One of the important issues to consider when taking out health insurance is how to pay your premiums. There are several payment methods and also payment frequency options available, and the premium payment choices you make can even affect the total cost of cover.
How can you pay for private health insurance?
There is usually a number of ways your fund will accept premium payments. Although not all funds will offer support for each of the payment types mentioned below, you can typically choose from the following options:
Direct debit from bank account. When you sign up for a policy, all you have to do is provide your bank account details (account name, account number and BSB) to your health fund. The fund will then automatically withdraw the necessary payment from your account whenever the premium is due.
Direct debit from credit card. This works the same as above except that instead of providing your bank account details, you provide your credit card details (name on card, card number, expiry date and CVV). Your health fund will then automatically debit your card whenever payment is due.
BPAY online or over the phone. When you need to pay a premium, you can do so via BPAY through your bank’s Internet or phone banking service. You’ll need to provide your health fund’s biller code and quote a reference number.
Online from your credit card. Most funds will allow you to pay your premium by logging into your health insurance account online and entering your credit card details into the payment section.
In person at a retail centre. You can visit your health fund’s nearest retail centre to pay via credit card, cheque or any other method of payment your fund allows.
In person at a post office. You can visit your local post office to pay your health insurance premium in the same way you might pay a utility bill.
By mailing a cheque or credit card details. Some funds will provide a postal address to which you can send a cheque to cover your premium amount, or to which you can send a credit card payment slip.
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What are the pros and cons of each payment option?
There are benefits and drawbacks to each of the health insurance premium payment methods listed above. Check out the table below to work out which of these payment options is the right one for you:
Pros
Cons
Direct debit from bank account
Simple and convenient payment option
You don’t need to manually enter payment details each time a premium is due
You pay using your own funds rather than running up a debt on your credit card
Many health funds offer discounts of up to 4% if you pay by direct debit
You may forget you have a direct debit set up – this can be a problem if you switch health funds
You may not have sufficient balance to cover your premium
Direct debit from credit card
Simple and convenient payment option
You don’t need to manually enter payment details each time a premium is due
Many health funds offer discounts of up to 4% if you pay by direct debit
You may forget you have a direct debit set up – this can be a problem if you switch health funds
Interest applies to credit card debt
BPAY online or over the phone
Easy to do via Internet or phone banking
Save your health fund’s details in Internet banking for faster transactions in future
Faster than paying in person
Unlike direct debit, you have to manually arrange payment each time your premium is due
Pay with money from your bank account rather than running up a credit card debt
Online credit card payment
Simple and relatively quick to do
Faster than paying in person
It’s not automatic – you’ll need to visit your health fund’s website and potentially log into your account whenever you need to make a payment
Interest applies to credit card debt
In person at a retail centre
Handy if you don’t feel comfortable paying online
Face-to-face service
Multiple payment options accepted
Manage other aspects of your health fund membership at the same time
More time-consuming than many other payment options
Can’t be done from the comfort of home
In person at a post office
Handy if you don’t feel comfortable paying online
Face-to-face service
Pay your health insurance premiums when you pay other bills
More time-consuming than many other payment options
Can’t be done from the comfort of home
By mail
Handy if you don’t feel comfortable paying online
Multiple payment methods available
Takes longer than online payment
You may need to pay postage costs
If using a credit card, you will have to send your card details by mail, which may not be secure
How often do you pay health insurance premiums?
Depending on the fund, the available options may include fortnightly, monthly, quarterly, six-monthly or yearly. Prices for private health insurance are generally quoted as a weekly or monthly price, so they tend to be the most common payment schedules. Most funds also require you to pay at least one month in advance.
Why would you want to pay your premiums upfront?
The most affordable premium payment frequency is usually to pay your annual premium in advance. This is because many funds offer sizable premium discounts, sometimes as high as 4%, to those customers who pay a full 12 months of membership in advance.
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Frequently asked questions about paying for health insurance
Here are some of the other questions we're often asked about paying for health insurance.
Yes, you can pay your health insurance premiums with a credit card. Regardless of whether you're a member of a major fund or a smaller restricted-access fund, credit card is a widely supported premium payment option across the board.
Using your credit card can be a much more convenient option than some other payment methods, such as mailing a cheque or paying in person at a health fund branch, with most health funds allowing you to use your credit card when paying premiums online or over the phone.
