At the beginning of the COVID-19 pandemic in Australia, health insurers around the country announced they would be deferring annual health insurance price increases.
These increases, which normally happen on April 1 each year "to adjust for rising healthcare costs", were set to rise by an average of 2.92% - the lowest since 2001 - costing the average family $127 in extra costs in a single year.
|
Insurer
|
Average increase (%) | ||||||
| 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | |
| Smallest increase | 2.98% | 3.98% | 3.76% | 2.98% | 2.28% | 1.64% | 1.98% |
| Biggest increase | 7.99% | 7.92% | 8.95% | 8.53% | 8.90% | 5.91% | 5.63% |
| INDUSTRY WEIGHTED AVERAGE | 6.20% | 6.18% | 5.59% | 4.84% | 3.95% | 3.25% | 2.92% |
Source: Department of Health
Most insurers deferred these increases for a period of six months to help customers financially impacted by the pandemic, but as tomorrow is October 1, these deferrals are coming to an end.
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Which health insurers are increasing premiums?
Pretty much every health insurer is going ahead with its scheduled price increases.
According to consumer advocate CHOICE, only a select few smaller and non-profit funds have "done the right thing by Australians and put a hold on price rises this year".
The four funds to delay premium increases until next year include:
- HBF (cancelled entirely)
- TUH (cancelled entirely)
- health.com.au (until 1 January); and
- AIA (until 1 January)
Some larger funds are giving some premium reductions or price freezes for those on JobSeeker or JobKeeper payments.
Bupa announced it would be delaying premium hikes if you or a partner has received these government payments, while HCF says it will cover premiums for up to six months for those who've "become unemployed or stood down through no fault of your own”.
But generally, CHOICE Health Campaigner Dean Price said Australia’s largest funds and industry lobby have focused on playing PR games instead of helping customers.
“Health funds are showing just how out-of-touch they are by putting their premiums up in the middle of this economic and health crisis," Mr Price said.
"People are already feeling financial stress and these price hikes are just going to hurt more Australians.
"It is likely that they will put prices up again in another six months time unless Minister (Greg) Hunt does something to stop this."
[Read: Is private health insurance worth it?]
In particular, Mr Price slammed NIB for raising prices during COVID-19, rolling back hardship support and "having some of the worst hospital surgery payouts of the big funds".
“October 1st is a day that shows people which private health insurers will really support them in a crisis. Some funds have chosen not to increase premiums this year, recognising the financial strain that many Australians are facing, while funds like NIB are raising prices on hospital insurance,” Mr Price said.
“Not only is NIB raising their hospital insurance prices in the midst of a global health and economic crisis, they’re rolling back support for customers who are struggling and their low level of payouts for surgery sets a bad example. NIB’s actions will hurt their customers."
However in a statement on its website, NIB said it was also waiving premium increases for members on JobKeeper and JobSeeker until 31 March 20201.
“We understand people are doing it tough at the moment and especially those who have had their regular income and livelihoods impacted as a result of the COVID-19 pandemic," NIB Group Executive Australian Residents Health Insurance Ed Close said.
"We hope by offering this support, we can provide some financial relief for our members as well as peace of mind knowing they can continue to make their health a priority.
"We are (also) encouraging anyone who has recently started receiving Government assistance to contact us so that we can provide this additional relief."
The infographic below, courtesy of CHOICE, shows which health fund is increasing premiums and by how much.
Don't forget to review your cover
With many premiums belatedly increasing tomorrow, it's still important to review your cover to see if it still meets your needs.
According to consumer behaviour expert and Queensland University of Technology Professor Gary Mortimer, 'set and forget' syndrome is rife with health insurance, with customers failing to revisit their initial purchase.
“Ironically, people will drive an extra 10 minutes to a different service station to save a few cents per litre on their fuel, but won’t take 10 minutes to compare premiums, which might save them hundreds of dollars each year or be the difference between waiting a month or a year for an operation,” he said.
“Health insurance, like many other insurances, are considered ‘unsought products’. You buy it with the intention of never using it, but people could be saving a lot of money."
Rob Seljak, CEO of TUH Health Fund - from one of the few health funds to cancel premium increases this year - said it was critical to review your health insurance at certain milestones, like turning 31, having a baby or nearing retirement.
“Some health funds are increasing premiums by as much as 5.58%, which will be a hike of nearly $300 a year for families and $200 a year for singles,” he said.
“After a challenging year, many Australians simply can’t afford another creeping cost so they should take the opportunity to shop around and to see if their policies are still meeting their needs.”
CHOICE also recommended taking the following steps to lower the cost of your health insurance:
- Speak to your health fund and demand a discount on your premiums. If you’re not getting value for money, switch fund;
- If COVID-19 has affected your income, you may qualify for hardship from your fund and other essential services. Speak to the non profit National Debt Helpline on 1800 007 007 for advice on accessing hardship;
- Assess whether you even need private health insurance. The industry has been warned in the past by the ACCC for potentially misleading Australians about the tax implications of private health; and
- Be aware that every Australian can drop their private hospital insurance for 1094 days without being punished by a Lifetime Cover Surcharge when they take it up again.
[Read: 20 ways to save money on your health insurance]
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Denise Raward
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