For many Australians, having health insurance is a cornerstone of both their financial and personal wellbeing, thanks in large part to how it protects you against unexpected medical costs and gives you peace of mind you’ll always be taken care of.
But at the same time, far too many people treat their health insurance as a set-and-forget purchase. They can end up missing out on better coverage or savings on their premiums. That’s why reviewing your health insurance plan every year is a smart step to get the most bang for your buck.
Why does reviewing your health insurance matter?
Life is full of big changes – from marriage to starting a family, getting older or switching careers – and your health needs will change alongside these milestones. A policy that worked for you a year ago might no longer be able to give you an adequate level of cover, or it might include features you don’t need to use anymore. If you don’t reassess your plan every so often, it will most likely result in unnecessary expenses or gaps in your cover.
Beyond your personal circumstances, the health insurance landscape is constantly changing. Insurers update the cost of their premiums every year, they adjust their benefits and they sometimes introduce new plans to stay competitive. If you don’t stay on top of these changes, you could end up paying more than you need to.
Top 3 reasons to review your health plan annually
1. Changing Life Stages
Your health insurance needs will evolve as you move through different stages of life:
- Starting a family: Pregnancy and obstetric services have a waiting period of 12 months, so if you’re planning to have children then upgrading your plan early is a must.
- Raising kids: Families will need plans with robust extras cover for dental, orthodontics and optical, which are commonly used for kids.
- Empty-nesting: Once your children are no longer dependents, you can tweak your policy to get rid of any unnecessary – and costly – benefits, such as pregnancy cover.
- Retirement: Seniors can benefit from plans that include cover for age-related health concerns, such as cataract surgery or joint replacements.
Bottom line? Reviewing and adjusting your policy means it will always reflect your current life stage and save you from unnecessary expenses for services you no longer need.
2. Rising Cost of Living
With inflation and the cost of living on the rise, the reality is that finding ways to reduce unnecessary expenses is essential. Many Australians overpay for health insurance by holding onto their policies that include unused benefits. If, for example, you’ve stopped using services like acupuncture or orthodontics, switching to a more suitable plan could save you hundreds of dollars every year.
Moreover, extras cover plans with fixed benefits can be more cost-effective if you use services like dental or physiotherapy sparingly. Comparing policies will help you identify the plans that best align with your budget and healthcare needs.
3. Tax and Other Financial Incentives
Health insurance isn’t just about medical cover – it also impacts your tax obligations. For higher-income earners, having private hospital cover can exempt you from the Medicare Levy Surcharge (MLS), saving you between 1% and 1.5% of your taxable income. For the 2024-25 financial year, singles earning over $97,000 and families earning over $194,000 can greatly benefit from this exemption.
Then there’s the Lifetime Health Cover (LHC) loading, which penalises you if you delay taking out hospital cover after turning 31. By adding 2% to your premiums for every year you go without coverage, LHC can make late entry into private health insurance prohibitively expensive. Putting an annual review into your calendar can help make sure your policy continues to meet these financial thresholds.
Portability
Don’t re-serve waiting periods when you switch to a new health fund or policy
“John was immediately covered for a hip replacement in private hospital because he had already served his waiting periods for joint replacements on his old policy”
How to tackle your annual review (2 steps)
Ready to do a thorough review of your health insurance plan? It doesn’t have to be overwhelming. Breaking it down into manageable steps can make the process very straightforward.
1. Look over your current policy in detail
Start by understanding exactly what your current plan covers. Look at both the hospital and extras cover to see:
- Services you regularly use.
- Benefits you rarely or never claim.
- Annual limits and out-of-pocket costs for commonly used services.
Having done this, you’ll know exactly what you’re paying for and what you might be missing out on.
2. Compare policies and providers
Good news: the Australian health insurance market is extremely competitive, with insurers regularly updating their plans. Take advantage of this opportunity to compare policies and look into alternatives that might better match your needs. Pay attention to:
- No waiting periods: Plans that let you access benefits straight away can be a great choice if you’re switching insurers.
- Private health insurance extras cover: Look at policies that align with how often you use your insurance, such as those with high-value benefits for optical, dental or physio.
Comparing health insurance online or setting up a quick consultation with a health insurance advisor can help you figure out the best options.
When to consider switching health insurers
Sometimes, reviewing your policy can reveal that your current insurer no longer has the best deal around. Here are a few situations where switching might be advantageous for you:
- Better value: Another provider has comparable cover but with lower premiums.
- More benefits: A different plan that has higher limits (annual and lifetime) or extra services that you’ll be likely to take advantage of.
- Special offers: Promotions like no waiting periods for extras or discounts for new members can make switching worthwhile.
Portability rules in Australia guarantee that if you do end up switching to a new fund, you won’t have to re-serve waiting periods for equivalent benefits. This makes changing insurers a low-risk way to improve your cover.
4 benefits of annual reviews
By reviewing your health insurance plan annually, you can:
- Make sure your plan covers the services you need for your current stage of life.
- Get rid of any unnecessary extras or downgrade to a more cost-effective policy.
- Stay eligible for MLS exemptions and maximise any government rebates you might be entitled to.
- Stay informed about policy updates, premium increases, new benefits and more.
Stay Informed, Stay Protected
Health insurance is an essential investment, but like any financial commitment you’ll need to pay regular attention to make sure it continues to serve you well. Taking the time to review your health insurance plan at least every 12 months means you can adapt to new life stages and tweak your cover as you go to save money over the long term.
Take charge of your health insurance today and enjoy the peace of mind that comes with knowing your plan truly works for you. Speak to the team at Fair Health Care Alliance to start comparing health insurance.
