Why do premiums increase?
Health costs in Australia are driven by an aging population which needs more medical and surgical care, along with new and expensive medical and treatment options and the increasing costs of healthcare delivery. About 85-90% of your premium pays directly for the ever-increasing cost of healthcare delivery, including payments to doctors, hospitals and other medical costs. When these costs go up, everyone has to pay more – including through health insurance premiums.
As world-class healthcare helps Australians live longer lives, an ageing population also puts additional pressure on our health system to deliver ongoing care. In the last two decades, the number of people aged 85 years and over has more than doubled, compared with a total population growth of 32% in that same time.
At Bupa, we’ve been working hard to keep health cover affordable, but in order to improve affordability, we need to look at how money is being used by healthcare providers. We also need to focus on making healthcare itself more affordable and target the ineffective, unnecessary or wasteful aspects of the health system.
Are increases the same across health insurers?
Rate increases vary from insurer to insurer, and from policy to policy. While it may be tempting to switch providers following an increase in your current premium, or even to consider cancelling your cover all together, there are a couple of important things to consider.
Firstly, if affordability is an issue and you’re looking to move to a cheaper cover, be sure to look thoroughly at the inclusions, exclusions and minimum benefits of a new cover.
Secondly, if you’re considering cancelling your health cover completely and then decide to take out a new policy in the future, you may need to re-serve waiting periods and, if you’re aged over 31, you may have to pay the Government’s Lifetime Health Cover loading. Some insurers will allow a small gap period between the end of your old policy and the start of your new one, but this varies across the industry. In addition, if you earn over $90,000 (singles), or over $180,000 (couples/ families), without appropriate hospital cover you may have to pay the Medicare Levy Surcharge at tax time – which is more than the cost of some of our hospital covers. You should speak to your tax adviser to see whether this will impact you.
Can you avoid paying the rate rise?
The good news is that you can avoid the rate rise. If you pre-pay your premium in full before 1 April 2018, you can lock in the current rate.
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