The premium for my private health insurance is going up again this year. There are some services I know I’ll use each year – dental, optical and chiropractic. But the cost of an appointment can vary widely depending on the provider, the type of treatment and the number of follow up appointments. My health needs also vary year to year – e.g if my glasses prescription changes, I’ll spend more on optical that year. What’s the best way to figure out if my private health insurance extras cover is still worth it?
-Allison, NSW
The cost of living is rising, and premiums and rates are going up across the board, and with an average 4.41% increase in all Australian health insurance premiums just approved, it’s a good time to evaluate what you’re spending money on – including health insurance. You can make significant savings by auditing your needs and shopping around.
I’ll start by saying that health insurance (like most insurances) is complicated and deeply personal. There is no ‘one-size-fits-all’ for the ‘best’ health insurance, but everyone can employ a similar strategy to figure out what works for them based on their unique life, health and financial circumstances.
As a consumer advocate I really hate this in principle for essential services, but in the current landscape, reassessing your health insurance will have to be an annual task if you want to be efficient with your finances. If you’re diligent with this, it’s a strategy that’s likely to yield savings over time.
Anticipating your health needs across a whole year – especially when it comes to hospital coverage – can be difficult, but it sounds like you’ve got a good handle on the regular health insurance extras you access. The next step is to take some time to document this. Write down what extras you’ve used in the last year (you could even do the last few years if you want to establish a trend), how often you’ve used them, what they cost you out of pocket, and the rebates you received.
Next, think about the coming year and what extras services you’re likely to use. As you’ve noted, if you got new glasses last year, you might not anticipate needing optical in the next year. This isn’t to say unexpected needs won’t arise, but you can start with a solid baseline of your regular, expected needs.
You might also want to consider if there are needs that might arise further down the track too, like pregnancy or a hip replacement with a preexisting condition. Some of these extras have significantly longer wait periods, up to a year, when added to your insurance. The same goes for hospital coverage. If you’re choosing a certain cover level with a view to receiving care at a certain time, you need to make sure that aligns with wait times and any other restrictions in the cover’s terms.
Then, audit your extras. If there are extras you’re paying for, but haven’t used over the last year, or have used sparingly, you might find that what you’re paying in premiums exceeds what you would have paid out of pocket without any insurance at all. Conversely, if you’re using an extras service semi-regularly, you might find what you pay in premiums is less than what you would spend if you weren’t covered, after your rebates.
Once you’ve decided what extras you’d like to keep, what you can get rid of, and what you want to add, and think about the level of hospital cover you’re most likely to need, it’s time to start shopping around.
You can use a commercial comparison site, but do so with caution. Commercial comparison sites take affiliate commissions from providers, which means they are paid by health insurance providers to include their products in comparisons, like advertising. As a result, most commercial comparison sites only provide comparisons on around 12 or even fewer health insurance providers, despite there being more than 30 health insurance providers, and over 100 different policies to choose from in Australia.
You can avoid this by using the government’s private health insurance comparison site, which is completely independent, affiliate free, and run by the Commonwealth Ombudsman. It includes the details of every health insurance policy available in Australia and is completely free to use.
Choice also has a completely independent health insurance comparison tool, that includes all available options from 48 health insurance providers with no affiliates. However, Choice’s comparison tool will set you back $29.95 for a three monthly subscription. If it’s likely you will save more than that on your premium, the subscription may be worth it.
You can also look at insurance providers’ websites or call them directly, but this is likely to be time consuming.
As you’ve noted, appointment costs can vary wildly between health service providers. You can avoid this to an extent by using a health insurance company’s ‘preferred provider’. This is a network of pre-approved health services chosen by the health insurance provider, and accessing them can dramatically reduce your out of pocket costs.
Choice notes that in some preferred provider cases, like where a health insurer operates its own clinics, the risk is not receiving continuity of care. This might not be an issue for you if you’re looking for a one off treatment (for instance, annual teeth cleaning), but might pose a problem if you have a chronic condition that requires follow ups.
Larger health insurance providers generally have quite extensive networks of preferred providers, so it’s worth looking into what’s local and appropriate to your needs based on the extras you’re looking for.
Once you’ve settled on cover you’re happy with, remember that you always have the right to switch your hospital cover or insurer without financial loss, or having to re-serve waiting periods with a new provider if you keep your cover at the same or a lower level. You will, however, have to serve waiting periods for any added extras or better conditions on your new cover, so be aware of these conditions. The Australian Competition and Consumer Commission suggests some insurers might be open to waiving waiting periods for some extras if you’re switching from one provider to another, so be sure to ask when you sign on.
Ultimately, only you can decide what extras you need. Life is always likely to throw a few curveballs your way, so it’s not always guaranteed that your extras will be worth it. But having an annual process for thinking about and shopping around on your health insurance is the best way to ensure you’re paying for the right mix of extras for your time of life.
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