Aussies could pay hundreds more for health cover in 2025

Comparison website Compare the Market said the federal government was set to announce an industry average adjustment in the coming months.

Any rate adjustment will apply from April 1 next year, meaning the government could announce the change any time from December to March.

And increasing doctor fees, higher health industry wages, and increased costs to insurers are all likely to push premiums higher.

This year’s adjustment was an increase of 3.03 per cent, just over half of the insurance industry’s initial request to the government for a six per cent rise.

Compare the Market economic director David Koch said the increases weren’t “a cash grab from health funds” and that there was a “strenuous process” involved.

“Health funds must first provide details of their proposed premium adjustments to the Department of Health. The Department of Health and The Australian Prudential Regulation Authority consider various factors before passing on the proposal to the Health Minister for final approval,” he said.

“These factors can include an increase in doctor fees, the rising cost of medical equipment, the increased cost of hospital procedures, wages of health professionals, the increased cost of an insurer paying out a claim, and more.”

He said Australians could trust the process, pointing out that the government had previously knocked back increases they found unjustifiable.

And he urged people with health insurance to pay careful attention to what their health fund tells them following the upcoming announcement.

“While this year’s industry average was 3.03 per cent, it’s vital to know that the actual premium change was different between health funds and even individual policies within that fund,” Koch said.

“This will almost certainly be the case again next year and because it’s such a mixed bag, it’s really going to be on Australians to understand what their premium adjustment is, whether there’s a better deal available and if there are ways to save.”

Advice for would-be savers

People facing untenable increases to their health insurance premiums are urged to shop around and see what’s out there.

“When the premium increases come around, don’t just accept your renewal letter. See if you can find a similar level of cover with a lower premium,” Koch said.

He urged people to look at health insurers offering perks and incentives for new clients.

“In the past, we’ve seen everything from waived waiting periods to free coverage for a limited time and access to reward programs offered to customers,” Koch said.

“Insurers can be quite competitive, so use any incentives to your advantage.”

But, he warned, the cheapest policy may not be the best option.

“At the end of the day, you need to find a policy that offers coverage for services and treatments that are important to you,” he said.

“In fact, a basic policy may offer very little or no major benefits at all.”

And on the other side of the coin, more comprehensive policies offer more inclusions, but they might include ones a customer is unlikely to make use of.

“Use the upcoming rate changes to assess your health needs, as you may be able to switch to a lower-level policy that still covers you for the services and treatments that are important to you,” Koch said.

He also said people shouldn’t be afraid of waiting periods with every change of policy.

“Your new health fund will recognise any waiting periods you’ve already served if you’re moving to an equal or lower level of cover,” he said.

“If you are moving to a more comprehensive policy, you would need to serve waiting periods for any upgrades.”

And finally, he urged people to become thoroughly familiar with the terms and conditions of their policy.

“In particular, keep an eye out for any inclusions and exclusions, waiting periods, benefit limits, excess amounts and more. This information can be found in your health fund’s policy brochure or by speaking to a health fund representative on the phone.”