Use it or lose it: Making the most of your health insurance is more important than ever

Millions of us just copped another price hike, this time on our health insurance. Three of the big four funds – Bupa, HCF and NIB – increased premiums on 1 November after postponing these hikes from April because their customers were claiming less during the pandemic.

The other major health fund, Medibank/AHM, was set to do the same until a hacker accessed the personal details of all 4 million-odd customers, so they pushed the premium hike back to 16 January next year.

If you want maximum bang for your buck, you need to claim as much as possible on your health insurance policy.Credit:Isabella Porras

At an average of 2.7 per cent, this year’s health fund hikes were the lowest in 21 years. But such is the cumulative impact over those 21 years that if you had a $2000 policy back in 2001, it would now cost over $5900.

And of course, health insurance is not the only bill going up – it comes on top of power bill increases this year of around 20 per cent, grocery inflation of around 10 per cent and petrol returning to over $2 in the past fortnight.

Fortunately, there’s still plenty of money you can save on a health insurance policy – for example by shopping around for cheaper cover, accessing switcher’s deals that give you up to 12 weeks free, and tweaking your policy to remove cover you no longer need.

But it’s also important to use it. If you want maximum bang for your buck, you need to claim as much as possible on your extras policy, if you have one.

There are two types of health insurance policy, and they’re really quite different to each other.

The hospital policy is like a traditional insurance policy – it covers you for a large expense (surgery in a private hospital) that you might not be able to cover from your savings.

But the ‘extras’ policy is more like a budgeting tool. You pay the health fund an amount each month or year and in return, you get a portion back each time you visit an allied health professional such as a dentist, physio or optometrist.

At the end of each year, our benefit limits reset and we lose whatever we haven’t claimed – it’s a ‘use it or lose it’ situation.

It’s entirely within our control whether we claim the maximum amount from these policies. Unlike major surgery, it’s mostly up to us when we go to the dentist, get new glasses or book a remedial massage.

So the way to get value from these extra policies is to make a lot of appointments.

I don’t know what proportion of health fund profits come from hospital versus extras policies, but I’d hazard a bet that the extras policies are where the cream is. That’s because many of us spend hundreds of dollars on an extras policy each year, but we don’t claim that same amount back.

It’s easy enough to check if you’re one of them and if so, maybe you should get rid of that part of your insurance (that won’t have any impact at tax time – it’s only the hospital policy that has implications for how much tax you pay).

But if you want to maximise the value from your extras, it’s crunch time right now because most funds re-set the limits on 1 January – and that creates a bit of a logjam at dentists, optometrists and elsewhere in December.

Remember this handy little trick: if you have any prescription at all, even 19:20 vision, you can claim a pair of prescription sunglasses on your extras policy.

Sami Yalavac, managing director of Bupa Health Services, told me their optical appointments are 30 per cent above the yearly average in December: “The end of the year gives people a reminder that they need to book their regular eye test, look for a new pair of sunglasses or just refresh their look for the warmer weather.” So make those appointments ASAP.

Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. Investors should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.

Joel Gibson is the author of KILL BILLS! The 9 Insider Tricks you Need to Win the War on Household Bills. Catch his money-saving segments on Nine Radio, TODAY & Twitter @joelgibson.

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Use it or lose it: Making the most of your health insurance is more important than ever

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