It's that time of year again, when all health funds prepare to increase their premiums on April 1 to account for the rising cost of health care. You’ll no doubt hear a lot about rate rise percentages, industry averages and ‘weighted average increases’. It can be very confusing! Of course, it's tempting to compare funds purely based on their published weighted average rate rise in a given year; however, to accurately review or compare your cover, it’s important to look at the details of your specific policy.
HIF members are being notified of their individual increases for 2019, however we're aware that this topic often causes confusion each year. To help combat that confusion and ease any concerns you may be having, here's an all-you-need-to-know guide to our upcoming premium increase.
Why do premiums go up each year?
Each year on April 1, the health insurance industry (all funds inclusive) raise premium rates on existing products. A number of factors lead to these increases - rising health related expenses, increased doctor charges, medical equipment and technology, increases in claims frequency, and more.
Why are health costs rising more than the Consumer Price Index (CPI)?
The annual health insurance premium increase reflects the rising cost of healthcare overall. The Consumer Price Index only reflects price increases for a pre-defined range of goods including food and clothing, and is currently held down by the falling oil/petrol prices. As CPI does not reflect an increase in private healthcare usage, it simply can’t be compared to a health insurance premium increase.
Does HIF profit directly from premium increases?
No. Unlike some of our competitors, HIF is a member-owned, not-for-profit company. This means that the company has no shareholders to report or distribute profit to. Any net operating margin that is earned as a result of this rate rise will be directly added to the fund’s reserves to ensure the future payment of claims and reduce pressure on any future premium increases. The Board of HIF, whose role is to represent the best interests of members, would not be acting responsibility if rates were not increased at this time.
Why is my premium increasing by more than HIF's average percentage?
The average percentage increase is an average across all policies, states and territories, but each product is priced individually depending on the increasing health care costs associated with that product in each state or territory. For that reason, some of our premium increases are less than the average while others are more – depending on the costs associated with the particular product or location. It's important to note that this year’s adjustment to the Federal Government Rebate will also result in a reduction of the discount you receive off the price of your policy by the Government. The erosion of the rebate is driven by the Government and is not a decision implemented by HIF. It’s also important to note that the rebate does not apply to any Lifetime Health Cover Loading (LHC), effective from 1 July 2013.
Can I remove cover for something I know I won't use. For example, Maternity services?
At HIF, we understand that there are services (such as maternity) that our members would like to exclude from their policies, while still retaining services like cardiac and joint reconstruction. With this in mind, we've introduced a no-maternity cover option as part of our very first combined policy - 'No Maternity Hospital with Mid Extras Combo'. It's important to remember though, that whilst commonly used services like maternity are listed in our hospital cover comparison table, our hospital policies will cover you for thousands of different treatments and procedures - essentially, any service that has a Medicare item number attached and isn't specifically listed on your policy as a restricted or excluded service.
How will the premium increase affect me if I’ve paid my contributions in advance?
If you pay your premiums prior to April 1, you will enjoy rate protection for that time, including other changes that may impact your premium after April 1 such as the reduction of the Federal Government Rebate. That means that you will pay your premiums at the current rate for the duration of that upfront payment, which can be 12 months worth of premiums, 6 months, 3 months, 1 month or one fortnight. If you choose to make an upfront payment of 12 months, you will also receive an additional bonus discount* of 4% (or 2% for six monthly payments). To pre-pay your premiums, call us Monday to Friday on 1300 13 40 60. Please note: Discounts are not available in conjunction with any other offer.
The Federal Government adjusts the Rebate every year – what impact does it have on my premiums?
The Government adjusts the Rebate every year according to a calculation based on the Consumer Price Index (CPI) and average annual premium increase. While this doesn’t change your premium amount, it does mean that if you’re claiming the rebate you will need to pay more because of the rebate adjustment.
Why do some funds increase by more or less than the Minister announces?
Each fund has to take into account a number of things when they submit their proposed increase to the Minister. These include:
- The number of our Members making a claim
- The types of claims that our members are making
- Increased charges from hospitals and healthcare professionals
- Other health insurers also have to take into account what profits their shareholders are expecting, but at HIF we don’t have shareholders. We’re only here for our Members.
I’m an HIF member. By how much will my standard contribution increase and when are the new rates effective from?
The exact details of how the premium increase will affect you personally will be communicated to you in writing prior to April 1.
I’m currently with another fund but I’d like to switch to HIF. What do I need to do?
Switching to HIF is easy as. Simply call us on 1300 13 40 60 or join online (it only takes a few minutes). During the online application process, we’ll ask for the name of your current fund, your previous member number and your authorisation to contact your previous fund on your behalf - then we do everything else! No forms to fill in, no paperwork, nothing. We’ll also honour your previous length of membership, meaning that you receive the highest benefits applicable to your new level of cover, and you don’t have to re-serve any unnecessary waiting periods.
Important points to consider when reviewing your new post-April premium:
- Don’t focus solely on the percentages: It doesn’t tell you how much your individual policy has increased by. The weighted industry average is just that – an average.
- Focus on value for money: If you plan to compare your HIF cover with other funds, consider all the really important factors - benefits, annual limits, excesses and customer care.
- Consider past performance: If you want to compare different health funds’ rate rises, add up the last 5 to 10 years’ worth of rate rises – this will give a clearer idea of who’s most competitive. Don’t forget other important figures. It isn’t always easy to compare like-for-like covers – many similar covers differ in various ways – but focus on the actual price of similar covers, not the rate rise, versus what you’ll get back when you need it.
- Look at claim-to-premium levels: What percentage of premiums does a health fund pay back to its members in benefits? This one is very important. It tells you a lot, not only about value for money, but also about the priority of the health fund - you. For example, did you know that in 2017/18, HIF paid out a huge 90c in benefits for every $1 we received in premiums compared to the industry average of 86 cents?
Want to avoid this year's premium increase?
If you want to save money and delay when you have to start paying the new premiums, you can! All you have to do is pre-pay your premiums before April 1 – and you can pre-pay up to 12 months in advance. To pre-pay your premiums, call us Monday to Friday on 1300 13 40 60. And remember, when you pay on an annual basis, you'll automatically get a bonus 4% discount (or 2% for half-yearly payments).
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