A substantial portion of Australians on individual private health insurance policies are under-utilising their extras cover, according to a new analysis, raising concerns about the overall value being realised by this segment of the market.
Data from a national survey conducted by Money.com.au revealed that 40% of singles on health insurance claim on their extras just once or twice each year. This level of usage was significantly lower than that of members on couples policies (20%) and family policies (31%).
Chris Whitelaw, general manager of health insurance at Money.com.au, said the research points to a growing gap in benefit usage between singles and those with multi-person policies.
“It’s natural for couples and families to claim more frequently on their extras cover – more people on a policy means more people needing general or ancillary treatments, whether that’s dental visits, physio appointments, or optical check-ups. Someone on a single policy may naturally claim less, but if they’re only claiming once or twice a year, hypothetically for their bi-annual dental check-up, it means they’re still paying for dozens of benefits they’re not using,” he said.
He added that paying for benefits that are seldom accessed can result in substantial out-of-pocket costs over time.
“When it’s just you on a policy, there are fewer opportunities to claim – but you’re still paying for a full suite of extras. That’s where the singles cover trap kicks in: Many singles are forking out for benefits they barely use, leaving hundreds of dollars on the table every year,” Whitelaw said.
The average number of claims made by singles on extras cover is three per year, typically for services such as basic dental care, optometry, or physiotherapy.
The study found that 26% of singles claim three to five times a year, 16% claim between six and 10 times, and only 9% report more than 10 claims. Another 9% of single respondents stated they had not made any claims at all.
Usage rates among couples and families were generally higher. Couples were the most frequent claimants, with 17% making over 10 claims annually and 26% falling into the six to 10 claims bracket.
Families followed closely behind, although with slightly fewer high-frequency claimants.
Another recent Money.com.au survey also highlighted persistent confusion around the private health insurance tier system implemented in 2020.
The reform, which categorises hospital policies into four levels – Basic, Bronze, Silver, and Gold – was designed to simplify comparisons across insurers. Each tier sets a baseline of clinical services that must be covered.
Despite these intentions, 56% of survey participants with hospital cover said they only somewhat understood how the tiered system works, and 13% reported finding the structure just as difficult to interpret as the prior regime.
Whitelaw said feedback from policyholders suggests the system has not fully delivered on its objective of simplifying the market.
“The product tier system isn’t delivering the simplicity we expected. People are paying thousands in premiums each year without really knowing the inclusions and exclusions of their hospital cover. The feedback we’re getting is that the tier system feels like new jargon layered over old complexity,” he said.
