Watch Out For Health Insurance Premium Rises On April 1

It's no joke: on April 1, health insurance premiums will rise across the board for Australians. As such, if you can afford to pay in advance, this week is a good time to do it.

Health insurance is a tightly regulated industry, and the premiums which insurers can charge are closely monitored by the Federal Government. Each year, insurers apply to the government with details of how much they plan to increase their premiums in order to ensure they remain a solvent, viable concern. Once those rates are approved, they are applied from April 1.

The government now publishes an online summary of how the rates have changed for each provider. While the average increase is 5.56%, this varies widely between insurers. For instance, premiums at the Railway & Transport Health fund will rise by an average of 14.38%, while the Reserve Bank Health Society premiums are only going up by 1.5%.

The key thing you can do to avoid these increases is to pay your premiums in advance ahead of the rate change. If you've paid for 12 months of cover prior to April 1, you'll be covered by the rate that applied when you paid in advance, not the post-April 1 rate.

It's worth pointing out that it's not compulsory to take up health insurance in Australia — in theory, you can rely entirely on Medicare. However, quite aside from whether you get stuck on waiting lists or get no choice about who treats you, that decision has financial consequences. If you earn more than a certain amount and you don't have private health cover, you'll be liable for the Medicare Levy Surcharge. That's assessed at 1% of your taxable income (fringe benefits and super contributions above the defined minimum are also included).

For the 2009-2010 financial year, the surcharge applied for incomes of above $73,000. So if you earned $75,000 a year, you'd be liable for $750. Assuming you can find a health insurer that costs that amount or close to it, then the theory is that you'll sign up for the insurance rather than pay the surcharge. Most working Australians are also eligible to receive a 30% rebate on the cost of the insurance, though note that this is usually factored into the quoted price from major insurers. (There's also rules which make insurance costlier if you don't sign up to it at a young age, but that's a topic we'll examine another time.) The government-run PrivateHealth site lets you compare the full range of available private health plans.

Private health insurance premium increases [Department of Health and Ageing]

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Comments

    I don't have private health and don't really see much need to have it.
    I'm over the 31 year old age limit which means I'm slowly losing the 30% government rebate, but I've done the maths and worked out that the money I save each year far exceeds the reducing government rebate I "lose".
    With Premiums going up at far higher than CPI, I can see myself pushing out my joining time even longer than I originally thought..

    Honestly, we opted out of health insurance twenty years ago because the cost for return was seriously out of whack!! We found that the amount of times we went to the doctors cost a tiny fraction of the over a thousand dollars or more for insurance per year. Sure if something goes wrong you wait for awhile, but depending where you live, it's generally not that long! My wife, had to have a tumor removed around 15 years ago for which she waited around two weeks to have sorted. Fortunately it was benign, but she is booked in every year for a checkup, and regular doctors visits for scripts, and it still costs a fraction of insurance!!

    Agreed with all of the above, I only intend on getting Private Health Insurance when I earn >$77k when the Medicare Levy Surcharge kicks in and the effective cost of health insurance is close to $0.

    Hi guys, working for iSelect for about 4 years now and dealing with health insurance every day, there is one other thing i would like to point out other than the medicare levy surcharge and the rise of premiums.

    The government brought in a legislation on July 1st 2000 stating that if you are over the age of 31 and do not have at least a basic level of 'hospital' cover, your premiums will increase by 2% every year you delay taking up cover, so should you leave it be till you are 50 for example, you will incur a 38% loading!! This is an additional 38% you pay on your premium for not maintaining even a basic cover throughout the years. I guess whilst we are young and healthy it may not seem as important, but as we age, we become more of a risk and hence the prices accommodate for that!

    So at least dont let it lapse for too long! The highest loading someone can have is 70% and you don't want it to get to that! it takes 10 continuous years of cover before the loading is removed.

    Hope this helps.

