Thousands lose access to rebate as insurance premiums soar Health cover falling

OVER a million Australians are paying up to $ 3000 more for private health insurance as a result of government means tests, age penalties and subsidy cuts.

Government health insurance penalties are more than doubling the cost of health cover for some at a time when rising premiums are forcing people to drop their insurance.

For some people these penalties are pushing their health insurance costs up from about $ 3000 to more than $ 6100. Premium rises over three times the inflation rate are also driving a health cover exodus.

The proportion of the population with health insurance has started to fall for the first time in 17 years, threatening to send health fund membership into a death spiral.

But two years after the Federal Government set up a private health insurance reform process little has eventuated.

A News Corp investigation into the effect of government health insurance penalties has found tens of thousands of Australians lost access to some or all of the 25 per cent private health insurance tax rebate under a means test introduced in 2012. As a result they are paying up to $ 1077 a year more for their cover.

If they also delayed taking out their health insurance until late in life they could be paying a government Lifetime Health Cover ( LHC) penalty worth up 70 per cent or $ 2100.

Over one million Australians are paying this LHC penalty that increases the price of insurance by 2 per cent for every year they delayed taking out cover after they turned 30.

The Federal Government has also cut the subsidy it provides for health insurance from 30 per cent to 25 per cent, adding $ 166 to the cost of health insurance by indexing it at a rate lower than premium rises.

When these charges are added to the average $ 4000 premium for family cover it means some Australians could be paying more than $ 6000 for health cover, twice the $ 3000 bill faced by those not affected by the penalties. Many Australians are unaware they are paying these penalties.

A national Ipsos Australia survey commissioned by health fund broker iSelect found more than one in four Australians did not know whether or not they were paying a Lifetime Health Cover loading on their policy.

iSelect spokeswoman Laura Crowden said one in four iSelect customers aged 31 were paying a LHC penalty that added an average 29 per cent to hospital cover premiums.

A couple who waited until 55 to take out hospital cover for the first time would be paying a 50 per cent loading.