Health Insurance Savings Guide
See if you can save hundreds on Health Insurance using these savvy tips & tricks
How to shop around for Health Insurance
There are 2 Questions to ask when you’re looking for a great value Health Insurance offer.
- What cover do you need, and who is offering the best value on that cover?
- What Special Offers are available to new customers?
Answer both of those questions and you’ll find the best policy for you at the best price! But it’s not simple, so here are some tips to make it less complicated.
Q1: What cover do you need, and who is offering the best value on that cover?
To answer this question, you can go to each individual health fund’s website and get a quote if you want to, but a much simpler way is to use one of many comparison websites.
There are two types of comparison sites: government and commercial. Here are the pros and cons of each type:
|Type 1: The government comparison website||Contains almost all policies on the market. Gives one-page summary of each policy to simplify the jargon.||A bit clunky to navigate, and sometimes out of date. Can be overwhelming because it shows you ALL options instead of recommending a plan.||
People who are confident doing their own comparisons. People who don’t like giving their phone number over (see below)
|Type 2: Commercial comparison websites||Does a lot of the work for you. Can filter 1000s of options so you’re not overwhelmed.||Does not contain every provider and every offer on the market.||
People who want some help doing comparisons. People who don’t mind giving their phone number over
The vast majority of Health Insurance policies are sold over the phone, so most of these comparison websites require a phone number before showing you quotes.
Q2: What Special Offers are available to new customers?
Once you’ve picked a policy, you can go ahead and take it out through the comparison site you’ve used. But you might also be able to get a special offer for new customers on that policy.
Common examples of special offers for new customers include “One Month Free”, gift cards valued from $100 to $400, cashback of up to $500, and even discounts of up to 12% on Premiums.
Sometimes these offers are to be found on the provider’s website.
Sometimes they’re only for members of certain groups such as motoring groups and consumer groups. (NB: check whether there’s a fee to belong to the group and factor that into your calculations.)
Examples of special offers from motoring clubs and group discount clubs
- NSW: The NRMA has a special offer for members with Australian Unity
- WA: RACWA has a special offer for members with HCF
- SA: The RAA has a special offer for members with HCF
- NATIONAL: One Big Switch* has regular special offers with HCF
- NATIONAL: The FiftyUp Club* has regular special offers with HCF & Bupa
5 Ways to Reduce your Health Insurance Premium
With premiums almost doubling over the past decade, millions of Australians are downgrading their cover or looking for ways to cut their Health Insurance costs. Here are 5 clever ways to save:
1. Review your Cover
Are you finished having children and still paying for obstetrics cover? If you don’t know the answer, you’re not alone… Many of us haven’t reviewed our policy in years and could be paying extra for cover we don’t need.
Removing obstetrics, IVF and pregnancy services from a policy saves about $500 p.a. for a family, on average.
Make sure you know what you’re trading away when you downgrade your policy.
There’s no point saving $100 to get rid of something you need cover for. Insurance is always about deciding how much risk you can live with. If you can’t bear to live with ANY risk, you’ll just have to pay top dollar. The ombudsman has some advice on policy “exclusions & restrictions” here.
2. Increase your Excess
As with most insurances, you can often cut your premium by increasing your Excess.
For Health Insurance, “an excess is an amount that you agree to pay towards the cost of hospital treatment, in exchange for lower premium costs”.
You may be required to pay an excess every time you go to hospital, or only the first time each year – it depends on the policy. But if you’re not a regular visitor to hospital, a higher excess might be a good option for you to save some money.
The maximum excess allowed by the Federal Government is currently $1000 for families and $500 for singles. Federal Government has changed the law to allow excesses of up to $1500 for families and $750 for singles but this change will not take effect until 2019.
To avoid the extra taxes charged on people who don’t have Health Insurance, don’t increase your excess to more than the Government maximum amount (most funds don’t offer any bigger than this anyhow).
3. Ask about “contribution groups”
There’s a loophole in Health Insurance regulation that says Health Funds can offer “contribution group” discounts of up to 12% off the standard premium to defined groups of people, such as employees of a company or motoring club or other organisations.
They’re sometimes called “Corporate discounts” too but it’s an industry secret that you don’t always need to be corporate to get them.
So ask your fund if they can put you into one of these groups: you might already qualify and don’t know it, or sometimes they’ll just add you to a group to keep you from leaving.
Here are some examples:
“Contribution group” members can save up to $480 on a typical $4000 family premium, and some funds use this loophole to retain members who are leaving.
4. Switch health funds
You can sometimes save hundreds (or even over $1000 in rare cases) by switching health funds. There are a few reasons for this.
Different funds target different types of customers and they will drop their price for the particular type of customer they are chasing.