      Seriously, everything you just said sounds like scare tactics,... Loading for this and loading for that!! As I said in my earlier post, Health insurance is way out of whack, return for cost. Without being too rude, pedal your wares elsewhere. :[

        Definitely not a scare tactic.. Let me put it to you this way. It doesn't phase me whether you take up health insurance or not.. I was merely just trying to advise of another implication of not having it. Simple.. If you don't want it, don't take it up, i couldn't care less.. really.

          Not scare tactics, just industry spin. It's not a 38% loading - it's the amount of money that taxpayers won't be subsidising a private business.

            Oh boy, why did i even bother.. ya'll are so negative when all i tried to do was let you guys know of another factor, actually forget it. whatever.

              The fact that Stan started out by saying he works for iSelect and then stating a fact that most people over look isn't a scare tactic etc. He's informing the uninformed.

              Yes, I have private health - hate the rises, hate the gaps in claims and am very healthy (used to just be a HBF member for cheap movies - courtesy company health plan).

              Today with a family, I'd feel irresponsible to not have private health. In fact my employer makes part of our renumeration package a lump sum to cover health insurance.

    I only joined a health fund after two years of being hit with the medicare levy. im fit, exercise regularly, eat healthy etc. its a joke of system that i get penalised for being healthy, and want to take the risk of paying for health costs that can come up. right now, im righting of my annual health fund costs. i would rather put that into bank account, and save it for an emergency. when willthe government wake up and make health programmes (such as gyms etc) compulsory, and in return you enjoy cheaper premiums. maybe put a 20% loading for smokers. why do i need to supplement the poor lifestyles of other australians? there is no incentive what so ever for people to lead a healthy lifestyle with this system. an absolute joke.

      I agree with everything you said except for the thing with smokers. Personally I've never smoked, but you have to keep in mind that smoking is a true addiction. The Government only cares about it's face value as far as the public is concerned, they're quite happy to take the tax from it! The people who should be paying for the health care of smokers, are the scumbags peddling the bloody things. Yet they are aloud to sit back and rake it in!!... :(

      I'd also like to see private health cover not penalise me for removing "complimentary treatments" that have no proven efficacy. I heard a speaker last year (I think it was Dr. Rachael Dunlop but I’m very unsure) who had asked her health fund to supply a quote without things like homeopathy etc and it was hundreds of dollars more expensive to have cover that only included medically proven treatments.

    I'm a doctor who works in the private health system and has worked in the public system for over a decade.
    You have to have rocks in your head not to have private cover (and no, this is not serving).
    Be clear - if you are treated in a public hospital you are being used as an experiment for training of very junior staff.
    You think you can 'put away' enough money for cover then you are kidding yourself. 100k sound enough? Gone in one week in intensive care or one major operation plus expenses. What's 6 months off work worth to you compared to next day treatment/surgery and back to work asap?

    Most people have no idea how expensive it is to undergo most treatments/surgery. No private cover = 6months to 2 years wait publically with an intern operating on you.

      Really,.. six months to two years? Maybe in Rockhampton and the like where the Gov has really dropped the ball, but generally if it's urgent, maybe a couple of weeks, or sooner if very urgent. Look I understand there is a need for insurance, the problem is that the average Joe Blogs on the street can't even afford it! Even if you can, you have to pay loading according to your age and finances. It would be nice in the real world if it wasn't even necessary. However the thing is you are paying ridiculous amounts of money for something you may not need and if you do, you ARE covered!!

