For most single mums, balancing the budget is part of our DNA. But over the past six months, chances are it’s been even harder than normal for you to keep on top of things financially. It might be that your finances have been significantly impacted by COVID-19 and making ends meet is harder than ever, or that you simply have had even less time to budget given the stresses of working from home or schooling from home (or juggling both!)
If you have experienced a reduced income in recent months, then you may have already been questioning the cost of your private health insurance as you look for ways to ease the financial pressure. If you’ve been lucky enough not to be impacted financially by COVID-19, chances are the ongoing economic uncertainty still has you looking closely at where you might be able to cut back on your expenses….
So, in this context, the last thing you probably want to hear is that health insurance premiums are set to increase on October 1st. You may be shaking your head thinking, ‘wait a minute, didn’t that already happen this year?’ Well no, although its understandable you might be confused. Health insurance premiums normally rise on April 1st each year but just days out from this year’s increase, health funds announced they would delay the 2020 increase for at least six months to reduce the financial pressure due to COVID-19. Unfortunately, that grace period is now almost up and many funds are planning to increase their premiums on October 1st instead.
There is no way to sugar coat a cost increase, so let’s run through what you need to know to avoid being taken by surprise by a higher than expected premium deduction next month.
How much more will I be paying?
First things first, not all health funds are planning to increase premiums on October 1st. Some funds – including HBF, AIA, Health.com.au & TUH – have announced they are delaying the increase until 2021. Other funds – including Bupa & NIB – have announced they are waiving the 2020 premium increase for any policy holders currently receiving either JobKeeper or JobSeeker, while Medibank is offering up to 50% off premiums for six months to any customers on JobKeeper or JobSeeker.  Most funds – regardless of whether they are increasing premiums or not – are offering some sort of hardship assistance to customers financially impacted by COVID-19. So if you’ve lost your job or your income has reduced due to COVID-19, make sure you reach out to your fund to see what support may be available.
While not all funds are increasing prices for all customers, many policy holders are likely to see their premiums increase from October although by how much depends not only on your fund but your individual policy type. Keep in mind that while your health fund should get in touch to let you know if your policy is increasing, these days its not always obvious. Gone are the days when funds routinely notified you via snail mail of any rate increase, with most funds communicating electronically via email(which can be all too easy to miss).
My policy is increasing – now what?
Get on the front foot and find out if your single parent policy is set to increase from October 1st. If the answer is yes, then now is the time to compare and see if you might be able to find better value with a different policy or provider. As a busy single mum, it’s very easy to put ‘comparing health insurance’ in the ‘too hard basket’ (or simply the ‘I don’t have time for it basket’). But comparing health funds doesn’t need to be hard work. A comparison service like
iSelect can compare your current policy against other options to see if you could get better value from one of the range of funds they compare.
And saving money doesn’t mean sacrificing peace of mind. While you may decide to downgrade your level of cover to save, many customers are able to find a similar level of cover but for a cheaper price with a different fund. A recent survey of iSelect customers found that 67% told us they are paying less as a result of switching through iSelect, with almost half (47%) getting the same or better value for a cheaper price.  Whether it’s getting the same for less, or more for same, it can definitely pay to shop around on your health insurance.
But apart from shopping around for better value, there are a few other ways to reduce the cost of your health insurance. Here are iSelect’s top 5 tips for getting better value ahead of October 1.
1. Review your policy
Take a close look at your policy and make sure you aren’t paying for things you no longer need. This is particularly important if your health needs or life stage has changed.
2. Increase your excess
If you think you are unlikely to go into hospital in the near future, then increasing your excess on your hospital cover is likely to bring down your overall premium without compromising your level of cover. For families, opting for the maximum excess of $1500 can save up to $350 a year off your premiums.
3. Extras – do you still need them?
Many of us have been unable to get much value out our extras in recent months due to COVID-19 restrictions on many extras services. If money is tighter than normal, then consider dropping your extras cover, even just temporarily as dropping extras won’t result in any tax penalties or extra loadings that dropping your hospital cover may incur. You could split your extras and hospital policies between different providers or opt for a flexible extras policy to get more back on the services you use the most.
4. Pre-Pay and save
If you are in a position to do so, pre-paying your annual premium upfront for the full year before October 1 will lock in your current rate and help you avoid the 2020 premium increase for another 12 months.
5. Look for payment discounts or freebies
Some funds offer a discount for paying by direct debit rather than credit card while others have special introductory offers such as waiving some extras waiting periods or several weeks free. Others offer free dental check-ups and/or waive excesses for kids going into hospital.
 Source: February 2020 survey of just over a 1000 (1103) customers who recently switched private health insurance policies and/or providers through iSelect
Should I simply cancel?
It’s understandable that many mums might be thinking of cancelling altogether, especially if money is tighter than normal. But make sure you are aware of the implications of dropping private cover. Not only will you lose the peace of mind that comes from knowing your kids can have access to the best possible care in the event of something unexpected happening, but dropping your hospital cover may also result in tax penalties via the Medicare Levy Surcharge (MLS) and longer waiting periods for elective surgery in the public system, especially due to the expected COVID backlog. Also, if you decide to re-join down the track, you may have to pay higher premiums due to Lifetime Health Cover (LHC) loading, along with re-serving waiting periods which can be up to 12 months.
Cancelling your cover should be your last resort, especially given the hardship support currently available. Don’t cancel without first taking the time to compare your options and exploring other ways to reduce your premiums such as dropping extras, downgrading your level of cover or increasing your excess (even if just temporarily until your budget hopefully recovers).
In these uncertain times, the peace-of-mind private health cover provides is arguably more valuable than ever but right now, a dollar saved is a dollar earned. So take the time to shop around before October 1st to make sure you and your kids still have the appropriate level of cover but at a price to suit your budget.
Disclaimer: iSelect does not compare all providers or policies in the market and not all policies or special offers are available at all times, through all channels or in all areas. Not all policies available from our providers are compared by iSelect and due to commercial arrangements and customer circumstances, not all policies compared by iSelect are available to all customers. View our full range of providers via our website.