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Growing numbers of Australians are turning their backs on health insurance due to concerns about affordability. According to the Australian Prudential Regulation Authority’s 2017 survey into health insurance coverage, they found that the percentage of Australians with hospital cover was 45.7% - the lowest level in seven years1.
In Australia, there are more than 30 insurers offering around 3,500 different health insurance products2. While the number of policies available to you will vary depending on your circumstances, it’s worth comparing policies every 2-4 years. This helps to ensures that your policy still meets your needs. Your medical needs will change over your lifetime, and your insurance should reflect these evolving needs.
iSelect can help you to compare private health insurance options to ensure your policy is the right one for you. We can also help you to switch policies or providers if we identify one that better meets your needs.
Before deciding to cancel your health insurance policy, you should ensure you thoroughly understand the additional costs you may incur. This includes both instant costs, as well as future costs.
The decision to cancel your policy may affect your tax obligations and your ability to access the medical treatment of your choice2. 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.
While most Australian taxpayers are required to pay 2% of their taxable income to help fund Medicare, 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% and 1.5% of your income3.
As of 30 September 2018, you must pay the Medicare levy surcharge if you’re a single person earning more than $90,000, or a couple or family making more than $180,000.
The Private Health Insurance Act’s ‘portability’ rules protect consumers who change to another hospital policy with the same insurer, or a different fund4.
These rules mean that you won’t have to wait the standard waiting periods again before you’re entitled to benefits when transferring to a policy at the same, or a lower level of benefit. If your new policy includes new or more generous benefits, you may have to complete a waiting period before you can access these benefits.
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 regulations5; you can call iSelect on 13 19 20 for guidance regarding the approach in your state.
Lifetime Health Cover (LHC) is a financial loading which may be payable in addition to the base rate premium for your private health insurance.
Here’s how LHC works. If you don’t have private hospital cover before the 1st of 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 cover6. Meaning that if you go 3 years after your 31st birthday without health insurance, then when you do decide to take it out, you’ll pay an extra 6% on your premiums.
That said, you only have to pay the loading for a maximum of 10 years. If you hold continuous Hospital cover for 10 years the loading is then removed. The maximum loading that you can ever pay is 70%. Further, LHC is an Australian government initiative, designed to encourage younger Australians to take out, and maintain, their private health insurance.
It’s relatively easy to cancel a health insurance policy. Depending on your provider, you’ll be asked to call them, complete an online form or log into an online portal to notify them of your cancellation.
If you decide to cancel your policy, your health fund should pay back any contributions you’ve paid in advance.
If you’re cancelling your policy to switch to another health fund, you should request a clearance certificate from your current fund to give to your new fund. This certificate serves as a record of your health insurance cover; if you do not provide your new fund with a clearance certificate, you will have to complete waiting periods again.
Iselect can assist with requesting the clearance certificate on your behalf if you decide to transfer to another fund. However, this is subject to the fund allowing iSelect to do so.
Bupa lets members cancel their membership by completing an online cancellation form. They’ll also forward your clearance certificate to your new health fund if you’re switching to another provider. Bupa also allows you to cancel your membership via phone.
To cancel a Medibank policy, you must call them or visit a Medibank store7.
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 expert health advisors 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 13 19 20 to get started!