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Too lazy to switch health insurance

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Over a quarter of Aussies never switch health funds.

In under a week, health insurance premiums rise by an average of 3.25% and many Aussies are too loyal to look for a new fund, according to research conducted by Finder.

According to the survey data, only 27% of Aussies have ever switched health funds, with a further 34% saying they had only switched health insurance providers once in their lives. This figure is troubling considering health insurance premiums have risen on average more than 50% since 2010.

But while premiums continue to rise, what you can claim is getting whittled away. According to the ACCC, in June 2018 roughly 44% of hospital insurance policies had exclusions, which was up 4% from June 2017 (40%). During that same period, the number of hospital policies with excesses or co-payments also rose from 83% to 84%. And in 2019 with the health insurance reforms, extras policies will see a reduction in what they cover with benefits for natural therapies like yoga and pilates being cut.

This apparent lack of value for money may inform the most recent findings from Roy Morgan, which said, "Only just over half (55.4%) of private health insurance fund members currently agree that 'it is essential to have private health insurance'."

Switching health funds in 2019

The beginning of April is normally the peak time for people looking to switch health funds for two reasons. First, prepaying your premiums before 1 April means you're locking in your cover at the previous year's rate. Second, during March health funds offer a range of deals and discounts to try and win your business. While this is all true in 2019, the waters are somewhat muddier with all the changes to the private health sector and no more so than with the changes to the new tiered hospital policy system.

From 1 April 2019, health funds will need to start grouping their hospital policies into four tiers: gold, silver, bronze and basic. These tiers all have their own minimum requirements of cover. For example, gold policies will need to cover treatments in all 38 clinical categories, whereas basic policies only need to cover you on a restricted basis for treatments in three clinical categories. To make matters a little more confusing, funds can offer plus (+) policies that provide cover outside of those mandated minimums. For example, birth and pregnancy is only a requirement for hospital policies in the gold tier but funds might offer a silver plus (+) policy that covers birth and pregnancy.

While 1 April 2019 is the date all these changes start, health funds have until 1 April 2020 to make their policies compliant. If you are thinking of switching this year, make sure you're aware that your policy may change. Health insurance is not a lock in contract. If you're unhappy with your cover, compare and find better.

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