The world economy is not in recession, though it is fair to state that financial ups and downs have turned into the new normal nowadays. A large number of Australians are feeling the heat of high inflation driven by rising prices of commodities, soaring energy bills, and more. Besides these regular financial challenges, the rising cost of healthcare facilities has further made the situation complex.
According to a study, the average out-of-pocket expense for hospital treatment has reached $426 in 2024, marking a steep rise of 6.7% compared to the previous year. Moreover, the cost of various medicines has increased sharply in the last two to three years. In such a scenario, it is important to find the right health insurance policy.
On the other hand, some private health insurance policyholders often think about cancelling their policies. So, how effective is the strategy of giving up a private health insurance policy to deal with rising inflation? People who are young and healthy may find this option luring, though you need to understand the downsides. Instead of an impulsive decision, you should be mindful when deciding to cancel your private health insurance policy.
Reconsidering Health Insurance: Is It a Good Option?
The cost of the private health insurance policy is undoubtedly high, though it comes with certain benefits. Moreover, giving up the health coverage is not the best-suited way of dealing with high inflation. Lifestyle changes and meticulous usage of resources to prevent high utility bills can be more effective than cancelling a health insurance policy.
However, it is also true that paying for private health coverage is a financial burden at times. Here are some of the reasons why many young Australians want to cancel their private health cover.
1. Rising Premiums
The cost of private health insurance policies has increased with the advent of time. Moreover, buyers need to pay an additional cost when they want to renew their private health insurance policy. As a result, health insurance has become a financial liability for small to large families in Australia. In such a scenario, many families want to cancel their private health insurance policies to reduce expenses.
2. No Immediate Value
People invest in private health insurance to cope with unforeseen health expenses. However, there is no immediate return on investment when it comes to investing in a private health insurance policy. There is no immediate value in a private health insurance policy until you fall ill and require medical treatment. Therefore, many people find it unrealistic to invest in health coverage.
3. Cost-of-Living Crisis
The cost-of-living crisis is another notable driving factor behind the trend of discontinuing private health insurance policies. A high global inflation rate has resulted in a sharp rise in the prices of essential commodities and crucial medicines. On the other hand, energy prices have risen, contributing to the rising energy bills for households. For all such factors, monthly expenses for families have increased. Discontinuing the private health insurance policy has emerged as a compelling way of reducing monthly household expenses.
Is Private Health Insurance Still Important?
Besides covering immediate healthcare expenses, a private health insurance policy also provides long-term security to people. Medical emergencies can happen anytime without any prior notice. Therefore, health insurance keeps you prepared to meet the hefty expenses due to unforeseen health emergencies. Go through the following points to realise the true value of a private health insurance policy.
1. Know the Annual Limits and Rebates
Choosing a private health insurance policy is still relevant when you buy a policy after reviewing the rebates and annual limits. The annual limit refers to the policy claim per year for certain health services, such as optical, dental, etc. On the other hand, a rebate is the amount that your health fund pays when you lodge a claim.
Some private health insurance policies feature attractive annual limits with low rebates. Investing in such a policy may seem luring, though a low rebate suggests that your out-of-pocket expenses will be high when you undergo medical treatments. Therefore, you need to choose a policy, keeping the balance between rebate and annual limit in mind.
2. Understand the Inclusions and Exclusions
Before investing in a private health insurance policy, you must understand the exclusions and inclusions carefully. Every policy is unique, and you will find specific exclusions and inclusions with those policies. For example, popular exclusions in a general private health insurance policy are pregnancy and childbirth expenses.
It is noteworthy that every policy is potentially unique, featuring different inclusions and exclusions. Therefore, it is crucial to pick the right policy after minutely checking the terms and conditions. You must check the inclusions and exclusions so that no confusion can happen later during a health emergency.
3. Check the Gap Cover
It is frustrating to pay a hefty out-of-pocket expense after a hospital procedure. At this point, the concept gap cover comes into the picture. Gap cover helps cover the gap between what your insurance company pays and what your healthcare provider charges. Insurance policies with flexible gap cover are always good deals to reduce out-of-pocket expenses.
Still Want to Cancel Health Insurance? Do These Things…
If you still want to cancel your private health coverage, you must keep a few things in mind. In the following section, let’s discuss the things in detail.
- Medical Levy Surcharge: Taxpayers in Australia must pay the medical levy surcharge if their yearly earning exceeds a particular threshold. In case you are liable to pay the medical levy surcharge, it is better to continue with the private health insurance. In the end of the day, private health insurance will cost less than the medical levy surcharge.
- Compare and Find Cheaper Option: You can compare multiple health insurance policies and identify the cheaper one. If you think you are paying a high private health insurance, you can look for other options. Instead of cancelling the health cover, picking a cheaper option will eventually prove more helpful and cost-effective in the long run.
- Avoid Surgery Waiting List: In public hospitals, getting a surgery done is a hassle due to a long waiting list. Instead of waiting long, you can get the surgery done by a professional medical team at a private hospital. Since the surgery cost will be high in private hospitals, it is wise to invest in a health insurance policy.
Wrapping up
After discussing and analysing various aspects of a private health insurance policy, it can be concluded that investing in such a policy is not a bad thing. However, rising expenses force people to cancel their health coverage. Such decisions should be well-calculated rather than impulsive.
Health Deal Expert is a dedicated platform for you to compare and find great private health insurance deals to suit a customer’s needs. Instead of cancelling your private health coverage, visit our website or talk to our experts to grab the cheapest health insurance deals. Investing in the right deals will reduce your expenses and prevent financial hassles during an emergency healthcare requirement.
