Check up on health insurance
IT’S that time of year when rising health cover costs make headlines and, sure enough, from April 1 health insurance premiums are set to rise by 3.05 per cent.
According to comparison site Finder, families pay an average of $392 a month for health insurance and it’s unlikely premiums will fall any time soon.
In just five years, Finder estimates families could be paying as much as 10 per cent of their disposable income on health insurance, compared to 8.8 per cent at present.
The problem is, health insurance isn’t something you can walk away from and pick up again later in life. The system is geared to maintaining cover and fund members are only allowed up to 1095 days without cover before loadings apply if you want to rejoin.
This can make it worth looking at ways to save on premiums rather than opting out.
Check if you’re paying for inclusions that aren’t relevant to your needs. And be prepared to think outside the square.
If you have a couple policy, for example, it could be worth taking out two single policies if only one of you requires hospital cover for, say, obstetric care.
If you have the cash available, it’s possible to lock in prices for the next 12 months by paying a year’s worth of premiums before April 1. However, on the average monthly premium of $392, this would only result in a saving of $143.
Unless the fund offers perks for paying in advance, which some do, you could be better off using the money to pay down high-interest debt.
A smart move is to check if you could get a better deal by switching to another fund.
Australians tend to stick with the same health fund for an average of 12 years, so there’s a good chance you could save by shifting to a different fund. You shouldn’t have to re-serve a waiting period if you transfer to a policy with the same or a lower level of cover.
Or check if you’re eligible to join a restricted membership fund. These are open to members of particular occupations and the annual premium increases for these funds tend to be more modest.
Take a look at www.privatehealth.gov.au to compare funds or know if you’re eligible for a restricted membership fund. Paul Clitheroe is a founding director of financial planning firm ipac, chairman of the Australian Government Financial Literacy Board and chief commentator for Money magazine.