Australians with private health insurance could save big by taking advantage of a little-known hack, before insurers raise premiums again from 1 April.
Compare the Market’s Economic Director, David Koch, said the trick, which allows people to pay up to 12 months in advance upfront before they increase, couldn’t come at a better time as many Australians are still battling the cost-of-living crisis.
“It’s no secret that many health insurers are expected to lift their premiums from 1 April, but what a lot of people don’t realise is there’s a little-known hack that could allow you to lock in lower rates and delay the impact of higher premiums for up to 12 months,” Mr Koch said.
“The industry average increase will be 3.03 per cent, but of course, we know that some customers have already received notifications that their premiums will increase by more than the industry average.
“Some health insurers allow you to pay for your policy at least a year in advance, a move that can secure the price you currently pay before any rise in prices. But there’s a couple of things you need to know.
“The first is that your payment must be processed before the date the rate rise takes effect which could be as soon as 1 April, so you don’t want to leave it until the last minute. We know that this year’s 1 April deadline falls on Easter Monday, so funds that apply the rate rise from 1 April may require you to have your payments processed before the first Easter long weekend public holiday on Good Friday. If in doubt, contact the health fund directly to understand any cut-off dates they have.
“However, for funds that have a rate rise from 1 April, your best bet may be to aim to pay as early as 22 March to be safe. You don’t want to wait for your first payment to be processed after 1 April, as it will be too late.”
According to Mr Koch, if you do want to lock in a pre-rate price, you will need to pre-pay your premium to enjoy today’s price for longer.
“In some cases, funds may allow you to pay the pre-rate rise price for 12 months,” Mr Koch said. “While it’s a high upfront cost, it could save you in the long run – especially as you won’t be paying the higher premiums until 12 to 18 months down the track when the next round of health premium increases roll around.
“As we’ve seen in past years, premium increases can add hundreds to some policies over the course of a year, so it really is a simple way to save if you have the means to pay upfront.”
Mr Koch said now is the time to do your research and review your cover to ensure you’re paying a low price for the cover that’s relevant to your health needs.
“While the pre-rate rise hack can help you save, it’s never been a more important time to review your cover to ensure you’re getting the most value possible,” Mr Koch said.
“You may find another health fund is offering a similar level of cover for less or you may be able to move to a lower level of cover that still includes the benefits you use without forking out money for services that are no longer relevant to you.”
Mr Koch said there were several things you could do to ensure you pay less for health insurance.
One: Always compare apples with apples. You may be able to find cheaper policies than your current one, but they may be a lower level of cover with fewer health inclusions, or they may not cover the services you require. Start by understanding the services that are important to you and find a policy that includes them.
Two: Are you entitled to any other perks or incentives? As well as avoiding higher premiums by getting in ahead of the 1 April rate rise, check if there are any other perks, bonuses or incentives available. It’s not uncommon for health funds to offer rewards to incentivise customers to switch.
