Top 5 Health Insurance mistakes to avoid
Save money before premiums rise on April 1 by avoiding these common Health Insurance mistakes.
There are just three weeks before Health Insurance premiums are raised by nearly 4% on average.
Premiums have soared over recent years, but don’t panic – there’s still plenty of time to do your research and work out if you’re on the best policy for your current circumstances before April 1.
It’s important to know you’re not making mistakes that could be costing you money. Whether you’re spending too much on cover you don’t need, missing out on better deals or simply not keeping track of what you’re claiming, we’ve compiled a list of 5 common mistakes when it comes to Health Insurance, and how you can avoid them!
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Mistake #1. Not shopping around for your cover
It’s understandable to have signed up for your health insurance years ago and not thought about it much since — life gets busy and if you feel your needs are being met, then why change?
But there are two very good reasons why you may want to:
You might be paying more than other funds would charge you:
Similar policies can vary by hundreds of dollars between funds – but only about 5% of Australians switch each year. So it’s worth investigating whether your loyalty is ultimately costing you money.
You can compare easily at commercial comparison sites. Or you can do the legwork yourself on government site privatehealth.gov.au
Some families can save hundreds (even over $1000 in rare cases) by switching health funds. 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 cash back or gift cards.
You might be paying for cover that you no longer need:
Are you finished having children and still paying for obstetrics cover? If you don’t know the answer, you’re not alone. The first step is to review your cover and work out exactly what you are paying for.
Removing obstetrics, IVF and pregnancy services from a policy saves about $500 p.a. for a family, on average. And if you don’t want kids, or are finished having a family, there really is no need to be paying for these services.
But, do 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.
Mistake #2. Not checking how much you’ve claimed on extras
With private health insurance policies, you may pay for hospital cover, general treatment cover (also known as anciliary or extras cover) or a combination of both.
If you drop your hospital cover, you might have to pay extra tax, but your extras cover is NOT connected to your tax bill, so make sure you’re getting your money’s worth.
When you take out extras cover, you will have limits on what you can claim depending on the level of cover you choose.
For example, you may have a claim limit of $700 on general dental cover. It’s important to check you are claiming more than you are spending over the year. If you’re not claiming the full limit then you might be wasting money on these extras and should consider moving to a cover with fewer extras, or lower limits, and lower premiums.
It’s now easier than ever to check how much you’ve claimed on extras – most health funds have apps you can download to your phone, and many of those will allow you to review your claims history.
Mistake #3. Not selecting the right level of excess for your needs
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. As with most insurances, you can often cut your premium by increasing your Excess.
If you’re likely to need regular hospital treatment, a lower excess and higher premium costs may make sense.
But a higher excess might be a good option for you to save some money if you don’t believe you’re likely to claim often – it’s your call.
The maximum excess allowed is currently $1000 for families and $500 for singles. The 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.
Increasing your excess can often save a family over $500 and sometimes over $1000 on their premium in a year.
Mistake #4. Not minimising gaps
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).
Mistake #5. Not paying annually
Paying annually might at first glance seem a little counterintuitive to the goal of saving money — as it means paying a chunk of money upfront.
However, 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.
While it might not be something everyone can afford, it’s worth considering.
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.