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In 2022, Health Insurance Premiums Will Rise.

by Jasbinder Singh
In 2022, health insurance premiums will rise.

Health insurance premiums increased by an average of 2.7 percent on April 1, 2022. It’s the second year in a row with the lowest average annual increase since 2001, but some funds will see larger price increases than others.

Health Care Insurance had the lowest average increase of 1.09 percent, while CBHS Corporate had the highest average increase for the second year in a row, with a 5.33 percent price increase across their policies.

Although several large insurers announced above-average increases, many health funds will postpone price increases until later in 2022. NIB (1 September), Bupa and Medibank (1 October), and HCF are among them (1 November). Learn more about which health insurance companies are delaying premium increases.

Before the increase takes effect, your health fund will notify you of the actual increase in your policy. If you can afford to pay a full year’s premium in advance, you can secure 12 months of coverage at that year’s rates.

Health-care costs are rising faster than inflation.

Despite the lowest increase in two decades, health insurance premiums continue to grow faster than wages or inflation, raising concerns that affordability is out of control.

“This year’s premium price increase made people question their need for expensive health insurance,” says CHOICE senior campaigner Dean Price.

“The average increase may be lower than in previous years, but people should check how much their specific policy has increased because it will vary. Some funds saw average increases of up to 5.33 percent recently.

Premiums have risen by 54% in the last decade, while the consumer price index (a measure of inflation) has increased by only 20%.

“The federal government must take real action to address issues that industry is unwilling or unable to address on its own – we need a comprehensive review of the private health system,” says Price.

Premiums have risen by 54% in the last decade, while the consumer price index (a measure of inflation) has increased by only 20%.

“The federal government must take real action to address issues that industry is unwilling or unable to address on its own – we need a comprehensive review of the private health system,” says Price.

In 2022, the private health rebate will remain the same.

While the average premium increase receives a lot of attention, the cost of your premium increased on April 1, 2021, due to a reduction in the private health insurance rebate. However, the rebate remains unchanged this year because the premium increase was lower than usual.

The premium is reduced based on how much premiums rise in comparison to the rate of inflation: the greater the difference, the lower the rebate. Because there was no change this year, the rebate remains unchanged.

In 2021, it fell by about half a percentage point to 24.6 percent for those under 65 with base-tier income. The rebate amounts will differ for older people and wealthy households.

Every year, on the same day that premiums rise, the rebate amount is recalculated. It was put on hold for a year at the start of 2020 due to the COVID-19 pandemic.

Cheaper premiums following medical devices reform

The proposed changes by the government to lower the cost of medical devices used in the private health sector, bringing them more in line with lower public hospital prices, are expected to save consumers around $140 million between April 1, 2022, and March 31, 2023.

According to Private Healthcare Australia, this equates to a 20% reduction in health insurance premiums (PHA).

According to the health insurance industry body, common medical devices such as hip and knee replacements are 30-50 percent more expensive in Australia than in other countries such as New Zealand and the United Kingdom.

Tax time savings through health insurance

 health insurance

You may see a lot of advertising from private health insurance providers advising you to get health insurance before June 30 to avoid the Medicare levy surcharge, but a tax expert advises you to make sure it’s worth your while.

Australian taxpayers who do not have private hospital cover and earn more than a certain amount – $90,000 for singles and $180,000 for couples and families – must pay the surcharge.

Mark Chapman, Director of Tax Communications at H&R Block, warned people not to be misled by marketing material before June 30.

“According to the rules, if your income exceeds the threshold and you don’t have adequate private cover for the entire year, you’ll pay the Medicare levy surcharge up to the date you took out the policy,” Mr. Chapman explained.

“So, if you get close to the end of the fiscal year and don’t have health insurance, it’s already too late to avoid the surcharge this year.”

“You will save tax by avoiding the surcharge, but only between the time you take out the coverage and the end of the fiscal year” (which could be minimal if you leave it until the end of the year).

Of course, you will receive the full tax benefit the following fiscal year.”

If you don’t have insurance yet, he recommends getting it as soon as possible during the tax year.

He also cautioned consumers to be wary of health funds that attempt to sell health coverage plus extras in order to avoid the Medicare levy surcharge.

“The extras may be beneficial to your health, but they will have no effect on the surcharge,” he explained.

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