April 1st, April Fool’s Day – is it a coincidence that it’s also the day that health cover premiums increase? Jokes aside, this day affects 13 million Australians with private health cover every year and no one ever seems to laugh about it. Did you review your health cover arrangement before the rate rise?
The truth is, most people play the fool and switch off in the lead up to this annual rate rise. Long-term purchases like insurance are often treated as ‘out of sight, out of mind’, plus there’s a serious maelstrom of media in March on the topic and it can be difficult to cut through all the noise.
What’s important to understand is that there’s a big opportunity here to make sure you’re getting the best value for money – and maybe you’ll even spend less.
“Taking a few minutes to compare your health insurance around the rate rise is a great idea,” says Andrew Davis, Managing Director of Choosewell – a free health fund comparison service. Consider treating next April as an alarm clock to review your family’s health cover arrangement. You want to make sure the cover includes everything you need and nothing you don’t, and that the price is both competitive and affordable.
With the rise in premiums becoming an annual event, Mr Davis also states that what’s important is a suitable arrangement for you and your family, not the rise in premiums.
“Whether the average goes up 5% or 7% each year, it’ll still hurt. What matters more is that over time people’s circumstances and requirements change, and products change. The relative pricing of health funds also changes. So it’s important that people make sure what they’ve got is what they need and they’re insured by the fund that offers them the best price for the cover they need.”
On April 1 2016, average health cover premiums rose by 5.59% across all funds. This figure was often inflated to 6% by the media but it still represents a good mean of the rise each and every year. Seems like health cover will keep going up every year.
Members of the two largest health cover providers – Medibank Private and Bupa – have seen some of the largest increases at 5% and 6% respectively above the average of the top 7 funds. This could be due to an aging membership, which will drive up premiums for younger members because older members claim more rebates more often. Profit targets and shareholder revenue are other reasons some funds see continued increases year after year.
One factor driving costs higher is the expensive prosthetics industry, which is largely utilised by older members. It’s one of the fastest growing costs for Australians with private health cover. If your insurance hurts, it’s probably time to make sure it still fits. Personal situations change often throughout life and many Australians don’t realise they could have a better arrangement and save money. Planning another child? Are the kids done with orthodontics? Extras cover is also an important consideration that can save you money and provide better value but make sure you’re not paying for superfluous services.
Also, many young Australians choose the same fund as their parents, showing great brand loyalty but not a whole lot of product knowledge. Using a free online comparison site is a great way to compare your current fund against other options and get the best deal.
So don’t be a fool again; be curious about your health cover. It could save you money, or provide welcome peace of mind that you’ve got the best package for your needs.
About the Expert
Jayn O’Driscoll is interested in how money can be made easier for families and individuals. With 15 years experience in the financial services industry, Jayn began her marketing career at QBE Insurance where she delivered marketing campaigns and events for the motor and home insurance portfolios.
Make sure you and your family have the best arrangement for your needs. Use a comparison site like Choosewell.com.au to make sure you’re getting a suitable deal from your health fund when another rate rise hits next April.
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