6 ways to give yourself a discount on health insurance this year

With another premium hike looming, many Australians may be looking for ways to give themselves a discount on private health insurance.
Health insurance discounts 2021
Could you save money on health insurance this year? Image source: pada smith, Shutterstock.com.

Health insurance premiums are set to rise by an average of 2.74% from 1 April, but some consumers can expect costs to climb by much more than that, depending on their level of cover and who they’re insured with, according to the Department of Health.

In fact, Canstar data shows the average increase could cost families with a combined hospital and extras policy an average of $107 more each year, and $53 for singles.

And it doesn’t stop there, with APRA’s latest quarterly report on private health showing average out-of-pocket expenses for hospital visits increased by 13% in the past year, to around $339 in the December quarter. Out-of-pocket expenses for extras treatment increased by 1.9%, to about $52 in the December quarter.

If you would like to pay less, here are some options you could consider to cut your health insurance premium costs this year:

1. Compare health insurance to get a better deal

It’s important to find a health insurance policy with the inclusions that are important to you, the excess you’re comfortable with and a premium price you can afford. A good place to start could be to compare premium quotes from a range of providers based on the level of cover you need, keeping in mind policy inclusions and exclusions when shopping around. The cheapest policy might save you money each month, but it mightn’t necessarily provide the appropriate cover for you.

You might also consider having insurance with more than one provider if you can find better deals that way. For instance, if you know you want both hospital and extras cover, you might consider buying your extras cover from one provider and hospital cover from another if that’s a better option for you than taking out a combined policy.

Canstar compares a range of health insurance providers and can help you make a shortlist of policies that could suit your needs, based on features and price.

2. Pay by direct debit

One way to slash the premiums you pay each month could be to simply set up direct debit as your payment option, rather than using methods such as BPAY or paying on an individual basis with your credit card. In fact, 46% of the health funds listed on Canstar’s health insurance database currently offer discounts when you pay by direct debit.

The discounts on offer from those insurers ranges from 2% to 4%. That would save singles $68 each year on an average Silver Plus hospital policy from our database, and families around $137 on average.

3. Pre-pay your premiums

Another option could be to pay your health insurance premiums as a lump sum in advance, which could earn you a discount of up to 4% when you pre-pay 12 months worth of premiums.

This isn’t widely available though, with only five health funds on Canstar’s database currently advertising this feature:

  • Australian Unity: offers up to a 2% discount if you pay your premiums half yearly, and up to a 4% discount when you pay yearly.
  • HBF: offers a discount if you pay your premium annually, but doesn’t disclose how much the discount is on its website.
  • HIF: offers a 4% discount if you pay 12 months worth of premiums, or 2% off if you pay six months upfront.
  • Latrobe Health: offers 1% off upfront payments for a quarter, 2% off half-yearly payments and 4% off annual payments.
  • St.LukesHealth: offers a discount for people who pay half-yearly or annual premiums in advance.

The extra benefit of this option is that you may be able to lock in your current premiums before the 1 April premium hikes come into effect. HIF, for instance, guarantees “rate protection” if you pay your premiums before that date, in either 12-month, six-month, three-month, one-month or one-fortnight advance payments. Depending how much your health fund increases premiums by, this could result in an additional saving of 2.74% on average on next year’s premiums.

If you’re comparing health insurance policies, the table below displays some of the hospital and extras policies currently available on Canstar’s database for a single female born in 1985 seeking cover in NSW without pregnancy cover. Please note the table is sorted by Star Rating (highest to lowest), followed by provider name (alphabetical) and features links direct to the providers’ websites. Use Canstar’s health insurance comparison selector to view a wide range of policies.

4. Increase your excess

Choosing to pay a higher excess on your health insurance could actually decrease the overall cost to you. The excess is the amount of money you agree to pay towards a hospital claim on your health insurance policy, and then if there’s any further expenses your insurer would cover the rest (up to the limit of your cover).

For instance, choosing a $500 excess instead of a $250 excess could mean a premium cut of around $140 for a single person’s Gold hospital and extras policy, or $326 off for the same type of family policy, based on average figures from the Canstar database.

The savings could be even greater if you chose to pay a $750 excess. You could pay $166 less on average than a singles’ policy with a $250 excess, or around $384 less for a family policy, based on Gold hospital and extras policies.

Keep in mind, however, that while you may get a premium cut by choosing a higher excess for your health insurance, if and how frequently you submit claims and need to pay this excess amount may impact whether or not your overall costs decrease or increase.

Average premiums by excess for Gold Hospital and Extras policies

Excess Single Family
$250 $2,836 $5,777
$500 $2,696 $5,451
$750 $2,670 $5,393

Average premiums by excess for Gold Hospital policies

Excess Single Family
$250 $2,324 $4,699
$500 $2,161 $4,346
$750 $2,043 $4,113

Source: www.canstar.com.au – 18/03/2021. The Australian Government Private Health Insurance Rebate, Base Tier for under 65s, of 25.059% has been applied to premiums. National premiums based on state averages weighted by state population of insured persons (per APRA Quarterly private health insurance statistics).

5. Get an age-based discount

If you’re a young adult aged 18 to 29 years old, you could be eligible to receive up to 10% off the cost of your health insurance premiums. The discounts vary and will depend on your age at the time of first purchasing the policy. It’s also an optional discount for insurers to offer, so you may want to check with your provider whether it’s something that’s available to you. If you are shopping around, it’s another factor you could consider when comparing providers and policies.

Once you have an age-based discount, that discount will apply in full until you turn 41 if you stay on the same health insurance policy. The discount will gradually phase out by 2% each year after your 40th birthday until there is no discount applied.

Check out our breakdown of who can get the age-based discount to find out if it could apply to you, and speak with your insurer.

6. Get cover under your parents’ policy

If you are eligible, you may also be able to save money by going back onto your parents’ policy, instead of having your own. Changes announced in the Federal Budget mean insurers are allowed to increase the age up until which a dependant can stay on their parents’ policy from 25 to 31. These changes come into effect from 1 April 2021.

Canstar’s research analysts found a young person could potentially save the average annual premium of $2,940 for a single’s Gold Hospital and Extras policy by being covered under their parents’ policy at no extra cost, rather than taking out their own cover.

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This content was reviewed by Sub Editor Jacqueline Belesky and Deputy Editor Sean Callery as part of our fact-checking process.

Ellie McLachlan is responsible for leading and breaking financial news on home loans, savings and much more. Ellie studied a Bachelor of Journalism and Arts at UQ and has worked at major metropolitan and regional news organisations.

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