Private health insurance premium increases in Australia

Why do health insurance premiums go up on April 1st every year?

According to Health.gov.au, Australian private health insurers are legally only allowed to increase their premiums once per year.

Insurers must apply to the government to increase their premiums by mid-November each year. Approved increases can then go into effect from 1 April the following year.

How are health insurance price increases decided?

Each year, insurers can make a submission to the federal government detailing how much they want to increase their prices, and their reasons for requesting the increase.

According to the Ombudsman, the proposed increases are examined by the Department of Health and by the Australian Prudential Regulation Authority (APRA). The government and APRA may negotiate with insurers around the increases they may accept versus the cost of providing health services and the needs of Australians.

According to the Health Minister; “Insurers must ensure their members are getting value for money and that premiums are contributing to system-wide improvements, like higher wages for nurses and other health workers and sustainable hospital services.”

How much is the health insurance premium increase?

Insurers may increase their premiums by different amounts each year. While the federal government releases an average increase figure, individual insurers may increase their premiums by different amounts – some more than the average and some less.

Also, keep in mind that insurers may not apply this increase evenly across every health insurance policy they offer. Some policy prices may be raised more than others.

How to avoid the health Insurance premium increase

If your health insurer has raised its premiums, or will be doing so in the future, there are several options you could potentially consider to help manage your household finances:

• Ask for a discount: Contact your current insurer to find out if you can pay less for your health cover – some insurers may be willing to compromise to keep your business.
• Review your cover: It may be possible to cut back on some of your health insurance to save some money while maintaining an acceptable amount of cover for the essentials.
• Cut the extras: If your health insurance policy includes optional extras that you don’t realistically expect you’ll use any time soon, you could consider cutting these from your policy to save some money.
• Adjust your excess: Choosing to pay more out of your own pocket when making a health insurance claim could allow you to pay less in health insurance premiums.
• Compare alternative options: Health insurance from another insurer could potentially offer a similar level of cover at a lower price point, and may even come with discounts or other incentives for joining up.
• Pay early: Pre-paying your health insurance up to 12 months in advance may allow you to delay the impact of any scheduled premium increases until you’re hopefully in a better financial position.

Before making any changes to your health insurance cover, it’s important to carefully consider not only your personal finances, but your health and lifestyle. For example, a young single person will likely require different health insurance cover to a family household, or a pensioner on a fixed income, affecting the cost of their private health insurance.

The best policy for you may not always be the cheapest, so it’s often worth getting quotes from a variety of different insurers. You can use our tables to quickly compare a range of health insurance options side by side and get a better idea of what options may best suit your needs.

Cover image source: erdikocak/istockphoto.com