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Health Insurance Premium Increase FAQs

Find out what you need to know, from why premiums increase and how it works to how to save on your premium.


How rate review works

All Australian health funds review their premiums every year, taking into account the rising cost of healthcare services. But what does that mean? Things that contribute to the rising cost of healthcare include our aging population, a rise in chronic illnesses, a rise in the cost of medical procedures due to advancing technologies, and more people using the healthcare system.

As a not-for-profit health fund, the only reason we increase premiums is to ensure we can continue to cover the cost of claims and provide service to our members.

To calculate a premium change, we use claims and service cost data from previous years to estimate the amount we’ll need to spend in the coming year. Premiums are then adjusted for each type of cover in each state, so we can safely cover those predicted costs.

Premium increases aren’t calculated at an individual member level. Your premium change just depends on the kind of cover you have and the state you live in. Community rating legislation means everyone with the same cover will have the same premium change.

Your final premium amount each year will be a combination of the cover's change, any discounts (like a direct debit or corporate discount), your Lifetime Health Cover loading, and your Australian Government Rebate on Private Health Insurance.

The way health funds calculate premium increases doesn’t go unchecked. The Federal Health Minister’s office as well as APRA (Australian Prudential Regulation Authority) are required to sign-off on all average premium increases, and have the final word on whether the proposed increases are reasonable.

You’ll be notified of your new premium by letter or email in February.

HBF's publicised 1.98% increase is the average change across all our health cover options. As this is an average, your actual premium could change by more or less than 1.98% depending on the type of cover you hold.

Your premiums go up even when you don’t claim because they aren’t based on your personal claiming behaviour.

In Australia, health insurance works differently to other types of insurance. With things like car or home insurance, your premiums go up depending on how likely you are to claim, or every time you do claim (called ‘risk rating’).

Health insurance is completely different: your premium won’t increase or change as a direct result of you claiming, or even how likely it is that you will claim.

That’s thanks to community rating, which is legislation that basically says the price of your health insurance shouldn’t depend on how healthy you are (or change based on any other personal traits) – it should cost the same for everyone.

Community rating protects all Australians by making sure those who are sick or injured can easily access the help they need, when they need it, and not be penalised with a higher premium when they do claim.

No. We’re a not-for-profit health fund. We don’t have shareholders to pay, so we only ever increase premiums to ensure we can continue to cover the cost of claims and provide service to our members.

To keep premium increases to a minimum, we have taken a proactive approach, looking for opportunities to reduce costs both internally and externally.

Internally, our management structure is more efficient, we’ve contained our costs, clamped down on fraud and we’ve worked hard to get the best deal for our members through contract negotiations with healthcare providers. We’ve also made changes to some types of health cover so claims by a small minority don’t push up premiums for everyone.

How to save on your premium

There are many things you can do to lower your premium. You can:

  • Take advantage of payment frequency discounts e.g. get a discount for paying yearly instead of fortnightly.
  • Increase the excess on your hospital insurance.
  • Review the services on your policy.

To get the most value from your health cover, the best thing to do is make sure it features the services you need to support your health and lifestyle.

We always encourage our members to be on a product that suits their needs.

If you feel your product isn’t quite right for you, get in touch with us and we’ll help you review what you’re covered for and whether there’s a different product that better supports your needs.

If you are thinking of downgrading, it’s important to be aware that a lower level product may not include all the other services you’d like covered – for example, letting go of maternity may also mean losing cover for cataracts and joint replacement.

When it comes to your extras, downgrading means you may see a decrease in the amount you can claim on services like dental, optical and chiro.

It’s also worth noting if you decide to downgrade then upgrade again later, you will have to re-serve waiting periods on services not covered or covered to a limited extent on the lower-level product.

Why you should stay covered

The reason most people keep their private health insurance is the same as why they maintain their car or home insurance: it’s about insuring something important – your health – against the unexpected.

With hospital insurance, your health fund helps cover the cost of treatment in a private hospital. But what about the public hospital system? Yes, it is free, but there is a trade-off.

In the public system, unless it’s an emergency, you’ll be placed on a waiting list. On the other hand, going to a private hospital using your hospital insurance means you can skip that public waiting list, getting treatment at a time of your choosing. With hospital insurance you can also choose your specialist and gain access to a private room, so long as one is available.

Extras insurance helps cover the cost of your everyday healthcare services. It covers outpatient services that Medicare generally doesn’t cover – that’s things like dental, optical and chiro.

Both the public and private healthcare systems have their benefits. Ultimately, deciding on whether private health insurance is worth it depends on what’s important to you.

With HBF you can feel confident you've made the right choice. Almost a million Australians choose us over other funds because:

  • As a not-for-profit fund we don't have shareholders to pay and can focus on giving more back to our members.
  • We’ve kept our average premium increase below 2% for two years in a row (2019 and 2020).
  • You experience lower out of pocket costs in WA hospitals, compared to members of the other major insurers. The Commonwealth Ombudsman’s 2018 State of the Health Funds Report (published in March 2019) shows that in WA hospitals, of the five major insurers, HBF covered the greatest percentage (96.1%) of hospital treatment costs and has the greatest percentage (99.7%) of medical services covered with no or known gaps.
  • If you become unemployed, we’ll look after you. Eligible HBF members can get complimentary cover for up to 9 months.
  • Our Momentum Member Benefits program gives you access to a great range of benefits including free fitness sessions, discounts with major brands such as Snap Fitness, Friendlies Pharmacy and much more.

How to lock in this year’s rate by pre-paying

Yes. We can accept a manual payment of up to 18 months’ premium (from the date you make the payment) at the old rate, provided the payment is made before 1 April.

If you’ve already paid past 1 April, we can still take a manual payment at the old rate so long as you make that payment before 1 April.

Please be aware if you currently have a direct debit or corporate discount applied to your premium, you will lose it if you choose to make a manual payment.

Please note: The 4% direct debit discount does not apply to all products.

Payments must be received by HBF before 1 April. If you’re paying by BPAY or other digital means, you may see payments debited from your account before this date, but it is the date received by HBF that is important.

Online banking processing times can vary, so we strongly recommend lodging your payments well in advance of 1 April.

You also have the option of processing your payment immediately. Simply contact us on 133 423 or visit your local branch to make your payment today.

Legislation sets the conditions under which health funds can offer discounts. The Private Health Insurance Act 2007 stops us from maintaining your direct debit or corporate discount if you make a manual payment. The condition of the discount is that funds are automatically transferred, and not made manually. (Private Health Insurance Act, 2007; 66-5(3))

How the Australian Government Rebate on PHI works

Your Government rebate may be less than it was last year because of the way the rebate is calculated. While your rebate will change depending on your income and age, the rebate percentage itself is adjusted year on year in line with the overall rate of inflation (Consumer Price Index; or CPI) and generally decreases over time.

Because of the formula the government uses to calculate the rebate, if the average health insurance premium rise is greater than the CPI, the rebate percentage will reduce. As the cost of healthcare generally rises significantly more than the CPI, the rebate percentage will continue to decrease year on year.

The rebate you receive is calculated based on your age and income, which we request at the time you set up your health cover.

If you have not given us information about your age or income tier, or your information is not accurate, it may impact your next tax return. To check or update your rebate details, login to myHBF

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