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“Health funds should scrap their April 1 premium increases”: CHOICE

COVID-19 crisis means Australians need relief from private health premiums urgently

Consumer advocate CHOICE says health insurers should cancel health insurance premium increases scheduled for April 1 in light of the COVID-19 health and economic crisis.

"This year is going to be tough for many people and private health insurers can help a little bit financially by not passing on their premium increases."

"If people can't use the normal services that would allow them to claim on their private health insurance, then insurers' costs will be going down. There is no way they can justify increasing premiums in this context. Health funds should scrap their April 1 premium increases," says CHOICE CEO Alan Kirkland.

Insurer HBF has already moved to cancel the April 1 premium rise for their customers.

Non-urgent elective surgeries like hip replacements and cataract surgery have been cancelled by the Government. Many dentists are already cancelling check-ups and physiotherapy sessions and other extras services will be impacted by social distancing measures. 

"We are yet to see private health insurance be of any help for patients with COVID-19. Testing for the virus and treatment are covered by Medicare and are free. The health response to COVID-19 is led by the public health system. Health insurance is not needed to cover treatment for COVID-19," says Mr Kirkland. 

While the average increase of 2.92% was the lowest in eighteen years, most funds will increase their premiums by more than 3% and some funds will have increases as high as 5.6% on average.

"Health fund premiums have gone up by 61% over the past decade. Their justification is that the amount they pay out to cover your treatment is going up. But that doesn't hold up this year. We don't think people should be paying full price when they won't be able to access a full service."

More health insurance help from CHOICE available at: choice.com.au/healthinsurance

Advice for people with or considering health insurance:

Drop extras - there are no tax implications and many services are unavailable 

- Most people spend more on extras premiums than they get in benefits in a normal year. 

- This year you won't be able to use many of your extras benefits due to necessary social distancing to avoid infection with COVID-19. This may impact services like massage, physiotherapy and chiropractic as well as non-urgent dental check-ups.

- Extras insurance is not needed for lifetime health cover loading or to avoid extra tax.

- If you drop your extras cover and want to take it up later again, the waiting period for most services is usually two to six months. It can be higher, including 12 months for major dental work or orthodontics and several years for services like hearing aids. 

Is Private Health Insurance worth it right now? 

- If you are healthy, with no planned elective surgery and are under financial pressure, contact your health fund and ask them to suspend your cover or waive your premiums to save. 

- There will be limited cases where you can use your private hospital cover in the short term - urgent surgery for life-threatening conditions that need to be done within 30 days in the public system such as limb amputations and heart surgery. 

- Private health cover may still give you benefits for pregnancy, psychiatric treatment and rehabilitation but this is a changing situation - we'll continue providing the best advice we can at choice.com.au

What are the impacts of dropping or not taking up private health insurance? 

- You can drop health insurance for up to 1,094 days (three years minus one day) in your lifetime without incurring a lifetime health cover loading penalty. You need to consider if this is the time that you want to utilise this break. If your health insurer allows you to suspend your policy the suspension doesn't count toward the break.

- If you earn more than $90,000 (single) or $180,000 (family, couple) dropping private health insurance will mean you pay extra tax, instead you should consider downgrading to a cheaper, lower cover policy. 

- If you drop your hospital cover you will have to serve waiting periods again if you take it up again. Waiting periods vary and are up to 12 months for pre-existing conditions and pregnancy. 

Media contact: Katelyn Cameron, 0430 172 669, media@choice.com.au

Editor's notes:

Infographic available:
2020 average private health insurance premium increases by insurer

https://infogram.com/1pr97wyppxkll0hg2zwvw60619smxg29jr5?live