For a lot of Australians, private health insurance feels like one of those bills that just keeps creeping up every year. The instinct is usually to scale back cover, or chase the cheapest policy on the market.
The catch? The cheapest policy is rarely the best one. The real goal is to pay less while still being covered for the things that could genuinely knock your finances around. Here are some practical steps to help you save without sacrificing peace of mind.
Review your hospital cover level
Most insurers offer four levels of cover: Basic, Bronze, Silver and Gold, with the premiums climbing as you move up the tiers. Before you turn 31, taxpayers need at least Basic cover, with the mandated maximum excess, to avoid the Medicare Levy Surcharge.
Plenty of Australians choose to pay more for Bronze, Silver or Gold. If that’s you, it’s worth looking at the procedures you’re paying for that you’re unlikely to use in your current life stage (think pregnancy, joint replacement, cataracts). Dropping to a lower tier that excludes those can save you hundreds a year, and you can move back up when your needs change.
A popular middle-ground is the Silver Plus tier offered by some insurers, which covers you for standard services in a private hospital, plus one nominated service from the Gold tier (such as pregnancy, joint replacement or cataracts).
Consider increasing your hospital excess
If you’ve got a healthy emergency savings buffer, accepting a higher excess can really bring your premium down. The excess is only payable if you’re admitted to hospital, and usually only once per calendar year no matter how many admissions you have. Typical options are $250, $500 and $750 per person for singles, with double those amounts on family policies. The higher the excess you can comfortably wear, the lower your premium.
Remove extras you don’t use
Most insurers offer optional “Extras” cover for non-hospital services not covered by Medicare, like optical, dental and physio. If you don’t use them, why pay for them? And even if you do, check how much you typically claim back in rebates each year. It may well be less than the extra premium you’re forking out.
Don’t pay for duplicate cover
Your Extras policy might be doubling up on benefits you already get from somewhere else, like Medicare, the NDIS, employer wellness programs, or loyalty schemes through pharmacies, credit cards and retailers. Costco, for example, offers member discounts on hearing aids. You may even get health discounts from your own insurer (e.g. Medibank Live Better, Bupa Plus, HCF Thank You) without paying anything extra.
Combine policies and save
Instead of each family member holding their own policy, a couple or family policy will usually work out cheaper. Most insurers also offer reduced premiums on single-parent policies covering one adult and their children.
Compare policies every year
Make sure you’re still getting the best deal by comparing policies through PrivateHealth.gov.au. As well as premium costs, keep an eye on waiting periods, benefit limits and exclusions.
Use the government rebate
Plenty of people qualify for the means-tested Australian government rebate on health insurance premiums. You can claim it upfront as a premium discount through your insurer, or at the end of the year via your tax return.
Dodge the Lifetime Health Cover loading
If you expect to need private hospital cover later in life, make sure you take it out and maintain it from the year you turn 31. Otherwise you’ll cop a government-mandated 2% Lifetime Health Cover loading on top of your premium for every year you were over 30 without cover, up to a potential 70% loading payable for 10 years. That’s a hefty long-term cost for a short-term saving.
Avoid underinsurance: check exclusions and restrictions
Before downgrading, look carefully at any extra exclusions or restrictions attached to the lower-level cover. If you’re likely to need heart treatment, joint replacement, psychiatric care or ambulance services, these can be excluded or restricted on a cheaper policy, which is exactly when you don’t want to discover the fine print.
Avoid underinsurance: reassess as life changes
Your cover should evolve as your life does. Big moments worth a review include getting married, the arrival of children, hitting your fifties, retiring, or being diagnosed with a chronic condition. A policy that suited you five years ago may not be the right fit today.
Your financial adviser can help you review your needs
Done properly, these steps can lower your premiums while still protecting you from the kinds of costs that can really derail a financial plan. A financial adviser can walk you through the trade-offs and make sure your cover still fits where you’re at in life. This is the sort of thing we cover with clients across Newcastle and the Hunter as part of our personal insurance reviews, often alongside broader financial planning so all the pieces work together.
Talk to Virtuous Wealth
If you’d like a fresh look at your health cover and how it fits with the rest of your financial picture, we’d love to help. Get in touch with our Newcastle team to book a no-obligation chat.
This article provides general information only and does not take into account your personal objectives, financial situation or needs. Before acting on any information, you should consider its appropriateness, having regard to your own circumstances, and seek personal financial advice from a licensed adviser.
