Australians who have private health insurance may have noticed that their annual premium increase has yet to be advised. While premium increases take effect on 1 April each year, the increase has previously been announced in January or early February.
With only a week left until March, policyholders might be wondering if this year’s delayed announcement spells good or bad news. The increase percentage is negotiated each year between the industry and the federal government.
Insurers this time around requested increases averaging 6 per cent, but this was rejected out of hand in December. Health minister Mark Butler said then: “I’ve written to every private health insurer, directing them to have another go.”
Mr Butler said insurers needed to put forward “a more reasonable figure”, especially in light of current cost-of-living pressures. Any proposal should consider “years of record profits and the declining proportion of premiums they return to customers”.
While the industry would not have expected to receive approval for their 6 per cent request, it stands as somewhat of an outlier. The last four approved annual health insurance increases have all come in at under 3 per cent. The last increase of over 6 per cent came in 2015, when Tony Abbott was Australia’s prime minister.
A delayed health insurance announcement – what does it mean?
As well as creating uncertainty among policyholders, the delayed announcement will put pressure on the industry itself. One well-placed industry source said the announcement may not come until as late as 1 March. Health insurers must give members a minimum of 30 days’ notice of a rate change. A 1 March announcement would make that near impossible.
From a member perspective, it would also leave very little time to consider options and seek a better deal. Given that the trigger for these considerations is the receipt of renewal notifications, that time frame will likely be further squeezed.
What should members do?
Compare Club’s head of research Kate Browne says members should take a pre-emptive approach. “Our message to people is to act now and get their health insurance reviewed as a priority. If you haven’t reviewed your health insurance in the last two years, there is a good chance that you are missing out on getting the best possible value from your insurer. There’s plenty of competition in the market right now for your business, but do it now.”
While the final rate of increase is expected to be under inflation, it could be as high as 4 per cent. It may well be less, too. Either way, reviewing your health insurance now is likely to put you in a good position to spot a good deal.
Among those available now are offers that include up to eight weeks free. If this also offers better rates than your current health insurance, you could well make a double saving.
We’ll likely be waiting another week before learning what the health insurance increases will be, but consumers can still be prepared. Kate Browne’s advice is pertinent. “With no confirmation … yet, it’s likely there is going to be a last-minute scramble.”
The best time to act to lock in a better rate, she said, is now.
Were you aware of this year’s late health insurance increase announcement? Will it have an impact on you? Let us know via the comments section below.
Also read: Flash Poll: Is private health insurance really worth it?
Health disclaimer: This article contains general information about health issues and is not advice. For health advice, consult your medical practitioner.
