Don’t be caught out by April Fools’ Day premium increases

As 11 million Australians consider how they will budget for increased private health insurance premiums commencing on 1 April 2018, the Australian Dental Association is calling on consumers to rethink the need for "extras" cover and on the Government to support tax offsets for those who "self-insure".

“We acknowledge that Minister Hunt has announced further amendments to the Private Health Insurance Act which will address some of the concerns around health insurance policies, however the changes do not go far enough,” states Dr Hugo Sachs, Australian Dental Association (ADA) Federal President.

“Having access to and being able to choose your provider has been the catch cry of private health insurers for years, but what insurers don’t tell you is that your choice is restricted to providers within their network. Use someone outside the network and you will receive less in rebates. This is discrimination and completely unfair no matter how you look at it.”

“Discriminatory rebates, increased restrictions and exclusions on the types of treatments provided is why the ADA has asked the Federal Health Minister to consider providing tax offsets to consumers who would prefer to set up a ‘Health Savings Account’ to cover the cost of their dental and allied health treatment”.

Last year, the ADA commissioned the Centre for International Economics to explore models that would assist consumers to overcome some of the access barriers to dental and allied health care in Australia. The report titled “Saving for One’s Care” was released in early March 2018.

The report concludes that a ‘health savings account’ (HSA) presents an opportunity to overcome the limitations of general treatment cover (extras) and introduces a reward-based proactive approach to encourage Australians to save for their dental and allied health care.

The HSA model developed has three components with a concessional cap set at $3,000 per annum per account holder. The components are:

• a tax offset which enables those on low incomes to transfer tax-free income up to a specified level

• tax concession for those earning above the tax-free threshold to salary sacrifice

• a market model which allows consumers to save over and above the concessional amount to foster positive savings behaviours.

The potential savings pool for dental and allied health services is estimated to be initially around $1 billion per annum rising to $3.7 billion once 10% of the population adopts the model. Individuals are expected to save on average around $1,225 per annum to cover out of pocket costs.

Almost $10 billion was spent on dental services in 2015-16 according to a report by the Australian Institute of Health and Welfare1. Of that spend, 58% was by consumers with private health insurers contributing only 18%.

Australian Prudential Regulatory Authority 20172 data stated that health insurers raised $6.47 billion in general treatment [extras] premiums and only paid out $4.87 billion. That’s an excess of $1.6 billion. The Government expects to pay around $6.4 billion in premium rebates to health insurers in 2017-183.

Many consumer groups and peak health professional bodies are echoing the ADA in their call for action on extras cover with out-of-pocket costs on extras increasing by 2.1% between September and December 2017.

“Maintaining oral health is less costly than treating disease,” added Dr Sachs. “Currently consumers lose whatever is left in the extras policy cover on 31 December each year. With a health savings account, they keep whatever they didn’t spend and the amount grows each year. We need to encourage consumers to invest in prevention rather than cures. Having control of their health dollars rather than losing any unspent benefits each year will benefit everyone in the long run.”

The CIE Report Saving for one’s care is available at