AN absolute disaster for all retirees is how the latest health insurance hike of almost 5 per cent has been described by a leading seniors’ advocacy group.
“Private health insurance is seen by many who have made contributions over their lifetime as essential in their later years,” said Association of Independent Retirees (AIR) policy and advocacy committee chairman Robert Curley.
“This increase is about four times the current CPI increase rate.
“This will create an absolute financial disaster for many retirees who feel they are compelled to maintain their private health cover for peace of mind, to access the specialist of their choice, use a private hospital and not have to rely on the overloaded public hospital system, especially for non-emergency procedures.”
The increase could see the average single senior pay an extra $104 and a couple about $208 a year. It comes on top of cumulative increases of 28 per cent since 2012.
Prime Minister Malcolm Turnbull acknowledged that increased costs would hit families hard but urged people to maintain their health insurance.
He said health insurers claimed the increase was needed because the rising cost of health services was running higher than the rate of inflation, driven by labour costs and technology.
However, Mr Curley said the rise was a “double whammy and a further kick in the teeth” for older Australians due to changes to the age-related and means-tested health insurance rebate. In 2013 the rebate was 35 per cent for those aged between 65 and 70, and 40 per cent for those over 70.
The rebate is now adjusted according to the CPI and in three years has dropped for people in these age brackets to 31.25 per cent and 35.72 per cent respectively.
“From April 1, seniors will have a 5 per cent increase in their premium plus an estimated additional increase in the vicinity of 2 per cent due to the reducing of the rebate percentage rate with a current annual CPI of 1.4 per cent.
“Thus, it is a 7 per cent-plus increase rather than 5 per cent.”
AIR has made a pre-budget submission to the federal government recommending the reintroduction of the old rebate levels for seniors.
“What is distressing is that these rebates were originally introduced to help support and encourage retirees to continue with their private health insurance and not simply rely on the overloaded public hospital system,” Mr Curley said.
Fancy change?
CONSUMER advocacy group CHOICE has the following tips for anyone considering dropping or changing their private health insurance:
- If you’re keen to switch policies, top-level hospital cover with an increased excess is often better value than reducing your cover.
- Pay your annual premium as a lump sum in March to avoid the April 1 price rise.
- Think of extras cover as a budgeting tool. If you’re getting back less in benefits than you’re paying in premiums, it may not be worth the money.
- To see if you’re actually financially better off taking out a policy, visit DoINeedHealthInsurance.com.au