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2019 is the year to get private health insurance, here's why

16 January 2019 - 1:30pm

This year's private health insurance premium increase will be the lowest in 18 years.

For consumers this is great news, but knowing where to look to find real savings isn't always straight forward. This article will examine the reasons behind the annual premium rise, explain why this year's is comparatively small, and show you why 2019 is the perfect year to invest in a private health insurance policy.

Premiums rise every year, but 2019's increase is lower than recent times.The lowest premium increase in 18 years makes 2019 a great time to invest in private health cover.

Why do health insurance premiums increase every year?

There are a number of reasons behind the annual round of premium increases:

1. Rising costs of providing healthcare - The world of medical technology is constantly evolving, and while this has benefits in improving treatments, it comes at a cost. Indeed, the last decade has seen spending on healthcare rise by roughly 50 per cent, according to the Australian Institute of Health and Welfare.

2. Increasing numbers of claims - Australia's population is ageing, so it's no surprise that we're seeing more people claiming on their health insurance policies than ever before. In fact, 2018 was a record year for sums paid by health funds on behalf of their members, with a total of $20.43 billion spent, according to Private Healthcare Australia. This trend looks set to continue, with 2018-2019 expected to see an increase in claims of $500 million dollars. 

While no one likes spending more on premiums, these increases are the only way that health funds can stay in business and continue to provide their members with the best possible health cover.

Premiums rise as the costs of providing health care do.Constantly improving medical technology is one reason for annual premium increases.

Why is the 2019 premium increase lower than previous years?

If the premium increases are necessary why is this year's 3.25 per cent rise, effective from 1 April, lower than recent years?

In fact the industry weighted average increase has been decreasing since a high of 6.2 per cent in 2014, according to Department of Health statistics. However, 2019 marks somewhat of a landmark year for private healthcare in Australia with the introduction of a number of important governmental reforms - these are largely to thank for the reduced premium increase. 

The private health insurance reforms were first announced in 2017, and cover a wide range of policy changes. Among these are three which have key impacts on premium increases:

1.  Discounts for under 30s

From April 1, 2019 insurers have the option of offering premium discounts to individuals under 30 who are purchasing hospital cover for the first time. The discounts are strictly age-based, with incremental reductions of 2 per cent for every year that someone is aged below 30. For example, a 29 year-old can access the minimum 2 per cent off the price of their premium, while a 28 year old can expect 4 per cent, and so on. The maximum discount of 10 per cent is available to those aged between 18 and 25. 

HICA can help under 30s lock in discounted premiums that can last for nearly 20 years.

Crucially, however, offering these age-based discounts isn't obligatory for health funds. In addition, these savings won't be automatically offered to young people who already have policies in place. Having the objective expertise of an insurance consultancy such as HICA is the easiest way to review your options, and lock in discounts with a lifespan of nearly 20 years. 

Age-based premium discounts are one reason for the lower overall rise.Young professionals can benefit from premium reductions for under 30s.

2. Increase in maximum excesses

The reforms will also provide consumers the opportunity to select products with higher excesses than before. By accepting these excesses, consumers have access to lower premiums. For families and couples, the maximum available excess will rise from $1,000 to $1,500, and from $500 to $750 for singles. 

3. Reductions in the cost of prostheses

This reform is already in action, and has shown its efficacy as a cost saving measure. Figures from The Department of Health have shown insurers saved $188 million in the 2018 premium year, which in turn places downward pressure on premium increases for consumers. 

2019 is a time of great change, but also great opportunity for consumers interested in private health care in Australia. Taking the time to review your cover with the help of the experts at HICA is the simplest way to establish whether your policy is providing the best cover at the best price, or if there are better options out there. To find out more, get in touch with our team today.