Think before you ditch your cover

You can save money simply by shopping around a bit, writes Anthony Keane

FIFTEEN years of private health insurance price rises have left household budgets looking crook. Government figures show private health premiums have risen by 154 per cent over the past 15 years, which is more than three times’ overall inflation in that time. Adding to many people’s pain is that government penalty taxes for not holding hospital cover can be greater than the annual cost of cover. However, households need not sit back and take bad medicine. There are ways to cut health cover costs for those with a little time.

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,” iSelect spokeswoman Laura Crowden said.

The result is ever-increasing premiums, but experts believe health insurance is becoming too expensive for some people, who decide 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? Delete pregnancy cover. Young and healthy? Perhaps hip replacement cover is not necessary.

Shopping around and switching health cover providers regularly can save money. Many insurers offer their best deals to new customers, so people who stick with the same provider risk missing out on savings.

A federal government research paper found only 3.7 per cent of people switched health policies in 2015.

“Some consumers may adopt a set and forget approach and do not review their options,” the paper says.

“Consumers who purchase basic hospital products to avoid the Medicare Levy Surcharge may be less concerned with the level of coverage or who it is with, so don’t look elsewhere once a decision’s been made.”

Ms Crowden said regular reviews of your cover were important. “People end up paying a lazy tax because they simply don’t get around to reviewing it,” she said.

Other ways to cut costs include increasing the excess you agree to pay when claiming, but this adds to your out-of-pocket costs for hospital visits.

Paying premiums annually in advance, and before the yearly April 1 price rise, also delivers savings and you may receive a discount for paying by direct debit.

Extras cover is more popular than hospital cover, yet has no impact on government penalties such as the Medicare Levy Surcharge or Lifetime Health Cover.

“Be aware of policy benefits, particularly your extras,” Ms Crowden said. “People don’t realise the things they could be benefiting from.”

These include contributions to gym memberships, swimming lessons, discounts on hats and sunscreens and free dental check-ups.