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Key changes to health insurance in 2022 -

As you plan out the year it’s handy to know what changes are coming for health insurance to help you know the best times to compare and save.

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There are a number of changes coming to your health insurance in 2022 that you need to be aware of, from increasing premiums to considering how your cover could save you money at tax time.

Here we wrap up some of the major news and key dates to note for Australians with private health insurance in 2022.

Extras benefits reset on January 1

Depending on your health fund, your extras health insurance benefits are likely to reset on either January 1 or July 1, and in some cases it may reset 12 months from when you took out your policy.

What does this mean? Your annual limit on how much you can claim on an extras treatment will reset to the full limit applicable on your policy. For instance, your physiotherapy cover of $500 would reset to that full amount which you can spend on physio treatments throughout the year.

In some cases, you might find your health fund increases your annual limit each year for some extras until you reach a maximum limit.

When do private health insurance premiums increase?

Health insurance premiums will largely increase on April 1, but this year some insurers are expected to defer their premium rate rise to later in 2022.

Spokesperson Jessie Petterd from health insurance comparison service iSelect said your health fund should notify you if and when your policy is increasing and by exactly how much, which should be a prompt to shop around to see how your current policy stacks up.

Policies are set to rise by an average of 2.70 per cent, costing the average family $123, couples $136 and individuals $59 extra a year, according to iSelect.

But that’s just the average increase, which means some funds may opt to go higher than that.

“We’d encourage any customers struggling to afford their premiums to ‘switch not ditch’ and explore other options before cancelling as the savings can be well worth it and many customers are in fact able to find a similar level of cover for a lower price with a different fund,” Ms Petterd said.

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Cheaper premiums following medical devices reform

The Government’s proposed changes to reduce the cost of medical devices used in the private health sector, making them more aligned to the cheaper public hospital prices, are projected to save consumers around $140 million between April 1, 2022 and March 31, 2023.

This equates to 20 per cent lower health insurance premiums, according to Private Healthcare Australia (PHA).

The health insurance industry body said commonly used medical devices like hip and knee replacements are 30-50 per cent more expensive in Australia than in other countries like New Zealand and the UK.

“By better aligning the cost of prostheses to the public system, private health insurers will benefit from reduced expenditure on prostheses,” a spokesperson for PHA said.

“Health funds have committed to passing on these savings to members through reduced private health insurance premiums.”

The spokesperson said this announcement contributed to the lowest premium increase in more than 20 years of 2.70 per cent in 2022.

Tax time savings through health insurance

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

The surcharge is paid by Australian tax payers who don’t have private hospital cover and earn above a certain income – $90,000 for singles and $180,000 for couples and families.

Director of Tax Communications at HR Block, Mark Chapman, warned people not to be fooled by marketing material before 30 June.

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

“So, if you get near the end of the financial year and you don’t have health cover, it’s already too late to totally avoid the surcharge this year.

“You will get a tax saving through avoiding the surcharge but only for the days between taking out the cover and the end of the financial year (which could be minimal if you leave it until the end of the year).

You will, of course, get a full tax benefit in the next financial year.”

He said if you don’t have cover yet, it’s a good idea to take it out as soon as possible in the tax year.

He also warned consumers to beware of health funds that try to sell health cover plus extras to avoid the Medicare levy surcharge.

“The extras might be worth having from a health perspective but they won’t impact on the surcharge,” he said.

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