By Jessie Petterd, iSelect spokeswoman
Disclosure: we occasionally have posts from others on topics outside our scope of expertise. This post was provided by Jessie Petterd, whom we’ve worked with over the years from iSelect.
Private health insurance is going up (yep, again!) on April 1st this year. This is the second time in just six months that many of us have seen our policies increase. This time, Aussies can expect to be whacked with an extra $127 a year on average for a family policy and an extra $60 a year on average for a singles policy.
It’s enough to make any rational person think, do I really need private health insurance? Amid the COVID-19 pandemic, purse strings have certainly tightened for many Aussies so it’s understandable why you’d what to weigh up whether you really need private cover.
But hold your horses because there are a few things to consider before you call up your fund and drop them like a sack of potatoes. Although prices are increasing, private health insurance is arguably more valuable than ever with the past year highlighting the importance of health and access to quality healthcare. While getting rid of your insurance may seem like its solving one problem for you, it could in fact also be creating new ones. So let’s unpack this.
Is Your Health Worth the Wait?
Elective surgery wait times in many public hospitals within Australia have recently skyrocketed due to the COVID-19 backlog. This means if you were to drop your hospital cover, you could risk waiting longer in the public system for elective surgery which could include procedures such as the removal of wisdom teeth, tonsils or a knee or hip replacement.
Consider how this could affect your income if your injury or health issue should stop you from working. Private patients generally have shorter waiting periods for elective surgery, so this peace of mind is something to take into account when reconsidering your cover.
Can you Afford the Extra tax?
Thanks to the Medicare Levy Surcharge (MLS), if you don’t have private health insurance and have a taxable income over $90,000 as a single or $180,000 as a couple, you could pay as much as an extra $900 a year in tax. Weigh up whether you’d prefer to give an extra $900 to the taxman or use it towards a basic level of health cover so you’re at least getting something in return, even if it is in the long run.
Are you Happy to be Treated by any Doctor at any Hospital?
One of the key benefits of private health insurance is the luxury to choose your doctor and hospital if you require a procedure or treatment. You may like to choose a reputable doctor from a recommendation or a hospital close to home. If you’re treated as a public patient you, unfortunately, won’t have a say in which doctor treats you at which hospital. Consider this carefully when weighing up the pros and cons of your cover.
Are you Getting Anything out of your Extras?
Ask yourself when was the last time you used your Extras. If its few and far between, then you could consider changing your Extras to a flexible limit to make the most out of what you use regularly. Or if you really don’t benefit from your Extras at all, another option to reduce your premiums is to get rid of your Extras all together and keep Hospital only cover. However, if you’re making regular trips to the physio, dentist or optometrist for example then it may work out cheaper for you down the track to keep your Extras as these services are not covered by Medicare.
Am I Paying for Cover I Don’t Even Need?
If you’re starting to sway more towards keeping your health cover but dreading paying more from April 1, you can look at reviewing your policy to see if you could save money off your premiums. It’s quite common that people pay for things on their policy that they simply don’t need.
For example, if you’re young and healthy you might not want to keep things like hearing aids on your policy or if you’re not planning a baby anytime soon, then removing obstetrics from your cover could save you quite a bit of money. While it can be well worth it to shop around on your policy however, we know you probably have better things to do with your time.
There are health insurance comparison services available like iSelect who can compare other policies for you and who may be able to find a suitable level of cover for you from their range of providers at a cheaper price*.
There are other small hacks you can use to reduce your premiums such as opting for a higher excess if you think it’s unlikely that you or your family members will be admitted to hospital anytime soon. Or if you’re in the position to do so, paying your annual premium upfront before April 1st can save you money and help you to avoid the rate rise for the next 12 months.
While it may feel like you simply can’t afford the rising cost of health insurance premiums anymore, it’s important to also consider the downside of not having cover at all. You may find that you and your family would in fact be worse off without cover. But you don’t have to grin and bear it, there are options available that may help to reduce your premiums and you may be surprised at the extra cash you can pocket by simply shopping around on your policy.
*iSelect does not compare all health insurance providers or policies in the market. The availability of policies will change from time to time. Not all policies available from its providers are compared by iSelect and due to commercial arrangements, your stated needs and circumstances, not all policies compared by iSelect are available to all customers. Some policies and special offers are available only from iSelect’s contact centre or website. Click here to view iSelect’s range of providers.
 Source: Rise in elective surgery activity following COVID-19 suspension, NSW Bureau of Health Information, 9 December 2020.
Source: Elective surgery waitlist blowout could last two years, committee hears, Herald Sun, 4 December 2020.