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Health fund hack: How to skip next month’s premium

Here's how to quickly slash your health fund premium, and effectively get one month free.

Compilation image of health fund insurers logos Bupa and Medibank
Health fund policies vary greatly, so it's always important to make sure your insurance works best for you. (Source: Getty)

‘She’ll be right’ is supposed to sum us up as Australian. But forget about that when it comes to money today.

With the cost of everything (and especially home loan repayments) going through the roof, ‘she’ll be right’ is morphing into ‘she’ll be responsible’… and the austere Aussie.

Well, there is a health-fund hack that means your next month will – effectively – be free.

Read more from Nicole Pedersen-McKinnon:

And you don’t have to actually switch funds; it’s as simple as flicking a switch.

The most-wasted, costly cover

Hundreds of thousands of Aussies a year fail to switch off their obstetric and reproductive services coverage. Sure, when you are in this phase of life and planning a family, it’s key.

But if you are well and truly done with children, by removing this type of cover, you could shave on average $500 every year from your premium. In other words, the next month could be free. And a whole month every year thereafter.

This is possible because a lot of policies operate on a kind of pick-and-mix basis, where you can turn off and on particular conditions.

For example, you might be able to turn off hip-replacement surgery and this could well be a good idea if you are young and healthy. The same often applies to birth related services… and also to IVF assistance to conceive a baby.

The problem is that some providers have cynically lumped together incongruous medical ailments, so that switching one off means you switch off others as well.

An example might be a treatment bucket that includes obstetrics AND knee-replacement surgery, which may cover that on a risk-mitigation basis, you should not be without. If this is the case with your fund, it’s a pretty strong trigger to look at taking your business elsewhere.

Why you could save even more with a switch

The thing is that, while a circa-$500 saving would be nice, you may well be able to net yourself a $2,000 discount. That is the typical difference between similar policies, the cheapest and most expensive.

Of course, you do not want to be cheap and nasty, and it’s vital to check the alternative policy is decent before you walk away from things like loyalty bonuses (orthodontics commonly attract these and are expensive).

But it’s also crucial to remember that, in order to keep the health fund market competitive, you do not have to re-serve waiting periods for which you have already qualified. So, you are free to leave.

Where to look for the best health fund

There is an excellent, government-run website that lists all health funds and compares them with a click.

At private health.gov.au, you choose everything you want in your policy from the people covered and the cover you want, to the excess and potential co-payment. And then up will come your best-value options.

If money is even tighter than that, you can pull the other two aforementioned levers, but you need to do so carefully.

This is because single people earning more than $90,000 or couples on more than $180,000 pay a penalty in the form of the as-much-as-1.5-per cent Medicare Levy Surcharge… if they don’t have private health insurance.

And that’s a big warning: if you will be caught by this, don’t drop your cover. You will effectively be paying the same amount but will not have that additional health protection.

You are still exempt from paying the Medicare Levy Surcharge if you up your excess as high as $750 for singles or $1,500 for couples. Beyond this, though, you’ll still be caught by the levy even if you keep cover.

Now, the other lever to pull is agreeing to a ‘co-payment’… but I don’t love them. You usually only pay an excess once a year, regardless of the number of hospital visits and their duration, and not for children.

With a co-payment, you agree to reach into your own pocket for maybe $50 a night, for every night in hospital. So, the out-of-pocket could end up enormous.

Don’t drop for your private health – remember it attracts a tax rebate too. Instead, snare yourself a big, instant discount.

Nicole Pedersen-McKinnon is the author of How to Get Mortgage-Free Like Me, available at www.nicolessmartmoney.com. Follow Nicole on Facebook, Twitter and Instagram.

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