensive for consumers, with many deciding to roll the dice and hope they don't get really sick.
That's a risky strategy, and there are things you can do before getting to that stage.
First, make sure your policy features suit your family. Finished having babies? If so, delete pregnancy cover. Young and healthy? Perhaps hip replacement cover is not necessary.
"Households are feeling the pinch across the board," Ms Crowden said. "It's more important than ever to make sure you are getting the best deal."
Shopping around and switching health cover providers can save money. Many insurers offer their best deals to new customers.
A Federal Government research paper found that only 3.7 per cent of people switched health policies in 2015. Switching was also low for general insurance policies.
"Some consumers may adopt a 'set and forget' approach and do not expend the effort needed to review their options," the paper says.
"This may be particularly relevant to those consumers purchasing basic hospital products to avoid the Medicare Levy Surcharge. These consumers may be less concerned with the level of coverage or who it is with, so they may tend to make little effort to look elsewhere once a decision has been made."
Experts say regular reviews of your cover are important, and people can save money by increasing the excess they agree to pay when claiming, and paying annual premiums in advance before the April 1 price rise.
Extras cover is more popular than hospital cover, yet it has no impact on government penalties such as the Medicare Levy Surcharge or Lifetime Health Cover. Check your extras, and ditch it if you are not saving enough.
Comparethemarket.com.au consumer advocate Abigail Koch said the amount paid out on extras differed between funds, so doing some homework could help you.
"It can be better value to choose a fund that pays out a percentage of your bill for each treatment - for example, 60 per cent - rather than a fixed amount, for example $30," she said.
Ms Koch said people should always remember to claim, because many didn't, and look to take advantage of health fund discounts and promotions.
"Some funds will waive two and six month waiting periods on hospital and extras, others will offer gift cards worth hundreds of dollars. Some health insurance policies even come with discounts on gym memberships, clothing stores and movie tickets."