“Penalties for not taking up private health cover must be suspended”: CHOICE

Consumer advocate says Lifetime Health Cover Loading should be suspended in light of COVID-19
financial pressures

advocate CHOICE is calling on the Federal Government to suspend consumer penalties for not taking up private health insurance in light of the COVID-19 crisis.

advocacy group says the Government should add an extra 365 days to the bank of  permitted days without hospital cover, saving people who drop their private health
insurance this year from being punished financially in the future. 

Health Cover loading is a penalty that adds 2% to future premiums for every financial year you don’t take out hospital cover, once you turn 31. The loading, which has an upper limit of 70%, only applies for ten years if you do ultimately take out health insurance. 

changes to Lifetime Health Cover loading rules would mean people wouldn’t have to pay more for private health insurance in the future because they can’t afford it now and have to drop out of the market,” says CHOICE Health Expert Dean Price.

penalties for not taking on private health cover must be suspended while Australians focus on securing the basics for their families. The Australian Government has a chance to provide further financial relief to the community. The Government should quickly
change the Lifetime Health Cover loading rules, ensuring that people’s financial decisions made at the height of this crisis doesn’t punish them down the track,” says Mr Price.

“The Lifetime Health Cover Loading has always been used as a scare tactic by the private health industry. The community needs to know they won’t be penalised for not having private health cover right now. Given 80% of people with private health insurance rated it as their number one cost of living concern before the COVID crisis, the Government and the private health insurance industry need to do all that they can to ensure that people are getting something that is of value and is affordable.” 

“The pressures placed on the health system by the current crisis emphasise the need for whole-of-sector reform. Once the crisis is over, the industry needs a thorough, independent and public review. People are demanding better of their health system and private health insurance is well overdue for a thorough review,” says Mr Price. 

The consumer advocate also welcomed moves from Government and private health insurers to cancel or defer yearly price rises. Most private health insurers have deferred premium increases that were due on April 1 and the Government has fixed its calculation of the rebate accordingly.

“Given non-urgent elective surgeries have been cancelled for the next six months, insurers have done the right thing by postponing this round of premium increases, but should go further by canning them all together,” says Mr Price.

More health insurance help from CHOICE available at: choice.com.au/healthinsurance

CHOICE Media Release 31/04