Navigating Rising Health Insurance Premiums: A Guide to Annual Audits
As health insurance premiums increase across Australia, with an average rise of 4.41% recently approved, many policyholders are questioning the value of their coverage. Comparing health insurance options can be daunting, but conducting an annual audit is essential for financial efficiency. Australian policy expert Kat George emphasizes that while health needs vary yearly, the strategy to assess them remains consistent, offering potential savings through diligent evaluation.
Understanding Your Health Insurance Needs
Health insurance is inherently complex and personal, with no universal "best" policy. However, a systematic approach can help individuals tailor coverage to their unique life, health, and financial circumstances. Start by documenting your usage over the past year, including extras like dental, optical, and chiropractic services. Record how often you accessed these services, out-of-pocket costs, and rebates received. This historical data establishes trends and informs future needs.
Next, anticipate your health requirements for the coming year. Consider regular extras you expect to use, such as annual check-ups, and factor in potential changes, like a new glasses prescription. While unexpected needs may arise, a baseline of expected services provides a solid foundation for decision-making. Additionally, think about longer-term needs, such as pregnancy or surgeries, which often involve wait periods of up to a year when added to insurance.
Auditing and Adjusting Your Coverage
Once you have a clear picture of your usage, audit your extras. If you are paying for services you rarely or never use, the premiums may exceed what you would spend out-of-pocket without insurance. Conversely, for frequently used extras, insurance might offer savings after rebates. Evaluate whether to keep, remove, or add extras based on this analysis, and assess your hospital cover level to ensure it aligns with potential needs and wait times.
After determining your ideal coverage, it is time to shop around. Be cautious with commercial comparison sites, as they often receive affiliate commissions from providers, limiting options to around 12 insurers despite over 30 available in Australia. For a comprehensive and independent view, use the government-run private health insurance comparison site, managed by the Commonwealth Ombudsman, which lists all policies free of charge. Alternatively, Choice offers an independent tool covering 48 providers for a $29.95 subscription fee, which may be worthwhile if it leads to significant premium savings.
Maximizing Value and Flexibility
To reduce out-of-pocket costs, consider using preferred provider networks offered by health insurers. These networks include pre-approved services that can lower expenses, though be aware of potential issues like lack of continuity of care for chronic conditions. Larger insurers typically have extensive networks, so research local options that match your extras needs.
Remember, you have the right to switch hospital cover or insurers without financial loss or re-serving wait periods if you maintain the same or lower coverage level. However, new extras or improved conditions may require waiting periods, though some insurers might waive these when switching. Ultimately, an annual review process helps ensure you pay for the right mix of extras, adapting to life's uncertainties while optimizing your health insurance investment.
