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Health Insurance Premium Rate Rise 2020
As of 1 April 2020, private health insurance premiums will see an average increase of 2.92% across the board5.
So what does this mean for you? In this article, you’ll learn why annual increases in health insurance premiums occur and how to find out how much your premium has increased by.
Why is your health insurance premium going up?
Unlike other insurance products, such as car or home and contents insurance, all Australians are entitled to buy the same private health insurance products. This means that a health fund can’t refuse to insure you or sell you a policy on the basis of your health, or how likely you are to claim. There are also no increases to your premium based on your previous claim history.
This is because, unlike car insurance, private health cover is “community rated”, not “risk rated”. Community rating is a part of the legislation that governs health insurance in Australia, and is detailed in the Private Health Insurance Act 20072.
It means that even if you’re sick, injured or have a history of illness, you’ll still have the same access as everyone, even if it means you have to serve longer waiting periods before being able to claim on pre-existing conditions.
But health insurance providers still need to be able to keep up with the costs of providing health care. They can do this by getting approval from the Federal Government to increase the cost of their premiums each year for different products. As Australia currently has an aging population, more frequent and expensive admissions to hospital are occurring1, which contributes to an average increase in the cost of private health insurance premiums by 2.92% this year.
Average health insurance premium increases since 2013
|Source: Department of Health5|
How much has your fund’s premiums increased?
The increase to health insurance premiums is not a blanket fee across the industry. Instead, how much your premiums increase depends on both your health fund provider, and the product you’ve purchased from them3.
If your premium has increased, you’ll receive a notification in writing from your provider, with your updated policy information, and details about the change3.
If your increase was higher than the average, your provider must be able to explain why this is necessary to cover the benefits included in your policy3. The explanation is typically because your particular policy was previously underpriced. If you’re unhappy with your price increase, it may be a good idea to shop around and see if you can find a policy that better meets your needs and budget.
What does the premium increase mean for you?
If you can no longer afford your health insurance premium, it’s worth looking at your options before cancelling your policy. Keep in mind, you may need to maintain hospital cover in order to preserve your Lifetime Health Cover status, and avoid the Medicare Levy Surcharge3.
Your current health insurer may be able to offer you cheaper alternatives to the policy you’re currently on, and which still meet your needs. Alternatively, you could shop around as other providers may have something more suitable for you.
Most insurers can offer cheaper options for hospital cover if you pay a higher excess for your hospital admission. You could also consider reducing some of your extras cover.
Compare health insurance providers with iSelect
If you’re ready to start reviewing your health insurance options, we’ve partnered with a variety of providers who may have a great product for you.
Compare health insurance policies from our range of policies and providers online side-by-side*, or if you prefer, give our friendly team a call on 13 19 20. We’d be happy to help you find a policy that suits your needs.
*iSelect does not compare all health insurance providers or policies in the market. The availability of policies will change from time to time. Not all policies available from its providers are compared by iSelect and due to commercial arrangements, your stated needs and circumstances, not all policies compared by iSelect are available to all customers. Some policies and special offers are available only from iSelect’s contact centre or website. Click here to view iSelect’s range of providers.
Last Updated: 14/01/2019