Nicole Pedersen-McKinnon* warns against ditching private health insurance in the face of rising premiums and shares a trick to cut the cost instead.
The soaring cost of living means private health insurance is on the chopping block in many Aussie households.
Even so, 19 health funds will raise their premiums on April 1.
But what if I told you there was a way to lock in the cheaper 2022 premiums for another whole year? Or even two years.
Well, there is.
And a personal plea from me: Don’t drop your private health… I will explain shortly how I credit it with saving my life.
What we paid in 2022
The good news is that many insurers postponed their annual premium hike last year to September 2022 as a part of ongoing pandemic leniency.
And it was afforded by a decline in claims throughout COVID times.
One Big Switch says 15 funds have committed to copping the increases again this year, deferring them to until between June and November.
That’s to be commended.
But the premium reprieve is short lived, shorter with some than with others.
So far 19 funds are silent and may be planning to slug members with premium hikes.
These, says One Big Switch, include CUA Health, HBF Health, Transport Health, and Westfund Limited.
Whether or not your fund has given you some budgetary breathing space, you don’t have time to lose – the power to save is in your hands.
How to pay 2022 health insurance premiums today
The thing is that there is a way to lock in last year’s cheaper prices.
How?
Pre-pay your annual premium before April 1.
That date applies even if they have granted you bonus ‘hike’ time.
The key for cost cutting is April 1…. before the increase officially applies.
If you have the money you may even be able to prepay, and therefore lock in 2022 premiums, for up to 18 months.
This is very worthwhile, because the cost saving is cumulative – you can add the allowable pre-pay, that 12 to 18 months, onto however long your fund is postponing premium increases.
In other words, if your fund lets you pay 18 months in advance, and you’re also given a higher-premium reprieve for six months, you can (literally) buy yourself two more years at 2022 prices.
How much could you save? The average premium is set to go up by 2.9 per cent in roughly a month.
This compares with a 2.7 per cent average increase last year, so the hits to our hip pocket just keep coming.
Some insurers will also increase their prices by more, including some larger, more widely held insurers.
CBHS corporate will hike premiums the most, with a 5.38 per cent price increase across all policies… for the third year in a row.
And heavyweight insurers Medibank, BUPA, HCF and HBF will all raise their take by more than the average.
(Note that all but HBF of these health funds have announced some extension of 2022 premiums; HCF has yet to finalise its date)
Never drop private health insurance: My personal experience
What if you can’t pre-pay your health insurance? Because, let’s face it, pre-paying might not be possible right now.
On January 21, 2021, I was diagnosed with breast cancer.
Six weeks later, after a double mastectomy and simultaneous reconstruction, thanks to my private cover, I was cancer-clear.
And I’m delighted to say that as of thursday I will be two years cancer-clear.
Sure, private cover is expensive, but I am living proof that you cannot afford to drop it.
That cover could well work out priceless.
And you can still cut your (remember, tax deductible) premiums.
In part two of my strategies to cut the cost of private health insurance I divulge five more ways to keep your cover but at less cost.
*Nicole Pedersen-McKinnon is a financial educator and commentator, and the author of How to get mortgage-free like me.
This article first appeared at au.finance.yahoo.com.
