Can you pay your health insurance premiums via direct debit from a credit card or bank account?
When you’re a member of a private health fund, it’s important that you stay on top of premium payments to ensure that your membership doesn’t end up in arrears. Most funds support several payment options, including mailing a cheque and online credit card payments, but one of the easiest and most convenient ways to pay your health insurance premiums is via direct debit.
Setting up a direct debit payment is simple and can be a real time saver, but there are a few key drawbacks you should be aware of before choosing this payment method.
What is direct debit?
Direct debit is an easy and safe way to manage your health insurance premium payments. When you set up a direct debit, you give your health fund permission to automatically deduct your premium payments from your nominated bank account or credit card whenever they are due. This allows you to automate premium payments, ensuring that your premiums are always up to date and saving you time in the process.
If your employer offers salary sacrificing, you can also set up a direct debit arrangement so your health insurance premium payments are deducted straight from your pre-tax salary. This can be a convenient and tax-effective way to pay for health cover.
Can I pay my health insurance premiums via direct debit?
Many Australian health funds will allow you to pay your premiums via direct debit. Check the list of payment options provided in your policy documents to find out whether your fund supports direct debits.
Your health fund will require you to fill out a direct debit agreement or authority form in order to set up this arrangement. To complete the form, you will need to provide your name, address, date of birth and your membership number as well as when the deduction will commence, the frequency of each deduction and its amount.
You will also need to provide information about the bank account or credit card from which your premiums will be deducted.
If direct debiting from a bank account, you will need to provide the following information:
- The name and branch of the financial institution
- The name of the account holder
- BSB number
- Account number
If direct debiting from a credit card, you will need to provide the following information:
- The type of card (Mastercard and Visa are widely accepted and some funds will also accept other brands)
- The card number
- Expiry date
- Name on the card
- Cardholder’s signature
What are the benefits of paying via direct debit?
There are several reasons why paying for health insurance via direct debit is a good idea:
- Convenience. Setting up a direct debit means you don’t have to worry about manually arranging payment whenever a premium is due. Your premiums are automatically deducted at your chosen frequency, saving you time and stress.
- Affordability. You can choose the day of the month when you would like your premiums to be deducted from your account, allowing you to select a payment frequency that best suits your budget.
- Continuous cover. When you set up a direct debit, you don’t have to worry about missing a premium payment. This ensures that you are always covered and that you can always access the health care you need.
- Discounts. Many health funds offer discounts when you pay your premiums by direct debit.
Which health funds offer discounts when you pay by direct debit?
Several Australian health funds offer discounts to customers who pay their premiums by direct debit. The table below details the discounts on offer from some of Australia’s leading health funds.
|Fund||Direct debit discount||Annual payment discount|
Are there any potential issues?
Despite the many advantages of paying your premiums via direct debit, there are also a few drawbacks and risks to watch out for.
- Keeping track of your direct debits: You might be surprised at how easy it is to forget that you have a direct debit arrangement set up, which can lead to big problems if you close your bank account or credit card causing you to miss a payment. When this happens, you run the risk of your membership lapsing and having to go without cover as well as having to re-serve waiting periods when you rejoin. Membership usually lapses when you fall more than two months behind on payment, so it’s important to always keep your fund updated of any changes to your payment information.
- Switching funds: Issues can also arise if you switch health funds and forget to cancel the direct debit you set up with your previous fund. If you’re not careful, you could end up paying premiums to two separate funds, so make sure to always keep track of the direct debit arrangements you have in place.
- Insufficient funds: If you set up a direct debit from your bank account, it’s important to make sure that you always have sufficient funds in the account to cover your premium payment. If direct debiting from a credit card, you should be certain that you can pay off the debt before your interest-free days come to an end, or that you can cope with interest charges when they apply.
- How payment is classified: If setting up a direct debit from a credit card, make sure to check whether your credit card provider classifies your health insurance premium payment as a purchase or as a cash advance. If it’s treated as a cash advance, you’ll need to contend with higher interest rates, a cash advance fee and no interest-free days. You also typically cannot earn reward or frequent flyer points on cash advance transactions.