Investing in health insurance gives you quick access to high-quality private medical treatment, but we all need to make sure it’s affordable. One trick can help you save significantly on your health insurance premiums without sacrificing the benefits of your policy. Here we explain how it works.
What Factors Increase Your Health Insurance Premiums?
When you first take out a new health insurance policy, you’re the youngest you’ll ever be, you’ll have no history of claims, and the cost of medical treatments will likely be lower than they could be in the future.
These are the main reasons why health insurance premiums go up every year, with some factors playing a more significant role than others:
You’ll just get old.
It is a fact of life that today you are as young as you will ever be, and as you age, the risk of disease increases. For example, a third of all cancer diagnoses in the UK affect people over the age of 75. But it’s not just the increased risk of disease that comes with aging; as well as the cost of treatment, whereby complex and more expensive interventions are more common among people over 50 years old. Cancer treatment, for example, can cost hundreds of thousands to treat in the private sector, and will only be more expensive if they have co-morbidities (other medical conditions) to consider during treatment.
We’re also living longer, so health insurance providers are adjusting their prices to reflect the needs of an aging population and the fact that their overall health care spending is likely to rise.
Staying healthy can help keep increases to a minimum. Some providers reward a healthy lifestyle, so you can save money by adopting healthy daily habits like staying active, eating right, and keeping your weight within a healthy range. Policies that offer discounts usually require you to prove how much you exercise by wearing an activity tracker or taking part in events such as Parkrun.
If you make a claim, it will likely affect your premiums.
When you apply for treatment through your private health insurance, your insurance company pays the treatment provider for your medical care. Your policy includes financial limits for each type of treatment it covers or determines how many treatments you can have. Once you reach that limit, your private treatment will stop and you will have to seek NHS treatment or pay for private care yourself if you need more.
Most health insurance policies have a no-claims discount. Unlike car insurance, where you start at the bottom and work your way up, you start near the maximum discount level of around 65-70%, and as you claim, your discount level decreases. Of course, if you don’t claim, you can advance, but the maximum is usually around 80%, so you can lose more than you gain.
Along with your age, claims are one of the biggest influences on your renewal premiums, and if you lose much of your no-claims discount, you could find your premiums jump.
To learn more about this topic, read our guide to how each insurer treats claims and how they affect your no-claims discount.
Although NCDs are most commonly used for health insurance, some insurers offer different options, such as WPA’s “Pooled Risk”, which is similar to Freedom’s Community Rating, where the claims of all their members affect your premiums, not yours. Vitality also doesn’t offer a no-claims discount and instead calculates renewals on an A+B+C system.
Given the choice in this regard, it’s always worth seeking professional advice from a broker so you know what you’re signing up for and the pros and cons of the various options.
Treatment costs tend to rise; this is called medical inflation.
Medical inflation (and inflation in general) affects your health insurance costs in ways you can’t control. We’ve all seen how economic inflation has increased our cost of living recently, and the same rules apply to healthcare providers. When energy costs increase, heating and lighting in the hospital become more expensive, so medical costs also increase. While qualified medical professionals can expect good salaries, some hospital staff can earn minimum wage. Legislation occasionally increases the minimum wage or salary that employers must pay their staff. Insurers pass all these costs on to their clients through higher premiums.
Medical inflation works similarly, but refers to specific medical costs rather than the overall cost of running a clinic or hospital. Health care costs include the costs of treatments, surgeries, medical procedures, drugs and new technology. Many private healthcare providers pride themselves on investing in the latest technologies and giving their clients access to the latest treatments and medicines licensed in the UK but not currently approved for use in the NHS.
This can be a double-edged sword. While advances in medical technology may improve your chances of recovery or reduce side effects, they will also increase your health insurance premiums because insurance companies must cover the cost of new and advanced treatments.
One tip for reducing premiums without sacrificing too much coverage
There are several ways you can save money on your health insurance. Before we get to the trick, we’ll explain a few options that will help you reduce your health insurance premium by up to 20% at once.
Firstyou can increase the excess on your health insurance policy. Excess health insurance works the same as excess car insurance. You pay part of your treatment and your insurance company pays the rest. It lowers your premium because it reduces the amount your insurer will spend on your treatment. Some policies have an annual excess, while others apply it per treatment. You need to make sure that the excess is an amount you can afford so that it doesn’t completely put you off using your health insurance.
Elseyou can reduce your policy coverage. You can remove some extras on your shelf if you’re less likely to use them. Alternatively, you can keep your extra allowances but reduce the applicable financial limits. For example, you may initially pay unlimited coverage for some treatments, but decide to reduce it to a fixed amount.
It’s a good idea to talk to your broker before adjusting your cover level or increasing your excess to ensure you have the right cover for your needs. A broker can help you shop around and weigh the pros and cons before making any changes.
Finally, switching to a guided list of consultants can significantly affect your premium.
Switching to a guided list of advisors can save you around 20% on your health insurance premiums, sometimes more.
Guided selection of an adviser is an easy way to significantly reduce your health insurance premiums, but how does it work?
When you buy health insurance, your policy includes a hospital list detailing the hospitals and treatment centers that the policy covers. Every health insurance provider has a standard list that is automatically included with every policy.
Most policies also give you almost free choice as to which consultant will treat you, as long as they offer you private treatment at a hospital covered by your policy. If there is a consultant you particularly want to see because you know they specialize in the treatment you need or have a good track record, you can ask your health insurer if your policy covers them and the hospital where they work.
In contrast, when you add Guided Consultant Choice to your policy, you won’t have the same choice in who you see. With a guided list of consultants, your insurer will give you a shortlist of 3-5 consultants who offer the treatment you need, and you can choose which one you want to see. Guided list consultants are usually those who have agreed to the insurer’s fee schedule and therefore offer predictable treatment costs. All are still highly qualified, but can guarantee a lower cost of treatment.
Some very experienced consultants also agree to see a few patients each year at a fixed price lower than their normal fee.
Guided selection of a consultant is an easy way to reduce your premium. It’s also ideal if you don’t have a strong opinion on the best consultant for your needs or would appreciate some help and guidance.
Getting professional advice
At MyTribe, we provide general information about health insurance and ways to save on premiums. Talking to a specialist broker is the best way to access health insurance that meets your needs and lowers your premium. Contact us for a comparative quote and we’ll connect you with a regulated, high-quality broker for tailored advice.
Waiver: This information is general and what is best for you will depend on your personal circumstances. Talk to a financial advisor or do your own research before making a decision.