        That is the great con - you are NOT covered in the public system in OZ by any international standard (I have worked in several systems - US, Sweden).
        I agree private cover is expensive, but what people underestimate is the true cost of not being covered. We see people offering to mortgage their house to get earlier treatment than in the public system (we decline btw). If you have likely heart disease the typical process is a) wait 2-5months for an initial outpatient appt (intern). b) return for the consultant to see you in another six months c)Very high bar to jump to get treatment d) if need procedure go on waiting list for 2-6 months minimum. Some patients are dead by this stage.
        Private clinic a) see doctor of choice today b) in hospital of choice tomorrow for procedure c) back at work asap.
        I see it, I know it, as I said - rocks in your head (if you can afford it)

          I guess when it comes right down to it, all this just highlights the atrocious state of health care in Australia!! If dental care was covered by Medicare there would be a marked drop in dental and related issues which doesn't just mean mouth issues. I stand by my statement that Joe Blogs just can't afford it,.. so what choice do we have?? The fact that we are having this conversation just highlights the issue. It's all well and good stating that it is essential, but obviously you, can afford it!!

            Que is making big generalisations, and is talking about elective surgery. I know a lot of nurses, and one of them works at a private hospital in western Sydney. People who have heart attacks at the hospital have to wait a few minutes for treatment while one of the staff checks to see if your particular cover will pay for the treatment. If you don't want to wait, you can pay approx. $20,000 upfront - if it turns out you're covered you get refunded, if not, they take your money.

            A lot of people who go there have incomes high enough that their credit card limits will allow a debit of that amount. She has seen families break down in tears when it turns out they have to pay the $20,000. They could have just gone to Westmead and been saved for free.

      surely this is not real, i have had, several broken bones, operations. Complicated birth of my children resulting in months in hospital for family. Parents in intensive care after heart attacks, dozens of tests etc. No costs. The most expensive part is the pharmacy for drugs but that isnt that bad either. Perfect care at all times.
      Are you talking about elective surgeries.

        IF you have private health insurance. Some readers here actually truly believe they put away enough personally to cover costs without private cover - GOOD LUCK!!!

          umm. no insurance. Just normal public system. There is no way in the world I could afford private insurance for my family.

      Sorry Que, you may be a doctor, but you're full of crap. My wife was sick with a mystery illness when we returned from overseas years ago...we had private health insurance but every time we went to a hospital (for stays up to 6 weeks), we were admitted as public patients (as recommended on the QT by the nurses!). That way, we get the same care, from the same people and don't pay a cent.

      The notion that the public system uses patients as guinea pigs for interns is such rubbish that I presume you're practising from a plush private suite, out of touch with whatever you learned in your "10 years" of public experience...

      Insurance companies are in it for a profit, not for our health.

        Full of crap? Silly little man (or woman). You were 'stolen' by the public doctor as an intermediate patient (i.e. private cover was used). You got private treatment and don't even know it. How dumb can you get?

        Regarding interns/registrars, how do you think they learn? On puppets? I visit publically to two hospitals - you would not believe the stuff that goes on. I'm just glad my family is not exposed to it. Good luck bugwan. Remember not to complain to the state or federal governments when your treatment is poor. You've made your choice.

          Nearly $2000.00 a year for basic coverage!!! Just did a quick quote for basic cover. As I said before "obviously YOU can afford it" I certainly can't :[

    I'm continuously disappointed that with each rate rise there isn't a proportional payout increase for services. I've been receiving $27 back for a chiropractor or remedial massage for 10 years and numerous rate increases.

      Thats why you are never locked into a contract and you can change as you please, with your waiting periods following you!

    I love my health provider - I pay only $19 a fortnight for full cover. My health fund said my premiums were due to increase a whopping 30c as of April...ooooooooh.

      who with?
      Also for others, who is best for family cover, I looked at a couple and got quoted for over $400 a month. The lesser quotes were for only partial covers that meant you still had to pay more on top, (which I cant afford anyway) so public system still gets me. Maybe $200 full covers maybe doable.

        Hi Clint, just been reading this thread and for what it's worth, we just switched our cover from Medibank to HIF. It's the cheapest cover we could find and they don't restrict you to certain providers either which is refreshing. Their website is www.hif.com.au - maybe check them out if you get chance, we joined online and got 6 weeks free too :)

          Thanks, MT, HIF does appear to be the cheapest, although nothing close to Callie above $19 a fortnight for FUll cover. HIF says full cover for 1 person is $72 a fortnight. absolute basic 'do squat all' for 1 person cover is $25 a fortnight.

