Don’t be an April fool this year! Avoid these common health insurance mistakes… 

The first day of April is known around the world for pranks and silliness, but here in Australia it’s also a day when people might find themselves paying more for health insurance – and that’s no laughing matter. Fortunately, there are ways you can avoid, or at least lessen, the impact on the 1 April health insurance cost increases on your wallet.  

Whether you’re reading this because of the 1 April price rises or you just want general advice on saving money on health insurance, we’re here to help. We’ve compiled a list of 5 common health insurance mistakes made by Australians. Read on to avoid being an April fool when it comes to health insurance…   

Mistake #1 – setting and forgetting  

Many Aussies take out a health insurance policy and hold onto it for years and years, forgetting to review it and make changes as their circumstances change. This can really hit you in the wallet, as you could end up paying to cover treatments and services that you no longer need (more on that in Mistake #2). It can also mean you’re missing out on cheaper policies that offer you better value.  

Remember, insurers don’t reward you for loyalty, so there’s no point staying on the same policy for long periods (unless it continues to be the best cover for you). So review your policy regularly – say, once a year – or when your circumstances change, and enjoy the benefits of saving money. 

Compare your existing policy with other policies.

Mistake #2 – not adjusting your cover 

When your income, household or healthcare needs change, that’s a cue your health insurance needs to change too. If you don’t update your policy to match your circumstances, you could be paying for things that you don’t need like pregnancy care, or not paying enough for the things that will save you more money (through claims) in the long term.  

It’s important to update your health insurance when your: 

• Income increases or decreases. If your income changes, this could affect your eligibility for the Private Health Insurance Rebate. If you’re receiving the rebate when you’re no longer eligible, you could get a nasty surprise at tax time, so make sure you let your insurer know when your income changes.  
  What are the Private Health Insurance Rebate income brackets? 
• Family changes. Starting or ending a long-term relationship, having a baby or having your kids leave home will all affect your health insurance. To make sure you’re not paying too much (or too little, which leaves you with insufficient cover), contact your insurer about changes in your household and family circumstances. 
• Healthcare needs change. If you, or a family member covered by your policy, is diagnosed with a long-term health condition, check whether your policy will cover the services and treatments you’ll be using. If it doesn’t, use our Calculator to find a better policy.  

Mistake #3 – ineffective policies 

This mistake typically happens when people take out a policy to avoid paying the Medicare Levy Surcharge but don’t look closely at whether that policy will give them any real value. The Medicare Levy Surcharge applies if you earn more than $93,000 as a single or $186,000 as a couple, family or single parent.  

How much is the Medicare Levy Surcharge?

The bottom line is: regardless of your income level, if your health insurance doesn’t allow you to claim for the healthcare services and treatments you need, it’s not the best fit for you. By choosing a policy that allows you to claim on the healthcare costs you use AND helps you avoid the Medicare Levy Surcharge, you’ll be better off financially.  

Find a new policy that offers you better value.

What to consider when you’re looking for health insurance.

Mistake #4 – taking out cover after the age of 30  

When you’re young, you probably don’t think about your future healthcare needs much, but that could cost you (literally) later on. By taking out health insurance in your younger years you’re doing your future self a big favour, due to the Lifetime Health Cover Loading. If you take out Hospital Cover after the age of 30, you’ll have to pay an extra 2% for every year older than 30 you are, up to a maximum of 70%. The Loading lasts for 10 years of continuous Hospital Cover. And taking out insurance before the age of 30 also pays off as you’ll qualify for the Age-based Discount, which makes insurance cheaper until you reach the age of 41.  

On the other hand, depending on your circumstances, you might decide it’s worth copping the higher premiums later in life. If you think there’s a strong chance you won’t need private health insurance in your 20s, you may decide to delay getting Hospital Cover until later, when you’re more likely to need it. Of course, none of us know what’s going to happen so this is a risk to consider. We recommend you weigh up your age, income, healthcare needs and family circumstances carefully before making a decision about what age to take out health insurance. 

Mistake #5 – not understanding promotional terms and conditions 

Health insurers sometimes try to lure in new customers by offering promotions, like gift cards, reduced waiting periods or a certain amount of weeks for free. However these promotions may not be worthwhile in the long run. If you’re paying a lot for a policy that ultimately isn’t right for you, no promotional offer will make that a good deal. We strongly recommend reading the terms and conditions of any promotion before you sign up, to make sure you understand exactly what you’re getting, and when.  

Trudie McConnochie

Writer and Researcher

Knowledge is power – that’s the guiding principle behind everything Trudie writes, and it’s a philosophy she brings to her work at healthslips.com.au. By breaking down complex information into easy-to-understand blogs and stories, she aims to empower Australians to make the best choices and an informed decision around private health insurance.

Trudie understands firsthand some of the complexity of private health insurance having moved to Australia from New Zealand and having to navigate a vastly different public healthcare system and health insurance structure.

Trudie holds a Bachelor of Communication Studies (journalism major) from the Auckland University of Technology.

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