The number of Aussies with Private Hospital Cover has seen a steady rise over the past few years leading up to December 2022.1 For more than 11 million people,2 it remains an essential service – even as they battle with inflation and a rising cost of living.
Still, that doesn't mean that people don't change their insurers. By comparing policies, you might be able to find something at a better price or that better suits your needs. When people do end up cancelling their policies, it could be because they've got some shiny, new Hospital (or Extras) Cover waiting for them! They’re switching, not ditching!
Damn, that’s not a great place to be, is it? After all, you’re forking out your hard-earned cash for vital health services and peace of mind, so you want to be satisfied with your policy.
Fortunately, there’s a silver lining. In Australia, you’ve got more than 30 insurers offering a wide variety of Health Insurance products.3 While the number of available policies depends on where you live and your circumstances, there could still be over 100 different policies to choose from.4
With so many different types of insurance policies out there, it pays to look at your health insurance every two to four years to make sure it’s still ticking all your boxes. Most people find their lifestyle, financial situation and medical needs change throughout their lifetime, so it’s a good idea to regularly review your policy to check it still suits your needs.
iSelect can help you to compare Private Health Insurance options to ensure your policy is suitable for you.* We can also help you to switch policies or providers if we help you identify one that better meets your needs. It’s quick and painfree!
Before cancelling your Health Insurance policy, ensure you thoroughly understand any additional costs you may incur, either up-front or in the future.
Asides from affecting your ability to access the medical treatment of your choice, cancelling your policy may also affect your tax obligations. This is because Private Health Insurance policy holders may be exempt from paying the Medicare Levy Surcharge, and if you cancel your policy, you may have to start paying it. This can be up to 1.5% of your income, depending on what you earn.5
You may also have to serve waiting periods again, and pay more in premiums, if you decide to take out Private Cover again in the future.
Switching providers can be a great way to find a more suitable Health Insurance policy, rather than ditching it altogether. But if you do decide to cancel, here are some important things to be aware of before you make the move!
While most Australian taxpayers are required to pay 2% of their taxable income to help fund Medicare,6 high-income earners who don’t hold an appropriate level of Private Hospital Cover may also be required to pay the Medicare Levy Surcharge – which is between 1% to 1.5% of your income, on top of the standard 2%.7
As of 1 July 2023, you must pay the Medicare Levy Surcharge if you’re a single person earning more than $93,000, or a couple or family making more than $186,000.8
The Private Health Insurance Act 2007 has ‘portability’ rules, which protect you if you move to another hospital policy with the same insurer, or a different fund.9
These rules mean that you won’t have to wait the standard waiting periods again before you can make a claim, when transferring to a policy at the same, or a lower level of benefit.10
However, if your new policy includes new or more generous benefits, you may have to complete a waiting period before you can access these new benefits.11 This is why it’s important to read the fine print, but the good news is that any waiting periods you’ve already served will transfer across with you.
If your health fund provides Ambulance Cover as part of your policy, you may not be covered for ambulance transport once you cancel your Private Health Insurance.
Each state and territory has its own ambulance regulations,12 but if you’re unclear about whether or not you’re covered, contact your state or territory’s ambulance authority for more information.
Lifetime Health Cover (LHC) loading is a financial loading that may be payable in addition to the base rate premium for your Private Health Insurance.13
It is an Australian Government initiative designed to encourage younger Australians to take out, and maintain, Private Health Insurance in order to reduce the load on the public health system.
If you don’t have Private Hospital Cover before the 1st July following your 31st birthday, a 2% loading will be added to your premiums for every year after this date that you don’t have Private Hospital Cover.14
For example, if you wait three years after your 31st birthday to take out a Health Insurance policy, you’ll pay up to an extra 6% on your premiums – ouch!
However, you only have to pay the loading for 10 years of continuous cover.15 The maximum loading that you can ever pay is 70%.16
Consider making a switch before you ditch! If you’re worried about the cost of your current cover, take the time to see if you could find a similar level of cover with another provider for a cheaper price. And remember, any hospital waiting periods you have already served are protected by law as long as you switch to an equal or lower level of cover.17
We can help you with that! Keep in mind if you’re cancelling your policy to switch to another health fund, you’ll need a clearance certificate from your current fund to give to your new fund. This certificate serves as a record of your previous Health Insurance cover, and if you don’t provide your new fund with a clearance certificate, you’ll have to serve waiting periods again – which isn’t ideal!18 The good news is that switching providers is actually a much easier process than many people think!
So once you’ve weighed up all the pros and cons, if you do decide to go ahead and cancel your policy, it’s relatively easy to do so – phew!
Every insurer is a little bit different – and so are their cancellation processes. The good news is your health fund should reimburse you for any premiums you’ve paid in advance. And at your request, they’ll forward on your clearance certificate to your new health fund if you’re switching to another provider.
Often you can simply do it over the phone – just give your current fund a bell via their customer service number and explain you want to cancel your policy. Some funds do have a more formal process – such as requiring you to put your cancellation request in writing. That’s why it’s worth jumping online to your fund’s website to see exactly how cancellation works for them.
It can be difficult to know whether you’re better off cancelling your Private Health Insurance altogether or switching to a policy that better suits your needs.
Our friendly team members are on hand and ready to help you compare policies*, as well as highlight any important factors you should consider before making the final decision.
Of course, the right choice for you will depend on your personal situation.
Call us today on 1800 784 772 to get started!
1 Australian Prudential Regulation Authority – The Private Health Insurance Annual Coverage Survey December 2022 (Key Stats, Cell Z:14)
2 As above
3 Australian Competition and Consumer Commission – Private Health Insurance, Shop around and compare policies
4 As above
5 Australian Taxation Office - Paying the Medicare Levy Surcharge
6 Australian Taxation Office – What is the Medicare levy?
7 Australian Taxation Office – Medicare levy surcharge, income, thresholds and rates
8 As above
9 Commonwealth Ombudsman of Private Health Insurance – The right to change, p2
10 As above
11 As above
12 Commonwealth Ombudsman of Private Health Insurance – Ambulance
13 Australian Taxation Office – Lifetime health cover
14 As above
15 As above
16 As above
17 Health.gov.au – Waiting Periods & Exemptions
18 Commonwealth Ombudsman of Private Health Insurance – Clearance Certificates
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