Need to know
- Almost two in five (38%) Australians with health insurance have opted for top-level policies offering the maximum level of cover with no exclusions
- A single person who doesn't really need the top cover provided by a Gold policy could save up to $1823 a year by downgrading their cover to a Silver or Silver Plus Policy
- The price of health insurance for HCF, NIB, and Bupa customers is going up on 1 November (Medibank will follow on 16 January 2023), so now is the time to look at what you're covered for and whether you can get a better deal
Do you know exactly what your health insurance policy covers? According to the latest figures on health insurance released by the Australian Prudential Regulation Authority (APRA), more than 11.5 million people, or about 45% of the population, have health insurance policies giving them cover for hospital treatment.
Of these 11.5 million people, almost two in five (38%) have opted for top-level policies offering the maximum level of cover with no exclusions.
Are you paying for services you don't need?
CHOICE experts say that in some cases these top-level Gold policies cost almost twice as much as the cheapest Silver policy offered by the same provider. This means you could be paying a premium to secure coverage for a handful of extra services you may never need, such as cover for pregnancy and birth.
With the cost of health insurance steadily rising (and premiums for some major funds set to increase on 1 November 2022 and 16 January 2023), CHOICE experts are encouraging people to assess their level of cover to make sure they're not overpaying, and to check whether they could save money by downgrading.
For instance, a single person who doesn't really need the top cover provided by a Gold policy could save up to $1823 a year by downgrading their cover to a Silver or Silver Plus Policy with the same provider – or potentially even more if they shopped around for a better deal.
Premiums to rise on 1 November 2022
The cost of health insurance for HCF, NIB and Bupa customers is increasing on 1 November 2022 (Medibank will follow on 16 January 2023), so now is the time to look at what you're covered for and whether you can get a better deal. If you can prepay your policy for 12 months before your fund raises the price, it's a great way to lock in your current premium and save money.
What's the difference between Gold and Silver cover?
Gold cover is the premium level of cover. Gold policies are usually the only ones that cover you for:
- IVF, pregnancy and birth
- cataract eye surgery
- hip or knee replacement
- pain-management devices
- sleep studies
- insulin pumps
- gastric-banding surgery
- private treatment for psychiatry, palliative care or rehabilitation.
Some people may have taken out the top level of cover for a sense of security that they'll be covered under any circumstances. But CHOICE experts say that there are better value Silver Plus policies, and even some Silver or Bronze ones, that cover some of the items listed above, and that could save you hundreds if you downgrade.
For many people, a Silver Plus policy that includes cover for rehabilitation in a private hospital… will offer better value than a Gold policyUta Mihm, CHOICE health insurance expert
CHOICE health insurance expert Uta Mihm says, "If you're concerned about the rising cost of living, it's vital that you check you're on the right level of health insurance cover to make sure you're only paying for what you need.
"In most cases, the only people who are getting the best deal from being on a Gold policy are those who have a chronic illness or require it for pregnancy and birth services, psychiatric treatment in hospital or weight-loss surgery, as these are exclusively offered by Gold policies.
"For many people, a Silver Plus policy that includes cover for rehabilitation in a private hospital is a very good option, and will offer better value than a Gold policy."
Uta says that if you're paying for Gold cover because you want to be covered for items such as sleep studies or an insulin pump, there are cheaper policies available that cover these things.
"There are even Bronze plus policies that include cover for insulin pumps, so if you're paying for a Gold policy just because you need an insulin pump, you should downgrade to save money," she says.
Has your Gold cover served its purpose?
You should also downgrade if you've made use of the higher level cover but don't need it any more.
Perhaps you took out Gold cover to have a baby in a private hospital, but don't plan to have any more children? Or maybe you upgraded to Gold cover for cataract eye surgery, but your surgery and recovery are now finished?
If so, and in similar situations, you could downgrade to a Silver policy to make significant savings.
How much could you save by downgrading from Gold to Silver Plus or Silver?
The difference in price between Gold policies and Silver policies varies between providers, and depends on whether you have single or family cover, as well as which state you live in.
CHOICE experts analysed the cost difference between the top Gold policies and the cheapest mid-level (Silver or Silver Plus) policies offered by major insurers. They found that if you downgrade to a mid-level policy that differs by only a few items, you can save up to 49% of the price you're paying for a Gold policy.
Saving $1499 a year
For example, if you have a Gold Complete Policy with Bupa and you live in Victoria, you're paying about $282 a month in premiums. If you switch to the cheapest Silver Plus policy offered by Bupa, it will cost you just $157 a month – saving you $1499 over the year.
As prices for the same level of coverage can vary so much, it's important to shop aroundUta Mihm, CHOICE
The only differences between these two policies are coverage for assisted reproductive services, dialysis for chronic kidney failure, pregnancy and birth, cataract surgery, joint replacements and weight-loss surgery. So it's only worth paying for a Gold policy if you're sure you'll need these services.
Uta says, "Not only is it vital to understand what you're paying for, but as prices for the same level of coverage can vary so much, it's important to shop around. You could definitely save money by downgrading, however this is obviously only a good idea if you don't lose the cover you're going to need."
CHOICE tip: CHOICE experts have revealed that some of the best deals on health insurance can be found on Gold policies that are now no longer available to new customers.
If you're on one of these 'closed policies', you may be getting a great deal already and should keep it. Read more here: Are you getting the best deal ever on your health insurance?
Looking for better value cover?
CHOICE has built a tool that lets you compare thousands of health insurance policies.
Our experts rate policies based on out-of-pocket costs, fund complaints, cover, price and more – and we're 100% independent, which means we don't show sponsored results the way other comparison sites do.
We show you all the funds – big and small, member-owned and for-profit – to help you find the best.
Stock images: Getty, unless otherwise stated.