The price of premiums shouldn’t be the only criteria when choosing a health fund. How much money they will pay out is a hidden cost of your policy.
Data from the Australian Prudential Regulation Authority (APRA) reveals the tight-fisted health insurers rewarding themselves with up to 30 per cent of premium revenue instead of passing it on to customers in benefit payments.
The worst offender, according to the data, is Australian Unity Health Limited, which returned only $7 out of every $10 members paid to the group.
Australian Unity Health Insurance chief executive Rebecca Windsor defended her company to the Herald Sun.
Pandemic catch-up
She said the 30 per cent margin was due to a timing difference between the release of funds kept in reserve to cover any pandemic claims catch-up and the timing of the savings being returned to members, including the recent deferral of the 2023 premium increase to 1 April 2024.
However, figures from 2021-22 show Australian Unity Health Insurance paid out only 77 per cent of benefits.
In 2020, following the outbreak of COVID-19, the Australian Securities and Investment Commission (ASIC) and APRA directed insurers to set aside money to ensure they would have enough funds to pay for procedures that were deferred rather than cancelled during the pandemic.
Other funds with low returns to members were Cessnock District Health Benefits Fund Limited (71 per cent); National Health Benefits Australia Pty Limited (74 per cent); Health Care Insurance Limited and Reserve Bank Health Society Limited (both 75 per cent).
Of the bigger funds, nib had the poorest return to customers with 70 per cent.
Bupa paid back 81 per cent and Medibank 83 per cent.
Mutual fund HCF and HBF delivered the highest amount of all funds – 88 per cent.
Other high achievers were Police Health (87 per cent), Teachers Health (86 per cent) and CBHS, CBHSCH and St Lukes Health (all 84 per cent).
National averages
The national average return was 83 per cent.
The results show consumers should not just consider premiums when choosing a health fund, but also the returns to patients.
Compare Club head of research Kate Browne says navigating the health insurance market can be a complicated journey, but you don’t have to do it alone.
“Health insurance is a complex product, as complex as human beings, so it’s critical if you are paying for it that you are getting the best possible value and that you have cover that suits your needs,” said Ms Browne.
“The best way to do this is to speak to an expert who can look at a range of insurers and covers to make sure not only are you not paying too much but you are getting the best possible value.
“It’s also a good idea to review your health insurance every two to three years as your lifestyle and health needs change, as well as checking you are on the best possible deal. If you aren’t, it’s easy to switch and save.”
Do you check the benefit returns when choosing a health insurer? Why or why not? Why not share your experience in the comments section below?
Also read: Law firm claims insurers are punishing loyal customers
Disclaimer: YourLifeChoices is part of Compare Club Media.
