How to Cancel Your Health Insurance

Find out how to cancel your private health insurance and learn about some of the alternatives with Savvy.  

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, updated on July 10th, 2023       

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Health Insurance Banner - Older couple looking at a laptop and tablet before cancelling their health insurance

Are you considering cancelling your private health insurance? If so, are you aware that there are ways to reduce your premiums, which may make your health cover more affordable? Find out how to cancel your health insurance, as well as some of the alternatives to doing so, with Savvy. 

Compare lower-cost alternatives and get free quotes on hospital and extras cover policies which may prove to be even more affordable through us online. Consider your options through Savvy today. 

How do I cancel my health insurance policy?

It's possible to cancel your health insurance at any time you choose, simply by contacting your insurer either by phone or through an online form. If you decide to cancel your policy, your health insurer should pay back any premiums that you may have paid in advance.  

If you’re cancelling to switch to another fund, you’ll need a Transfer Certificate, which may also be known as a Clearance Certificate. This is a formal document issued by one health fund to another which shows all the details of the health cover you’ve previously had in place. This can often be sourced by your new insurer, who can request this from your old insurer. 

Knowing the exact dates you opened and closed your health insurance policy is important, as you may need them when it comes to tax time. 

What are the implications of cancelling my health insurance?

If you cancel your private health insurance, you’ll have to pay the full cost of any medical treatments you receive out of hospital should you require them and you’ll only be able to receive treatment as a public patient for Medicare-funded treatments.  

You'll also have to join public hospital waiting lists if you require non-urgent medical treatment, meaning you could be waiting months or even years to see a specialist and get the treatment you need. Without any extras cover, you’ll also need to pay the full cost of any out-of-hospital treatment. 

Further added costs related to cancelling your health insurance

However, if you cancel your hospital health cover, there are further implications, because it may mean that you pay more health insurance tax. Those who don’t have hospital cover and earn more than $90,000 p.a. may have to pay the Medicare Levy Surcharge (MLS). This is a second tax in addition to the Medicare Levy, which all Aussies are required to pay to help fund our public health system.  

The Medicare Levy Surcharge is an extra charge of between 1% and 1.5% of your income, depending on how much you earn. Higher income-earners will pay the higher level of MLS. If you cancel your health insurance part-way through a financial year and you earn over $90,000 p.a., you may have to pay a portion of the MLS for the number of days you were uninsured. 

If you decide to buy health insurance again later in life but have been uninsured for several years, your health cover may end up costing you more. This is because Australians who have no health insurance after the age of 30 have to pay more for their cover under a scheme called the Lifetime Health Cover (LHC) loading.  

This loading adds 2% to the cost of your cover for every year you’re aged over 30 and remain uninsured, capped at a maximum increase of 70%. You’ll pay this additional percentage on top of your health insurance premiums until you’ve had private health cover for ten continuous years. You should consider this additional cost when deciding if your health insurance is really worth it. 

What are the alternatives to cancelling health insurance?

If you're considering cancelling your health insurance, it’s important to know what the alternatives to doing so are. Some of these include: 

Swap providers 

You can compare a wide range of health insurance policies from a panel of leading insurers through Savvy to see if there’s a cheaper policy available offering similar or otherwise suitable cover. 

Suspend your health cover 

Some funds allow you to suspend your health cover, either due to financial hardship or because you’re travelling or working abroad and won’t be in Australia for an extended period. Suspending your cover could save you having to re-serve waiting periods, but not all providers will enable you to do so. 

Find a great special offer  

By comparing the latest special offers available, you may be able to save money by taking advantage of a new deal on your health insurance. This could involve waived waiting periods for certain treatments under extras cover, or even weeks of free cover once you’ve signed up for a new policy and paid your premiums for a few weeks. Special offers can also save you money on existing services; for example, if you currently pay for a gym membership, you may be able to get one for free (or a free pay TV subscription) through a special offer with your new health fund. 

Choose a lower hospital cover tier 

You could also consider a lower-tier hospital cover policy. This will still provide you with cover in a (more limited) range of areas but can help you save money on your premiums and keep your foot in the door when it comes to accessing certain hospital treatments as a private patient. 

Set a higher excess 

You may also consider increasing the size of your excess, which can also significantly reduce your premiums. The greater the size of your excess, the less you’ll be required to pay for your premiums, though you’ll have to fork out more if you end up needing treatment in hospital. 

Lower level of extras cover 

Some may also consider reducing the level of their extras cover, particularly if they haven’t used many of the benefits of their policy in the last 12 months. Carefully assess the coverage you may need when determining whether a step down is the right move for you. 

Get ambulance-only cover  

If you’re wondering whether hospital cover or extras cover is worth it, another option is to downgrade to ambulance-only cover, so you’re covered just in case you require transport to hospital and treatment along the way. However, ambulance cover may not be necessary in all states and territories, as Queensland and Tasmania both offer a level of free ambulance cover to their residents (although terms and conditions do apply for this coverage). 

Frequently asked questions about cancelling health insurance

If I cancel my health insurance policy but change my mind, is there a cooling-off period?

Most funds offer either a 21-day or a 30-day cooling-off period, so if you change your mind about cancelling, you can restart your insurance and continue on as before.  

What are ‘permitted days of absence?’

Each person is permitted 1094 days in their life without private health insurance (in other words, three years less one day) after the age of 31 before they have to pay a Lifetime Health Cover loading on top of the normal cost of their health cover premium. 

Does my health insurer have to agree to suspend my insurance?

No – health funds aren't obligated to agree to a suspension of your health cover, although many will agree to it if you intend to travel overseas and will not be located in Australia for some time.  

If I cancel my health insurance and return to the same fund, will I have to serve my waiting periods again?

If you cancel your health insurance and remain uninsured for a period of time, you may have to re-serve waiting periods when you do decide to take out private health insurance again later in life. However, this is worth checking with your insurer if you’re unsure. 

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We can help you compare health insurance policies side-by-side, with affordable hospital, extras and ambulance coverage offers from trusted insurers. Get started with a free quote today!

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