Need to know
- Most private health funds have announced that they'll be delaying the premium increase in 2023.
- If you're able to prepay for 12 months before your fund increases the price, you can make some good savings and delay the 2023 price increase
- CHOICE experts say it's also a good time to review your health insurance to see if you can get a better deal
CHOICE health insurance experts are encouraging Australians to take one simple step to delay any price increase to their health insurance premium until as late as 2025.
Usually, we advise that an excellent way to save money is to prepay your annual premium before 31 March to 'lock in' your current premium. But this year, there's a way you can save more money by delaying the price increase even further, and it could potentially save you hundreds.
Most private health funds have announced that they'll be delaying the premium increase in 2023, in some instances to as late as November.
Two big insurers are set to increase their premiums on 1 October. If you're with one of these insurers, now is the time to prepay your annual premium to lock in lower pricing:
- Bupa – 3.39% premium increase
- NIB – 2.72% premium increase (this includes Qantas Health).
The other three big insurers have already increased their premiums. If you're with one of these insurers and you haven't already prepaid, it's too late to lock in a lower premium:
- HBF increased its premiums by 4.49% on 1 April (including CUA).
- Medibank increased its premiums by 2.96% on 1 June (including AHM).
- HCF increased its 3.33% premiums by 1 September 2023 (includes RT Health.
How to delay your premium increase until 2024
Your health fund will let you know your policy's actual increase before the increase takes effect. If you can afford to pre-pay a full year's premium, you can lock in 12 (or in some cases up to 18) months of cover at that year's prices.
How to take advantage of this simple money-saving hack
- Check if your fund is delaying its premium price rise this year.
- Find out how long you can prepay for. NIB allows 13 months Bupa allows you to prepay 12 months. Some smaller funds may offer similar.
- Find out if you get a discount for prepaying and for paying by direct debit. NIB offers a 4% discount for direct debit. Bupa doesn't give a discount for direct debit or prepayment of your premium.
- Prepay your premium before it increases, and don't leave it until the last minute as some funds require prepayment by a certain date. Check with your fund to find out.
But wait! Now's a good time to review your cover
Before you lock yourself into your current fund for the next 12–18 months, now is a great time to do a quick health insurance audit and review your current cover to make sure you're not paying for things you don't need. Could you downgrade to a cheaper policy or get a better deal at another insurer?
The same cover with a different insurer can be hundreds of dollars cheaper. The largest savings are available for Gold policyholders, but even if you have a Silver or Bronze policy, you'll probably be able to find a cheaper deal that will give you at least the same cover. Our experts have found that in some cases you could save up to $1300 per year.
CHOICE tip: Before prepaying your premium, it's worth comparing health insurance policies and seeing how your current premium fares against the top policies for your selection.
Health insurance premium increases in 2023
Health insurance premiums will increase in 2023 by an average of 2.9%. This is only slightly higher than last year's 2.7% average increase, but some funds will have bigger price hikes than others.
The lowest 'increases' this year are HCI (Health Care Insurance), which is reducing premiums by an average of 0.09%, and Police Health, which will leave premiums the same on average.
CBHS Corporate has the largest average increase for the third year in a row with a 5.38% price hike across its policies.
More people will get the private health insurance rebate in 2023
As of 1 July 2023, more people will receive the government rebate as the income thresholds have changed. Before 1 July only people earning up to $90,000 as a single or $180,000 as a couple received the full rebate. Those income levels had stayed the same since the 2014–15 financial year.
Now a single person earning up to $93,000 a year (or a couple, family or single parent earning $186,000) gets the full rebate on their private health insurance premium (hospital and extras).
For those earning more than $93,000, the rebate steps down incrementally until it reaches 0% for people earning over $144,000 (or families, couples or single parents earning over $288,000). People aged over 65 receive a higher rebate.
The rebate is usually paid by way of reduced premiums.
How is the rebate calculated?
While the average premium increase gets a lot of attention, the cost of your premium normally goes up for another reason: a reduction in the private health insurance rebate. But like last year, this year the rebate stays the same, as the premium increase was lower than usual.
A cut of the rebate happens depending on how much premiums increase compared to the rate of inflation – the bigger the difference, the more the rebate goes down. As there was no difference this year, the rebate stays the same.
The most recent cut to the rebate was in 2021 when it dropped by about half a percentage point to 24.6% for people on the base tier income.
The rebate amount is recalculated every year on the same day premiums go up. It was frozen for 12 months at the beginning of 2020 due to the COVID-19 pandemic and in 2022 and 2023 there was no change as the premium increase was smaller than the rate of inflation.
Stock images: Getty, unless otherwise stated.
