Aussies ditch or downgrade their health cover
Millions of Australians have lowered their level of cover or ditched their health insurance policies altogether as premiums rise, according to new research by Finder, Australia’s most visited comparison site.
A nationally representative survey of 1,001 respondents revealed 6% of Australians have cancelled their hospital policy in the last 6 months, and a further 7% have reduced their level of cover.
It’s a similar story with extras, where 5% have cancelled their plans and 8% have reduced their cover.
This adds up to 13% of people ditching or reducing their cover – equivalent to 2.6 million people across hospital and extras policies.
On 1 October, 9 health funds are upping their premiums. The average price jump this year will be 2.7% – the lowest average annual increase in 21 years – but some policies will go up as much as 5.33%.
Tim Bennett, health insurance expert at Finder, said many Australians view insurance as a nice-to-have.
“Aussies have been slammed with rising energy bills, petrol prices and food bills and in many cases insurance is the first non-essential to be cut.
“Over the coming months we may start to see higher rates of underinsurance as many simply won’t be able to afford the policies they need.
“Those in the most vulnerable positions are at risk of ignoring health concerns for fear of a medical bill they can’t afford,” Bennett said.
Last June, new rules came into force allowing health funds to increase the age of dependents to 31, allowing eligible individuals between 25 and 31 who live with their parents to remain on their policy.
Although only a handful of funds changed their policies to extend the age limit, large players like Medibank, Bupa, ahm and HCF did.
Finder analysis estimates Aussies could save $6,647 in the 7-year period after turning 24 if they stayed on their parents’ insurance.
Bennett encouraged Australians to weigh up the costs and benefits of private health cover.
“Cancelling your private health cover is a risky move, especially if you have a health condition or might need surgery down the line.”
Bennett said there are financial reasons you might want to hold onto your cover too.
“If you don’t have hospital cover before your 31st birthday, you’ll face a 2% surcharge on your premiums for each year you aren’t insured thereafter – this is called the lifetime health cover loading.
“This means if you wait until age 60 to take out a hospital policy, you’ll pay 60% more on your premiums than if you had held a policy since age 30.
“Having sufficient hospital cover also lets you avoid paying the Medicare levy surcharge that costs up to 1.5% of your income if you’re earning above $90,000.
“Think about how much value you get out of your policy and whether it’s worth keeping your cover, switching to a better plan, or ditching it altogether,” Bennett said.
Men are more likely to have cancelled or reduced their extras cover (16% to 11%) and hospital cover (16% to 10%) when compared to women.
Finder’s research shows just 6% of Australians have increased their extras cover over the past 6 months, while 4% have increased their hospital cover.
| Have you changed your level of health insurance cover (extras and hospital cover) in the past 6 months? | ||
|---|---|---|
| Extras | Hospital | |
| Have not had this in the past 6 months | 44% | 45% |
| Have not changed my level of cover | 36% | 38% |
| Decreased my level of cover | 8% | 7% |
| Cancelled my cover altogether | 5% | 6% |
| Increased my level of cover | 6% | 4% |
| Source: Finder nationally representative survey of 1,001 respondents, June 2022 |  |
|
|
Daily Bulletin
