Millions of Aussies making this $700 a year health insurance mistake as price hike arrives

Health insurance premiums will get more expensive in days, rising at their fastest rate in nearly a decade. But for millions of Aussies, they are paying for cover they aren't actually using up.



Around 46 per cent of Aussies with private health insurance have admitted to not using up all of their health insurance extras cover limits last year, a Finder survey found. Physiotherapy is one of the most underused extras, with just 22 per cent using it all up.




Finder personal finance and insurance specialist Taylor Blackburn told Yahoo Finance millions of Aussies were paying for extras they barely touched.



'If you're not using your dental, physio or optical limits each year, you're effectively handing your insurer free money. Extras can really deliver value, but use them or lose them,' he said.

Blackburn urged Aussies to review their cover, get rid of anything that's unnecessary, check policy caps and shop around to avoid loyalty penalties.

'Aussies who fail to review their cover regularly risk paying more while getting less. Even a minimal extras policy can pay for itself after two dental cleanings,' he said.



Dental was another common extras going to waste, with just 33 per cent saying they had used up their limit, followed by optometry at 34 per cent.

Older Aussies were the most likely to let their extras expire unused, with 52 per cent of Baby Boomers admitting they didn't hit any limits.

According to Finder, the average cost for an extra policy is $58.12 per month. That works out to just under $700 a year.



The government has approved an average premium increase of 4.41 per cent, which will kick in from April 1. This marks the biggest average increase since 2017.

Some policyholders will see even bigger increases, with CHOICE analysis finding Gold policies across the largest five health funds: Bupa, HCF, HBF, Medibank and NIB, will rise in price by an average of 13.3 per cent.

Compare the Market found the average increase would add around $116 a year to premiums for the average hospital policy. For combined hospital and extras policies, the increase would be around $158 more a year.



Compare the Market's economic director David Koch said paying your premium in advance could help you delay the higher premiums.

'While it can be a high upfront cost, it could save you money in the long run because you wouldn't need to pay the higher 2026 premiums until 2027 when the next premium changes are announced,' he said.

'But keep in mind that by effectively delaying the rate increase by paying annually up front, you could be hit with a double-rise down the track, depending on your policy, if you decided not to pay annually in the future.'