Health Insurance For Unemployed

Find out some of the ways you can keep your private health insurance if you become unemployed with Savvy.

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, updated on July 10th, 2023       

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Health Insurance Banner - Worried young unemployed couple looking at bills and a laptop

Losing your job and becoming unemployed can affect your personal finances in many different ways, including your ability to maintain payments for your private health insurance. However, there are options open to you other than cancelling your health insurance, which you can find out about here with Savvy. Read our helpful guide to learn more about what you can do if you're unemployed and want to keep your health insurance.

What are my options for health insurance if I become unemployed?

If you’re unemployed, there are various options available to you to either help you pay your health insurance premiums or get through lean times until you’re able to find another job. Your options include: 

Suspending your health cover 

Many health funds in Australia allow you to temporarily suspend your health cover due to financial hardship. The length of time a suspension is permitted varies from fund to fund, ranging from two months up to two years in some cases. However, there are usually conditions attached to allowing a suspension, often including that you’ve been with the fund for at least a year and that your premiums are up-to-date when you request it.  

Reducing your level of cover 

This is an option to reduce the cost of your health cover. You could consider reducing the level of cover you have, such as from a gold hospital cover policy down to a silver or bronze policy, which can reduce the premiums you have to pay substantially. If you also have extras cover, you could also downgrade your cover from a top-level policy to a cheaper one to cut down the cost. 

Change policies to one with a higher excess 

The excess you agree to pay if you have to make a claim on your hospital insurance policy will affect its overall cost, with higher excess limits resulting in lower premiums. By staying with the same level of cover (such as gold, silver, bronze or basic) but accepting a higher excess, you can reduce the cost of your premiums. However, should you need to be treated in hospital, it’s important to be aware that you’ll have to pay more towards the cost of your treatment. 

Make a claim on unemployment cover 

Some top health funds are now offering unemployment cover as part of their benefits. This is a relatively new development in the health insurance field, so not all funds offer this option. You can read more about unemployment cover below. 

Cancelling your health cover 

You may decide to cancel your health cover if you become unemployed and are concerned you won’t be able to pay your premiums. However, before you take this step, it's well worth contacting your health fund and explaining your situation, as they may be able to offer you alternative options (such as a temporary suspension) rather than cancellation.  

You should be aware that if you do leave yourself with no health insurance cover, you may have to pay more private health insurance tax in the form of the Medicare Levy Surcharge. You may also have to re-serve waiting periods if you decide to re-join a health fund once you find a new job. This is on top of having to pay the full price of any treatments you may require while insured.

In addition, if you don’t have health cover after the age of 31, you may end up paying more for your health insurance if you do decide to join up again later in life, such as when you’ve found stable employment again. The Lifetime Health Cover (LHC) loading adds 2% onto the cost of your health cover per year you’re aged over 30, capped at a maximum of 70%. You’ll have to pay this extra amount for ten years continuously before it can be removed from your premium.  You can find out how much Medicare Levy you have to pay and how much private health insurance rebate you may be entitled to by using a health rebate calculator

What is health insurance unemployment cover?

Unemployment cover is offered by some of the top health funds in Australia, most frequently as part of their higher-level (gold or silver) hospital cover policies. It can cover the total cost of your premiums for a short period while you’re temporarily unemployed. It's usually only offered to health fund members who have paid their premiums for at least 12 months. The premium waiver can last from two months up to a year, but may only apply to your hospital cover policy or a combined policy, not to your extras-only cover.  

Hardship provisions have always existed within some health funds. However, widespread temporary unemployment in Australia resulting from the COVID-19 pandemic brought these provisions into media focus and resulted in a relaxation of the rules and an expansion of hardship provisions across several Australian insurers.  

There are also other conditions which can be attached to unemployment cover, but these vary between health funds. You should check with your insurer what their exact conditions are, but they may include:  

  • unemployment must affect the main income earner on a couples or family policy 
  • your policy premiums must be paid up-to-date when you request the waiver  
  • only one unemployment claim permitted per lifetime per member 
  • you will need to provide proof of your continuing unemployment 
  • the waiver will cease the month after you’ve regained employment 

Frequently asked questions about health insurance for unemployed

If I switch to a cheaper level of health cover, will there be extra waiting periods?

No – you won’t have to re-serve waiting periods you’ve already served if you switch to a lower-level policy. If you increase your cover again when you’ve found a new job and stay with the same health fund, you may not need to re-serve waiting periods again either, but this will depend on the exact rules of your particular health fund. If you upgrade your coverage with another insurer, you’ll likely have to re-sit waiting periods. 

If I'm now on a low income, do I still have to pay the Medicare Levy?

There are exemptions from paying the Medicare Levy for low income-earners. For example, if you're single and your taxable income is less than $23,365, you won’t have to pay the levy.  This exemption level is $36,925 for seniors and pensioners entitled to the SAPTO tax offset. If your income is between $23,365 and $29,207, you’ll also be entitled to a Medicare Levy reduction based on your family’s taxable income. 

If I cancel my health insurance, do I get a refund on cover I’ve already paid for?

If you've paid your health insurance premiums in advance and you cancel your health insurance policy, you may be entitled to a refund of the unused portion of the money you’ve paid up in advance, assuming you don’t have a claim pending on your policy. Check with your insurer if you’re unsure about whether you’ll be able to do so. 

Can I use my redundancy payment to pay my health fund premiums in advance?

Yes – if you receive a redundancy payment when you are terminated by your employer, you can choose to pay your health insurance premiums up to a year in advance. Some funds can offer discounts of between 3% and 6% on the overall price if you pay your health insurance premiums in advance for a year. 

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