At the peak of the pandemic, a bunch of organisations jumped on board and either suspended, lowered, or delayed their rates in a bid to help people out. As we begin to see a glimmer of light at the end of the tunnel, things are slowly starting to get back to normal. By normal, we mean expensive. This applies to health insurance rates. On October 1, health insurance rates are expected to increase across providers. So, let’s take a closer look at what this could all mean for you.
Why do rates keep going up?
Like clockwork, every April we are hit with a rate increase from our private health fund. Because it’s 2020, things were a little different this year and the April increase was pushed out to October. So what’s the deal? Why do they keep upping the price?
There’s a couple of reasons. First, inflation; did you know that in 1999, petrol hovered around 70 cents a litre in most capital cities? Wild! It’s how the world works, as time goes on, we get paid more, things get more expensive. It goes without saying that health insurance premiums will increase every year for that reason.
The other reason premiums increase each year is to stay in line with the rising cost of medical equipment and wages. According to the Commonwealth Ombudsman:
How much will rates increase?
This really depends on your insurance provider and the level of cover you have. Despite how much the increase is, your provider must inform you in writing of any changes made, prior to the increase being implemented.
It may seem that providers pluck a random figure from the air and run with that, but that’s not the case. The private health insurance industry is heavily regulated by the Australian Prudential Regulation Authority (APRA) and all rate increases must be approved by the Commonwealth Minister for Health.
On the 6th of October, when the federal budget was handed down, the government introduced an increase in the age of dependents living at home on their parents’ private health insurance policy from 24-31.
What level of cover is right for you?
Private health insurance can have many benefits, whether you’re covered for extras, hospital, or both.
There are many things to consider before you can find the right cover for you. Some important questions to think about are:
- What is your budget?
- What are the waiting periods?
- Do you have any pre-existing conditions?
- Can you be in a fund with your parents?
- Do you have dependents?
- Are you planning on having a family in the next 12 months?
Mix it up, shop around, ask for help
There was once a time when loyalty to an insurance provider was rewarded with discounts, not to mention the fact that changing insurance providers was a complicated process. Those days are gone. The private insurance market is growing and all the providers are competing for your money. Most providers will look after the entire process of switching your policy with your permission, making it incredibly simple.
Rest assured, the private health insurance sector is heavily regulated by the Australian Government. This means there are no cowboys operating from their basements.
If you have an existing policy, it pays to do a mini audit to see which benefits you took advantage of. For example, if you’re paying for optical, chiropractic, and podiatry and you have never set foot (see what I did there?) in any of these places, this is a great opportunity to shop around. It doesn’t make sense to pay for things you don’t need.
At the end of the day, here at Oiyo – we’re not financial advisors. If you are happy with your current provider and level of cover but are a little strapped for cash, have a chat to see if they can provide some financial assistance, delayed payment options or perhaps suggest a cheaper level of cover.
Key takeaways:
- Private health insurance premiums are set to rise on the 1st October 2020
- This is an opportune time to reconsider your budget and savings goals
Oiyo is a consolidated online resource, we are not financial advisors. We work with a range of industry professionals and compliance check our articles to ensure factual accuracy. However, we do not provide professional financial advice. Consider seeking independent legal, financial, taxation or other advice to check how the information and ideas presented in this article relate to your unique circumstances.
