Yahoo Finance Health insurance hack: How to cut $500 off your premium
Health insurance premiums have gone up an average 2.9 per cent.
Health insurance premiums have gone up by an average of 2.9 per cent but few Aussies realise they can reduce their premium with just one easy phone call.
After a six-month delay, health insurance now costs the average Australian family an extra $134 per year, while single people have typically been slugged with a $60 hike.
The phone call that saves $500
Though policyholders never know the exact breakdown, hospital cover is made up of an expense allocation for a whole bunch of different conditions. This is because, naturally, these conditions incur a different potential cost to the insurer.
The pricing is basically like any other type of product you buy, except in the case of health insurance, you can pick and mix for your preference.
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But let me warn you, it’s vital not to turn off protection for ailments that are expensive, even if you think they pose you no risk. After all, you never know what may befall you. I am a case in point. But if you are well and truly done with having children, then cancelling the reproductive and obstetrics services part of your policy saves an average of $500. And you should be able to do it with just one phone call.
Where the savings strategy comes unstuck
The only potential problem is that some health funds create ‘buckets’ of conditions, and you can only activate or deactivate an entire one. Where this is the case, you can bet they will cynically lump in medical conditions more likely to befall older people - like the need for a hip replacement - with those more relevant to the young - like birth-related services. As I said earlier, think twice before switching off cover for a condition you think is totally irrelevant.
Where your fund employs these pricing tricks, what can you do? Ditch and switch. The switch part is important – remember that you pay a penalty if you earn over a certain amount and don’t have private health insurance, called the Medicare Levy Surcharge. Above incomes of $93,000 for singles and $186,000 for couples, you are essentially taxed up-to 1.5 per cent more if you do not have at least basic hospital cover.
But a tremendous website, run by the government - so, independent - reveals there are likely far better-value policies that still exempt you from the levy. Private health.gov.au compares and contrasts policies for you in a couple of clicks.
You can input your specific family situation and required services, and it will pull up the optimal options in your state. You will soon see that many funds, and particularly the many not-for-profit providers, are not so stingy with their service groupings. They also usually allow you to more appropriately tailor your coverage to your actual needs.
The other thing you need to know is that portability of health insurance means you do not have to re-serve waiting periods when it comes to conditions for which you have already qualified. Just check whether you have any accrued benefits or loyalty bonuses with your original insurer first - orthodontics is a usual one. But this, too, may be irrelevant. And, with a move, you may have nothing to lose but cost.
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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