The rising cost of living in Australia has left many households wondering whether private health insurance is still worth the expense. With mortgage repayments, grocery bills, and energy costs climbing higher than ever, health cover is increasingly being viewed as a “maybe later” expense rather than an essential. But before you cancel your policy, it’s worth taking a closer look at what you could be giving up — and how to make your cover work better for you.
Why So Many Are Thinking Twice About Health Insurance
Premiums for private health insurance have grown steadily over the past decade, often outpacing wages and inflation. For younger Australians and those who rarely visit a doctor, the cost can feel unjustifiable. Three big factors are driving people to reconsider their cover:
- Rising premiums: Monthly payments have become a significant drain on many budgets, especially as other household expenses surge.
- Lack of immediate value: Healthy individuals often feel they’re paying for something they rarely use, particularly when public hospitals remain an option.
- Cost-of-living pressure: Families are prioritising essentials like food, fuel, and housing, and health insurance can quickly land on the chopping block.
The risk, however, is that if too many healthy people drop out of the system, premiums may rise even faster for those who remain.
What You Might Be Overlooking
Health insurance isn’t just about covering today’s doctor visits — it’s about future protection and reducing the risk of being stuck with big out-of-pocket bills when you least expect them. To make sure you’re actually getting value, focus on these key areas:
- Annual limits and rebates: Some funds promote generous annual limits, but if the rebate per service is low, you’ll still face high out-of-pocket costs. Understanding both figures is essential.
- Inclusions and exclusions: Many people unknowingly pay for cover they don’t need, such as maternity services long after having children. Trimming unnecessary extras can reduce your premium significantly.
- Gap cover: Those unexpected hospital costs that appear after a procedure can be minimised if your insurer has strong gap cover arrangements. Always check what’s available.
Smarter Ways to Cut Costs Without Cancelling
If you’re tempted to cancel your policy altogether, consider these alternatives first:
- Review your plan regularly: Policies change, and so do your needs. Checking your cover every year ensures you’re not stuck paying for outdated or irrelevant benefits.
- Shop around: With dozens of insurers in the market, comparing policies could reveal cheaper options that still meet your health requirements.
- Adjust your excess: Agreeing to a higher excess can lower your monthly premiums. This works well if you’re generally healthy and unlikely to need hospital care often.
Before You Pull the Plug
Completely walking away from health insurance may seem like an easy way to free up cash, but it can leave you exposed at the worst possible time. A smarter move might be reshaping your policy, switching providers, or cutting back unnecessary extras instead of dropping cover altogether.
Health insurance doesn’t have to be a financial burden if you understand how to tailor it to your life stage and priorities. The key is to treat it like any other major expense: review it, compare options, and adjust it as your situation changes. That way, you’ll stay protected without paying more than you need to.
