2021 Private Health Insurance Premium Increases
Megan Fraser Updated: 25 March 2021
Health insurance rates increase annually on 1 April, and this year is no different. Although each insurer sets a specific increase for the coming year, the average rise for this year is 2.74%. This is the second year in a row when increases have been set to a record low. The 2020 increase of an average of 2.92% is the lowest premium increase since 2001.
Although this is the lowest increase in recent times, this is the second premium increase in 6 months for most people. This is because last years increase was delayed until October because of the Covid-19 pandemic.
When do health insurance premiums increase?
Health insurance prices increase every year on 1 April. If your percentage increase is higher than the industry average of 2.74%, then your health fund must explain, in writing, why this was necessary. The premium you pay usually depends on your chosen health fund, cover type (Hospital, Extras, or Combined), and your coverage level.
Compare health insurance premium increases in 2021
Health Fund2020 Price IncreaseHBF 0.94%Australian Unity Health1.99%Teachers Federation Health2.88%HCF2.95%Bupa3.21%GMHBA3.24%Medibank 3.25%Defence Health3.93%CBHS Health Fund4.26%nib 4.36%
Source: The Australian Government Department of Health (March 2021)
What causes health insurance premiums to increase?
The three most common reasons for premium raises include:
A growing senior populationYoung individuals who cancel their private health insuranceThe ever-growing costs of life insurance
When insurers have a more significant percentage of seniors, people aged 60 and over, premiums generally rise because the people with private coverage tend to require more frequent and expensive medical assistance and thus claim more. These annual price hikes are necessary so companies can continue to cover the costs of benefits, including the salary increases of medical practitioners and the latest expensive innovative technologies.
Source: Australian Government Department of Health (March 2021)
Why the increase is so low this year
The record low rise this year is a direct result of the COVID-19 pandemic. In 2020, most health companies decided to postpone the annual increase until October 2020 and increases were kept minimal. These measures were taken to keep more Australians signed up for private health insurance. This should help to reduce the strain on the public health care system as more people require healthcare because of the pandemic.
7 Ways to save money on private health insurance
Pay your premiums annually before 1 April 2021; then, youâll be able to pay the same price for the next 12 months. Review your policy to determine if youâre still using all the benefits youâre paying for. You might find that you can downgrade your cover and thus pay a lower premium. Compare the type of policy you want between different health funds. Youâre not bound by a contract and can switch at any time. If you have a Hospital policy, consider paying a higher Excess, the amount of money you pay upfront when going to the hospital. A higher excess will usually result in cheaper premiums. Claim your government rebate at tax time. The amount you can claim generally depends on your taxable income, age and family structure (single, couple or family). Reduce your out-of-pocket costs by visiting a provider thatâs part of your fundâs preferred providers network. Keep an eye out for discount and promotions. Health insurance companies compete for your business and will offer exclusive savings deals throughout the year.
Frequently asked questions and answers
Who approves the health insurance premium increases?
Health insurance companies must provide their proposal justifying their need to increase premium first to the Department of Health and the Australian Prudential Regulation Authority (APRA), who then carefully reviews it before sending it to the Commonwealth Minister of Health for approval.
How do you know if your payment is going to rise?
Most health funds should contact members by the middle of March to inform them of the increases in their monthly fees. Your insurer should notify you via post or email. If you are unsure about when youâll be informed of the changes, it may be a good idea to contact your fund.
Will my health insurance premiums go up?
Yes, all insurers have confirmed that premiums will be rising on 1 April 2021. If you think that you wonât afford your monthly premiums once the increases have been implemented, you may want to shop around for a policy that suits your requirements.
Does the 2021 increase match inflation?
No, although this is the lowest premium increase in the past decade at an average increase of 2.74%, it is still higher than the projected inflation rate for 2021. Core inflation, which does not include the cost of food or energy, is projected at 2% for 2021.
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