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Rising Health Insurance Premiums: Are You Getting Your Money’s Worth?
Health insurance premiums in Australia will increase on April 1, reflecting the fastest rate of growth in nearly a decade. This rise has left many Australians questioning the value they derive from their policies, particularly when it comes to extras coverage.
Recent findings from a survey by Finder reveal that approximately 46 per cent of Australians with private health insurance did not utilise their extras cover limits in the past year. Among those extras, physiotherapy is notably underused, with only 22 per cent reporting they reached their full benefits.
Insights from Experts
Taylor Blackburn, a personal finance and insurance specialist at Finder, indicated that millions of Australians are effectively wasting money on unused extras. “If you’re not taking advantage of your dental, physio, or optical benefits each year, you are essentially giving your insurer free money,” he stated. He stressed the importance of maximising the use of extras, warning that failure to do so could lead consumers to miss out on valuable coverage.
To combat this trend, Blackburn advised policyholders to review their cover regularly, eliminating unnecessary components, checking policy caps, and exploring alternative options to avoid loyalty penalties.
Who Is Most Affected?
The data shows that older Australians, particularly Baby Boomers, are more likely to let their extras benefits lapse, with 52 per cent acknowledging they did not utilise any of their limits. The survey also revealed that only 33 per cent of policyholders made full use of their dental benefits, while 34 per cent utilised their optometry limits.
Cost Considerations
The average monthly cost for an extras policy is reported at $58.12, totalling nearly $700 annually. With the government’s recent approval of an average premium increase of 4.41 per cent—set to take effect from April 1—consumers are facing the largest rises since 2017. Some policyholders will experience even steeper hikes, especially those with Gold policies from major health funds like Bupa, HCF, HBF, Medibank, and NIB, which could rise by an average of 13.3 per cent.
A recent analysis by Compare the Market suggests that the anticipated premium increase will add approximately $116 to the average hospital policy per year and around $158 for combined hospital and extras policies.
Tips to Mitigate Costs
David Koch, the economic director at Compare the Market, has offered practical advice for managing the impending premium hikes. He recommends considering the advance payment of premiums, which, although may be a higher upfront expense, could ultimately save money in the long term. By paying in advance, you can delay the impact of increased premiums until 2027, when the next adjustments are expected.
Conclusion
With rising premiums and a significant percentage of policyholders underutilising their benefits, it is crucial for Australians to take a proactive approach in managing their health insurance. Regularly reviewing coverage, utilising available extras, and considering forward payment options could help mitigate costs and ensure that Australians receive the full value from their health insurance plans.
