The rising cost of living, including a recent 4.41% average increase in Australian health insurance premiums, necessitates an annual review of health insurance policies to ensure financial efficiency.
While health insurance is complex and highly personal, a systematic approach can help individuals determine the value of their private health insurance extras.
Evaluating Extras Cover
1. Document Current Usage
Record extras services used over the past year (or several years to identify trends), including frequency, out-of-pocket costs, and received rebates. This forms the foundation for understanding your actual needs.
2. Anticipate Future Needs
Consider expected health needs for the coming year. This includes routine services and potential future needs like pregnancy or procedures for pre-existing conditions. It's crucial to note that some extras may have waiting periods of up to a year. Similarly, hospital coverage requires aligning chosen cover levels with potential waiting times and restrictions.
3. Audit Extras
Assess if the cost of premiums for unused or sparingly used extras outweighs potential out-of-pocket expenses without insurance.
Conversely, determine if regular use of an extras service results in premium savings after rebates.
This audit helps identify where your premiums are truly providing value.
Shopping for Policies
After determining necessary extras and hospital cover, individuals should compare policies. Caution is advised with commercial comparison sites, which may receive affiliate commissions and only show a limited selection of providers.
For independent options:
- Government's Private Health Insurance Comparison Site: Operated by the Commonwealth Ombudsman, this site is independent, affiliate-free, and includes all available Australian health insurance policies.
- Choice's Comparison Tool: This independent tool, available for a $29.95 three-month subscription, covers all options from 48 providers with no affiliates.
Direct contact with insurers or visiting their websites are also options, though potentially more time-consuming.
Preferred Providers and Switching
To reduce out-of-pocket costs, consider utilizing an insurer's "preferred provider" network. While these networks can significantly cut expenses, Choice notes a potential risk to continuity of care, especially for chronic conditions.
Policyholders can switch hospital cover or insurers without financial loss or re-serving waiting periods, provided the new cover is at the same or a lower level. However, new waiting periods apply for added extras or improved conditions.
The Australian Competition and Consumer Commission suggests some insurers may waive waiting periods for certain extras when switching, so it is advisable to inquire.