This post will give you a guide into how you can reduce the cost of your private health cover as well as save money on high insurance premiums. We all are aware of the expenses associated with health care, but we must also recognise the help we receive from the Australian government in many ways with these costs. Help in the form of public hospitals and reduced prescription medicines are a few to mention.
However, the government can only provide so much, which is why numerous individuals opt to have private health care. Health care insures us against large medical bills, which we may otherwise be unable to afford. It also covers us above and beyond the Australian governments funded assistance. This is why I want to show you how to save money and reduce premiums on health insurance, to ensure you have the most affordable plan that suits your needs.
How To Reduce your Extras Cover
Extras cover are extra medical treatments which relate to things less severe, such as; optical, physiotherapy, natural therapies, massages and more. One of the keys to reducing your health insurance costs is to remove the extras that you don’t need. For example there is no benefit in paying for natural therapies if you have no intention of ever claiming for them. However, if you would like a tip on which extras get used more commonly, here they are; optical, ambulance cover and minor dental. But before you select what you do and don’t want, make sure you check with your health fund, to see what extras you can choose that you will need and which you won't.
Does Paying in Advance Reduce your Cost
With most forms of insurance, advance payments (annual up front payment) usually reduce the total amount you pay, when compared to monthly payments. So be sure to check with your provider the difference they charge if you opt for their monthly versus annual payment plans.
Excess and Co-payments
The term excess relates to the amount that you must pay in order to activate your claim. Essentially if you want to make a claim on your health insurance, you need to pay the upfront excess amount before the insurance company will pay the rest of your claim. E.g. You may opt for an excess payment of $500. So to receive payment for your $3,000 insurance claim, you must initially pay the first $500. A range of health insurance providers will allow you to select higher or lower excess amounts, but you need to bare this in mind. If you select a higher excess amount, your premium will generally be lower in most instances. So when making this decision, try to analyse your probability of making a major claim in the short term. Then compare this with the longer term amount you would save through increasing the excess. Co-payment is the amount of money that you will consent to pay towards the daily hospital costs, if and when you need to claim. Remember, that the more you are willing to pay, the lower your health insurance premium will be. Again remember to think about the probability of you needing to claim in the future, to help factor in how much you will be willing to pay, when you do claim.
When Seeking Treatment use your Health Funds' approved Provider List
If you would like to get more out of your health insurance provider, I would recommend checking with their list of approved providers, that provide gap free treatment. Most health funds have a list of providers that they coagulate with to provide their clients with benefits. By checking with your health insurance provider, you may be able to receive some treatments free. It always pays to research in depth.
Save in the Long Term and Avoid the 2% Penalty
The Australian government wants everyone to have a private health insurance policy essentially. This is supported by the creation of the scheme called ‘Lifetime health cover’, which as a result will charge you a 2% penalty on top of your health insurance premium. This 2% penalty is applied to your health plan if you do not set up a health insurance plan before the age of 30. If you apply for health insurance after the age of 30, the penalty will be active on your plan for 10 years. After which point it will stop. This is to encourage you to take out a health insurance plan younger and keep it for life.
Health Insurance Funds – Comparing before you Buy
Just the same as with car insurance, make sure you research all the available prices from all the providers out there. Health Insurance plans will vary on what they offer and their differences can be complicating, so simplify the process by using comparison websites. But what if you already have a health insurance plan? Well it certainly helps to shop around regardless, to make sure you are getting the best value for money. What may have been the best offering when you initially started searching, may have changed as new entrants emerge in the market.
Save Money with Government Rebates
The ‘Private Health Insurance Rebate’ is a government initiative which is designed to help Australians afford annual health insurance premiums. This tier based approach enables the government to see how much you earn per annum, whether you have family cover or single cover and applies a discount to your plan accordingly. A long story short, you receive a percentage discount on your premium.
How Can I take Advantage of the Rebate?
There are a number of ways to receive the rebate refund. The first way is when you file for your tax refund and secondly you can request your health fund to apply the rebate percentage to your plan immediately. The later option will help improve your cash flow on a monthly basis and also reduce your premiums from day one.
How Can I Calculate my Health Insurance Rebate?
Ways to Save money with the Medicare levy Surcharge
If you do not have sufficient private health insurance cover, then unfortunately the Medicare levy charge will penalise you anywhere from 1% to 1.5% of your total annual income. Again this is more evidence to suggest that the government want to encourage all individuals to have their own private health insurance in Australia. To avoid this charge, simply take out health insurance, because in some instances, you will also find that it doesn’t actually cost much more to have the health insurance.
Effectively you will receive more value for money buying a health plan, than you would paying the Medicare surcharge, for not having it.
I hope this guide will help assist you in finding an affordable health insurance plan, or at least helps in shaving off some costs on your current plan. If you have any other suggestions which helped you, please let us know in the comments section below.