You will need to provide the following details to pay insurance premiums using your credit card:
The type of card. Visa and Mastercard are widely accepted, while some funds also accept other cards
The name on the card
Your card number and expiry date
The CVV on the back of the card
Another option when paying your health cover premiums is to set up a direct debit from your credit card. To do this, it's a simple matter of filling out a form provided by your health fund with your credit card details. Your fund will then deduct the relevant premium amount from your credit card each month, quarter, year, or whenever your regular premium payment is due.
There are several benefits to paying your health insurance premiums by direct debit from your credit card, including:
It's convenient. Setting up a direct debit saves you the hassle of having to manually enter your payment details each time your premium is due.
You'll never forget a payment. A direct debit from your credit card automates the premium payment process for you, which means you'll never have to worry about your cover lapsing after you forget a payment.
You can earn rewards. If your credit card offers a rewards or frequent flyer scheme, you could earn points for paying your health insurance premiums with your card.
Discounts. Some Australian health funds offer premium discounts when you choose to pay by direct debit.
If your employer and health fund allow it, you may also be able to use salary sacrificing to cover your health insurance premiums. Also known as salary packaging, salary sacrificing allows you to pay your health insurance premiums using your pre-tax income. It can be an effective way to ensure that you get the cover you need and at the same time minimise your tax bill.
You may be able to salary sacrifice your health cover premiums if you work for one of the following organisations and your employer offers salary sacrificing as part of its employee benefits program:
A private or public not-for-profit hospital
A charity or other not-for-profit organisation
A private school, club or association
Paying for 12 months of cover in advance also allows you to take advantage of a feature known as rate protection. As you may be aware, Australian health fund premiums increase every year on 1 April.
If you've already paid your yearly membership fee, rate protection means you won't have to pay any additional premium if your health fund increases its rates during the period you have already paid for.
For example, let's say your health fund raises premiums by 5% just three months into your 12-month membership. Thanks to rate protection, you won't have to worry about this 5% increase until the full year is up and it's time to renew cover.
However, if your health fund is one of the few that doesn't offer rate protection, you will have to either pay the balance owing on the new premium rates or reduce the length of time your premium payment covers.
If you opt to pay your health insurance premiums by direct debit, make sure you don't forget that you have this payment arrangement in place. If you switch to a new health fund and forget to cancel your direct debit, you could end up paying premiums on two separate health insurance policies. Your fund will provide information and advice on what you need to do to cancel a direct debit, so make sure to complete this important task before beginning a membership with your new fund.
While direct debits from your credit card undoubtedly have their benefits, there are a few downsides to be wary of. These include:
Changing credit cards. If you change to a new credit card, it's vital that you remember to cancel the direct debit on your old card and set it up on your new card. If you don't remember this step, you could end up without health insurance cover.
Changing health funds. If you switch health funds, you'll need to remember to cancel your old fund's direct debit before arranging payment to your new fund.
Insufficient credit. If your credit card is maxed out, your automatic direct debit may not be able to be completed and your health cover may lapse.
Not reviewing your options. With a direct debit taking care of your premiums, it can sometimes be easy to push thoughts of health insurance to the back of your mind. However, it's worth reviewing your cover regularly to determine whether it still suits your needs and whether any premium increases make the cover too expensive for you.
Paying interest. Of course, you will also have to pay your credit card off before the interest-free days come to an end and interest charges apply.
Another risk you should be aware of is whether your credit card provider treats your health insurance premium as a purchase or as a cash advance. If your card provider classifies health cover premium as a purchase, you will be able to take advantage of the interest-free days available on your card and also earn reward/frequent flyer points (if your card offers them).
However, some card providers will classify a health insurance premium payment as a cash advance, which means it will attract a higher interest rate than purchases and you will not be able to take advantage of any interest-free days. A cash advance fee may also apply to your transaction.
Tim Falk is a writer for Finder, writing across a diverse range of topics. Over the course of his 15-year writing career, Tim has reported on everything from travel and personal finance to pets and TV soap operas. When he’s not staring at his computer, you can usually find him exploring the great outdoors.
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If you’re looking for private health insurance in Victoria, compare the most popular health funds in your state and how much it costs to take out cover.
Bupa health insurance offers different levels of cover for better health services but also provides tax benefits and prevents government penalties.
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