            How strange, maybe Callie is only on ancillary cover rather than hospital. I'd be interested to know who she's with too! I just checked the HIF website out of curiosity and their full ancillary cover (without hospital packaged in) is about $24/fortnight - though if you factor in the 43 days free offer they're currently running, it brings it down to about $21/fortnight in the first year. Alternatively, if you only wanted hospital, full cover for that is about $47/fortnight. Good luck with it anyway :)

      I would assume Callie's cover doesn't include hospital, which is the biggest chunk of the premium.

    Two Points -

    Very disappointing at the disrespect of other giving their opinion and clearly stating there position. You may not agree but the attacks are not required. In the end Health Insurance, like all insurance, is a personal choice which you need to make based on a range of information including options of those in the industry and those using and not using the product.

    I choose to have it and am interested if those who don't choose to purchase Home Insurance or Car Insurance? We have a functioning Public Transport network that has faults but works that you could fall back on if your car got stolen or damaged.

    StevoTheDevo commented the "Premiums going up at far higher than CPI" and this is true. It should be added that CPI is a weighted figure of increases across many industries, icluding health. The Decemeber 2010 CPI figure was 2.7% but the Health increase was 5.0%. As mentioned in the article the average increase was 5.56% which is higher than the health CPI but only marginally.

      Hello JB, that's fine, you can choose to pay insurance for a private service but why should taxpayers subsidise you for no gain?

      "subsidizing private health insurance is increasing rather than reducing the funding burden on Australian governments. Similarly, current policy directs an increasing portion of scarce
      Commonwealth health funds towards the top end of the income stream regardless of demonstrated health needs and public health priorities....There is increasing evidence that the costly financial incentives for private health fund membership are both wasteful and ineffective in increasing health fund membership, and are unlikely to significantly ameliorate funding pressures on public hospitals. The price elasticity of demand for private health insurance has been found to be low (Butler 2000)"
      The Australia Institute, http://www.tai.org.au/documents/dp_fulltext/DP43.pdf

      and

      "In 2003, the OECD was scathing about Australia's encouragement of private health insurance on several grounds: private health funds have limited tools and few incentives to promote cost-effective care; the subsidy has led to an overall increase in health utilisation; it has reduced the accountability of health funds for premium rises and gap insurance and has enhanced supply-side moral hazard incentives."
      http://www.theage.com.au/opinion/society-and-culture/healthcares-worthy-goal-rotten-base-20110220-1b0y9.html

        See my comment below. You are wrong. Sweden is bringing in private care because it is cheaper than state run systems (I recently worked as specialist in the Swedish health system for three years).

    Kemp,

    Other taxpayers do gain, if they have private health insurance they gain from the community rated nature of the system, where I as a younger person pay the same an an 80 year old. Also hospitals, doctors etc. can (if they those to) charge private health insurance companies more for the same procedure than medicare will pay, thus subsidising those using the medicare system.

    I subsidise roads I don't uses and schools I don't use. I am happy to give back the 30% of my health insurance that the government pays if I can have the tax back that I don't utilise.

      JB,

      For a start, "subsidizing private health insurance is increasing rather than reducing the funding burden on Australian governments"....and see the rest of my previous comment.

        No that's incorrect. Private care gives 40-65% efficiencies over public care. Check your facts.

          Sorry Que, it's not me saying it, it's researchers and the OECD....

    I have observed that of all different types of insurance, medical insurance is the most dubious because of the clash between
    the insurance coverage company's duty to remain making money and the consumer's need
    to have insurance plan. Insurance companies' earnings on health plans are incredibly low, hence some companies struggle to gain profits. Thanks for the suggestions you discuss through this site.

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