Also, most funds will offer you something to switch, such as ‘1 month free’, or waived waiting periods, or $100-$500 in cashback or gift cards.
For tips on finding a better offer, see the 9Saver Guide on “How to shop around for Health Insurance”
5. Pay annually, by direct debit
If you pay annually before April 1, when all health funds raise their Premiums, you pay the old price for the coming year and you effectively postpone the price rise for 12 months.
Also, some funds such as NIB, GMHBA and Australian Unity offer discounts of up to 4% for paying by direct debit, so ask for it.
Who can switch health funds?
Anyone can switch health funds. There are some common myths about how hard it is to change (see below), but the Ombudsman says you have a legal “right to change” funds.
You might not even need to speak to your old fund – the new fund often does it for you. But here are a few things you need to know before you go:
The law says you can take your waiting periods with you. That is, if you’ve served a waiting period for a particular treatment, you don’t have to serve it again at your new fund.
BUT if you move to a higher level of cover, you might have to serve some new waiting periods for new treatments, so do check.
Pre-existing conditions stop a lot of people from switching because they assume they can’t. The truth is, pre-existing conditions DO make it more complicated to switch, but it’s not impossible.
The Ombudsman says: “a health insurer may impose a 12 month waiting period on benefits for hospital treatment for pre-existing conditions. … Once a member has been on their hospital policy for a continuous period of 12 months, the pre-existing condition waiting period no longer applies and the member is entitled to the full benefits under their policy.”
Each health fund has agreements with certain private hospitals or groups of hospitals. So if you live in a remote area, or an area not well-served by private hospitals, you might want to make sure the fund you’re switching to deals with your nearest private hospital.
The Ombudsman has a checklist of 10 things to tick off when you switch, such as making sure your payments are up to date and cancelling any old direct debits. You can read the full list at this link.
Common Myths about changing Health Insurance funds
There are a lot of misconceptions about changing health funds. The truth is: the law ensures you’re not locked in.
- “It’s all too hard. I give up.”
There’s a view that Health Insurance is hard to switch because it’s a complex product and there are over 30 funds and more than 40,000 different options to compare. But the truth is, all policies fall into one of 3 categories: top, medium or basic cover.
The key is to keep it simple. if you were hiring a tradie, would you get a quote from everyone in the Yellow Pages? Of course not. Get 3 quotes and you’ve got a good basis for a solid decision. Or use a comparison site such as HealthInsuranceComparison.com.au* to do it for you. (See ‘How to shop around for the best Health Insurance offer’)
- “I can’t switch because I don’t want to serve my waiting periods again”
There are laws in place to protect switchers and encourage it. For example, ‘portability provisions’ mean you can take waiting periods you’ve already served with you. See above on “Who can switch health funds?”
The Private Health Insurance Ombudsman also has a good fact sheet at this link.
- “I’ve already paid for the year”
You can switch at anytime and request a refund of unused premiums from your current provider, so this is not a barrier.
- “It’s not worth it”
People often save hundreds on their annual premium by shopping around and switching, so it can be worth it. But there are other ways to save without switching too, so check out the 9Saver Guide on ‘5 Ways to Reduce your Health Insurance Premium’)
How to avoid Gaps
One of the biggest frustrations of health insurance customers is that, when they have to claim, they can still face a Gap of hundreds or thousands of dollars.
The Gap is the difference between what the health fund covers and what the specialist or hospital charges.
The average Gap payment is about $250, according to Government data, and you may not be able to avoid them altogether but you can minimise them. Here’s how:
Many hospitals have agreements with Health Funds to cover Gaps entirely or partially (on top of any excess or co-payment you’ve agreed to pay when you took out your policy).
You can check which hospitals have a deal with your fund here.
Medical Gaps or Doctors’ Gaps
Some doctors have agreements with certain funds to cover some or all Gaps.
It could be a ‘no Gap’ deal or a ‘known Gap’ deal, which caps the Gap at a certain amount.
You can check which doctors have a deal with your fund here.
If your fund does not have a deal with the hospital and doctor you are planning to use, you have 3 options:
- Change hospitals (your doctor might be prepared to do this),
- Change doctors (your GP or health fund might recommend another specialist), or
- Change funds (but make sure you won’t have to serve any new waiting periods for your procedure).
According to BUPA, just using your fund’s preferred providers for extras claims such as dental, optical, physiotherapy and chiropractic treatments can save a family about $600 a year.
Shop around for specialists
Most of us simply use the specialist recommended by our GP, but technology is making it easier to compare the prices and performance of specialists.
Funds such as NIB, BUPA, HBF and HCF also have agreements with these websites to give their members access to extra information.
Shopping around for a cheaper specialist can save as much as $4000 on a single operation.
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