The last few months have been a wake-up call in more ways than one.
Simple pleasures – like sitting down in a café for a cup of coffee, taking the kids to a playground or hugging your loved ones – aren’t taken for granted in late 2020.
And just as washing our hands a dozen times a day and liberally dolling out hand sanitiser has become part of our every routine, there will be other subtle lessons many of us take away from 2020.
Consider finances and the household budget. Just as 2020 has taught us to appreciate our health like never before, it’s also taught us a few valuable financial lessons. Financially, 2020 has been devastating for many Aussie families due to job losses and reduced income prompted by COVID-19 and first recession Australia has experienced in almost three decades. For many of us with young families – myself included – this is our first real taste of a recession.
If money is tight in your household, you’re going to be looking for expenses to cut back on and save money where you can. Even if you’ve been lucky enough not to take a significant hit financially, the ongoing uncertainty means you are probably still taking a closer look at the household budget.
And one expense that is likely to be hotly debated in many households is private health insurance, especially given many health funds are set to increase premiums on October 1st 2020 in an out-of-cycle rise. Private health insurance has been rising steadily for years – average premiums have risen by more than 50% over the past decade – but this latest planned increase comes when many families are doing it tougher than ever.
So, what are your options?
Let’s weigh up the pros and cons of private cover, and look at how you might be able to find better value before October 1st.
Find out if your policy is set to increase and if so, by how much
Private health insurance normally goes up on April 1st each year, but this year, health funds announced in late March they’d be delaying their 2020 increase for at least six months to help policy holders deal with the financial pressure due to COVID-19. Despite many Aussies – and in particular Victorians – struggling financially, many funds are planning to go ahead with their increase on October 1st, 2020.
The good news is not all funds are planning to increase premiums from October. Some funds – such as HBF, health.com.au, AIA & TUH – won’t be increasing premiums this year for any of their customers. Other funds – such as major funds NIB & Bupa – have announced that they’ll be increasing premiums for all customers except those currently receiving either JobKeeper or JobSeeker. And other funds – including Medibank – are offering targeted relief for those customers experiencing financial hardship due to COVID-19.
The bad news is premiums are likely to rise for many policy holders. So in the coming weeks, find out if your private health insurance policy is set to increase and avoid the nasty shock of a higher than expected premium payment next month.
If your policy is set to rise from October, your fund should contact you to let you know.
Look for ways to reduce your premium
If you value the peace of mind that private cover provides but need to reduce the cost, then it is time to carefully review your current policy. First things first, are you paying for things you don’t need? This is particularly relevant if your life stage or health needs have changed. For example, if your family is complete, look to drop pregnancy cover from your policy (you’ll be shocked by how much you could save). Another way to potentially save money without compromising your level of cover is to increase your excess. If you are unlikely to be admitted to hospital anytime soon, then opting for the maximum excess could save you up to $350 a year off a family policy.
Next, take a close look at your extras cover.
Remember, you can actually separate your hospital and extras cover between two providers to better tailor your coverage.
Dropping your extras cover – even just temporarily while your finances recover – will save you money without risking additional tax, penalties or loadings down the track that dropping your private hospital cover could incur. While you are taking a close look at your policy, make sure you are getting the most out of it. A lot of policies – particularly family cover – include discounts and freebies such as free dental check-ups or waiving excess for kids admitted into hospital.
Don’t be afraid to shop around for better value
A lot of us end up paying the ‘lazy tax’ because we simply can’t be bothered switching because we think it’s going to be too much hassle. As a result, we can end up paying more than we need for outdated or expensive cover. There can be quite a bit of difference between family policies offering the same level of hospital cover – as much as $1500 a year between some gold family policies and up to $700 difference in silver family policies. This demonstrates that saving money doesn’t have to mean compromising your level of cover – switching to a similar level of cover with a different provider can result in a significant saving. Getting the same value but paying less – winning!
And if the idea of saving money appeals but it still sounds like too much hassle, then it’s time to outsource. Comparison services like iSelect can do the hard work for you. Our trained health insurance consultants can compare your current policy against other options from our range of providers and if you do decide to switch, they can take care of the whole process for you. We’ll even ‘break up’ with your old fund for you so no awkward conversations required!
Disclaimer: iSelect does not compare all providers or policies in the market and not all policies or special offers are available at all times, through all channels or in all areas. Not all policies available from our providers are compared by iSelect and due to commercial arrangements and customer circumstances, not all policies compared by iSelect are available to all customers. View our full range of providers via our website: https://www.iselect.com.au/partners/
- Health insurance