Health insurance is designed to give you peace of mind and protect you from steep medical bills. But too often, people fall into traps that leave them paying too much or not being properly covered when they really need it. Here are five of the most common missteps Australians make with their health insurance — and how to sidestep them.
1. Choosing the cheapest policy without checking the fine print
It’s tempting to pick the lowest-priced option, but cheaper doesn’t always mean better. Budget policies usually come with limited cover, excluding major procedures like heart surgery, joint replacements, or maternity care. If you need these treatments, you could be left with huge out-of-pocket costs.
Instead of focusing solely on price, think about what health services you might need now and in the future. A slightly higher premium could save you thousands later on if it means you’re properly protected.
2. Holding onto outdated policies
Many people stick with the same cover for years without realising it’s no longer good value. Insurers frequently update their products to reflect rising medical costs and changing health needs. Old or “closed” policies don’t get those upgrades — but premiums usually keep climbing.
If you haven’t reviewed your cover in three years or more, there’s a good chance you’re overpaying for less. Comparing new options regularly ensures your benefits keep up with today’s healthcare standards.
3. Overlooking extras cover
Extras insurance is often dismissed as unnecessary, but it can be incredibly useful if you regularly visit the dentist, need glasses, or use physiotherapy. Without it, you’ll pay the full cost every time.
The key is tailoring extras cover to your lifestyle. If you see the dentist twice a year and buy new glasses every couple of years, extras can more than pay for itself. On the other hand, there’s no sense in paying for cover you’ll never use.
4. Misunderstanding waiting periods and gap fees
One of the most frustrating mistakes is assuming your new policy covers you immediately. In reality, many services have waiting periods — sometimes up to 12 months — especially for things like pregnancy or elective surgery.
Gap payments are another area where people get caught out. Doctors can charge above the scheduled Medicare fee, leaving you to pay the difference. Choosing a fund with strong “no-gap” or “known-gap” agreements can help minimise those nasty surprises.
5. Not comparing policies regularly
Perhaps the most expensive mistake is never shopping around. Health insurers compete fiercely for new customers, meaning there are always fresh deals, updated rebates, or more affordable options. Thanks to portability rules, you can switch to a new policy without re-serving waiting periods for the same level of cover.
To make sure you’re getting the best value, compare your cover every year or after big life changes such as marriage, having children, or retirement. Even a quick review can uncover better benefits at the same or lower cost.
Final Thoughts
Health insurance can be complex, but avoiding these common mistakes will save you money and give you more confidence in your cover. The best strategy is to stay informed, compare regularly, and choose a policy that truly matches your health needs rather than just your budget.
