What end-of-financial-year deals are health insurers using to woo customers?
EOFY is big business for health funds.
Every June health funds come out with all manner of deals and discounts to get your business before the EOFY. We've scoured the websites of all the major health funds in Australia and compiled a comprehensive list of deals, discounts, EFTPOS gift cards, waived waiting periods and other benefits.
There are some clear trends in terms of available benefits. The most popular bonus from health funds in 2016 is gift cards, with one-third of the funds offering a selection of EFTPOS, Rebel Sport, Westfield and Coles Group and Myer gift cards.
Another common incentive for health funds this end of financial year is the waiving of waiting periods on extras. Four funds (ahm, medibank, TUH and Teachers) are offering this kind of deal.
The other major EOFY health deal in 2016 is the promise of one month of free cover if you switch before 30 June. This offer (like the gift cards) is available from one-third of the funds we examined.
June typically sees a boost in activity for two reasons: people turning 31 who don't want to pay a Lifetime Health Cover (LHC) penalty for not having health insurance by that age, and high-income earners hoping to avoid part of the Medicare Levy Surcharge (MLS).
The LHC policy is designed to encourage people who don't already have private health insurance to take out cover. Once you've reached the age of 31, you have until the following 1 July to take out health insurance. If you don't get cover you'll be slugged with a 2% premium loading for every year over 30 you're without cover, up to a maximum of 70%.
If for example, you don't take out health insurance until you're 45 years old, you'll end up paying 30% more than you would have if you'd taken out cover before July following your 31st birthday. That means anyone who has turned 31 this year has a clear financial incentive to sign up just before 1 July, and insurers offer bonus deals to try and attract those customers.
Although much discussed, MLS sign-ups are less common. The surcharge (in the form of an additional tax on your income) only applies to people earning more than $90,000 (or $180,000 as a family), so most Australians aren't affected. You also have to be signed up for the full financial year to completely avoid the surcharge; otherwise, you'll pay a pro-rata tax for the period you weren't covered.
The Australian Competition and Consumer Commission (ACCC) is cracking down on insurance providers who try and overstate the need to get cover to avoid the surcharge. "The 'save on tax' claims promoted by many private health insurance companies and comparator websites may result in consumers rushing to purchase private health insurance to avoid a tax that most consumers don’t have to pay," chairman Rod Sims noted this week.