Rewind to March 29, 2020. It seems like forever ago right? And back then, it would have been hard to imagine how much things would change over the coming months. You probably don’t remember (because let’s face it, a bit has happened since then) but on March 29, Australia’s private health funds announced they would be postponing the planned average 2.92% premium increase  for at least six months to help reduce the financial pressure due to COVID-19.
The six months since seem to me both a blur and to have dragged forever (and as I write from my home in Melbourne under Stage 4 restrictions), it seems as though we’ve been in lockdown FOREVER. From adjusting to WFH and home schooling and the social isolation of not being able to see friends and family, through to the devastating economic impacts that have culminated in our first recession in decades, it’s definitely been a roller-coaster (or as I prefer, ‘corona-coaster’).
It may be hard to believe but those six months are almost up and many health funds are now planning to increase premiums on October 1. This out-of-cycle premium increase will come as a shock to policy holders at a time when many Aussies are under increased financial pressure.
But forewarned is forearmed, so here is what you need to know about this out-of-cycle health insurance premium increase on October 1.
Time to switch or ditch? Health insurance going up again on October 1?
Are all health funds putting up their prices?
No, not all funds are increasing their premiums, but many are planning to. Some funds – such as HBF, AIA, Health.com.au and TUH – have announced they will not be increasing premiums for any customers on October 1, effectively cancelling their 2020 premium increase.
Some funds – including Bupa and NIB – are waiving premium increases for any current customers on JobSeeker or JobKeeper but plan to increase premiums for all other customers.
Other funds, including Medibank and AHM, have said they will provide more targeted relief for those customers experiencing financial hardship. So while it will vary between funds and depend on your personal circumstances (i.e. whether you are on JobKeeper), many private health customers are likely to see their premiums increase from October 1.
How much will my policy be increasing by?
This depends. If your fund is increasing prices, then exactly how much extra you’ll be paying from October 1 depends on your individual policy, as even within the same fund, different policies will be going up by different amounts.
Will my fund tell me how much more I’ll be paying?
If your policy is set to increase from October 1, your fund should contact you prior to let you know how much more you’ll be paying. But gone are the days when funds sent letters that were hard to ignore. Communication varies between funds, with some sending very clear information via email whereas others simply notify you via your online portal or app which can be easy to miss.
What should I do before October 1?
First, make sure you know if your policy is increasing in price from October 1 and if so, by how much. If you haven’t heard from your fund yet, then ask them. If your policy is set to increase more than you are comfortable with, then take the time to compare your policy against other options before October 1st to see if you could find one better suited to your needs or budget.
Should I just scrap my policy altogether?
The economic impact of COVID-19 has meant many Aussie household are looking for ways to cut back on their expenses to reduce the financial pressure. It is understandable for many families, health insurance may be firmly on the chopping block, especially given many of us have got less value out of it lately due to restrictions on elective surgeries and many extras services. But with elective surgery lists likely to increase due to the COVID-19 backlog, the peace of mind and greater choice private hospital cover can provide may be more valuable than ever.
Think of it this way — the out-of-cycle rate rise should be a prompt to look closely at your cover and make sure it is still providing value for money. If not, it is time to see if you can find a more affordable option, either with the same fund or a new one.
What if I decide to simply cancel?
If you are under increased financial pressure and struggling to pay your premiums, rather than simply cancelling, contact your health fund directly to discuss your options for hardship support sooner rather than later. Remember, if you do cancel your policy, keep in mind that if you re-join down the track you might have to pay higher premiums due to Lifetime Health Cover (LHC) loading. Separately, you may pay additional tax via the Medicare Levy Surcharge (MLS) if you are a higher income earner, along with reserving waiting periods which can be up to 12 months. And of course, switching to a cheaper policy, or even downgrading your level of cover even just temporarily, are other ways to ease the budget strain.
Is switching worth the hassle?
There can be as much as $1500 a year difference between some gold family policies, and almost $700 difference between some family silver policies. And if the thought of switching makes you switch off, then that’s where iSelect can help. Our trained health insurance consultants can your current policy against other options from their range of providers to see if you could save money. A recent survey of iSelect customers found that 67% told us they are paying less as a result of switching through iSelect, with almost half (47%) getting the same or better value for a cheaper price.
We’re all looking for ways to save and ease the pressure on the household budget. So if you have private cover, take the time to compare your policy before October 1st to see how your fund stacks up.
– by Laura Crowden, iSelect spokeswoman
This blog post is sponsored by iSelect
Disclaimer: iSelect does not compare all providers or policies in the market and not all policies or special offers are available at all times, through all channels or in all areas. Not all policies available from our providers are compared by iSelect and due to commercial arrangements and customer circumstances, not all policies compared by iSelect are available to all customers. View our full range of providers via our website: www.iselect.com.au/partners/