How to skip next month’s premium

How to skip next month’s premium

Collective image of the health insurance companies' logos Bupa and Medibank

Health insurance policy varies greatly, so it is always important to make sure that your insurance works best for you. (Source: Getty)

‘She’ll be right’ is meant to sum up us as Australians. But forget that when it comes to money today.

With the cost of everything (and especially mortgage repayments) going through the roof, “she wants to be right” turns into “she wants to be responsible”… and the stern Aussie.

Well, it’s a health fund hack that means the next month will – in practice – be free.

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And you don’t actually need to switch funds; it’s as easy as flicking a switch.

The most wasteful, expensive cover

Hundreds of thousands of Aussies a year fail to turn off cover for obstetric and reproductive services. Sure, when you’re at this stage of life and planning a family, that’s key.

But if you’re done with children, by removing this type of cover, you can shave an average of $500 each year from your premium. In other words, the next month can be free. And a whole month every year thereafter.

This is possible because many policies operate on a sort of pick-and-mix basis, where you can switch off and on special conditions.

For example, you may be able to turn off hip replacement surgery, and this may well be a good idea if you are young and healthy. The same often applies to childbirth-related services … and also IVF help to get pregnant.

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The problem is that some providers have cynically lumped together incongruous medical conditions so that turning off one means you turn off others as well.

An example could be a treatment bucket that includes obstetrics AND knee replacement surgery, which can cover that on a risk-reducing basis you should not be excluded. If this is the case with your fund, it’s a pretty strong trigger to look at taking your business elsewhere.

Why you can save even more with a switch

The thing is, while a savings of around $500 would be nice, you could very well get a $2,000 discount. It is the typical difference between similar policies, the cheapest and the most expensive.

Of course, you don’t want to be cheap and nasty, and it’s important to check that the alternative policy is decent before forgoing things like loyalty bonuses (orthodontics often attract these and are expensive).

But it is also important to remember that in order to keep the health insurance market competitive, you do not need to restore waiting periods for which you have already qualified. So you are free to leave.

Where to look for the best health fund

It is an excellent government run website that lists all the health funds and compares them with a click.

At private you choose everything you want in your insurance, from the people covered and the cover you want, to deductibles and potential co-payments. And then the most valuable options will appear.

If money is even tighter than that, you can pull the other two levers mentioned, but you have to do it carefully.

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This is because singles earning more than $90,000 or couples earning more than $180,000 pay a penalty of as much as a 1.5 percent Medicare Levy surcharge … if they don’t have private health insurance.

And there’s a big caveat: If you want to get caught up in this, don’t drop your cover. You will actually pay the same amount, but will not have the additional health protection.

You are still exempt from paying the Medicare Levy surcharge if you increase your deductible as high as $750 for singles or $1,500 for couples. Beyond this, you will still be caught by the tax even if you maintain cover.

Now, the other lever to pull is to accept a “co-payment”… but I don’t love them. You usually only pay the deductible once a year, regardless of the number and duration of hospital visits, and not for children.

With a co-pay, you agree to reach into your own pocket for perhaps $50 a night, for each night in the hospital. So out-of-pocket can end up being huge.

Don’t neglect your private health – remember that it also gives a tax discount. Instead, get a big, instant discount.

Nicole Pedersen-McKinnon is the author of How to Get Mortgage-Free Like Me, available at Follow Nicole on Facebook, Twitter and Instagram.

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