A recent survey conducted by Money.com.au has indicated that nearly a quarter of Australian families with private hospital insurance have refrained from using their coverage due to the financial burden of gap fees.
According to the findings, 23% of family policyholders have skipped hospital claims, citing out-of-pocket costs as a deterrent – more than any other policy group. This figure contrasts with 17% of couples and 15% of single policyholders who reported similar behaviour.
The data also revealed that families were least likely to proceed with a hospital insurance claim when treatment was required. Only 43% said they had used their insurance in such circumstances, compared to 44% of singles and 64% of couples.
Chris Whitelaw, general manager of health insurance at Money.com.au, said families tend to face higher claim volumes due to the nature of their household structure.
“Families typically have more people on their policy and as a result, more opportunities for hospital claims, whether it’s childbirth, tonsil removals, or sporting injuries. That means more exposure to gap fees and higher out-of-pocket costs over time compared to singles or couples with cover,” he said.
The survey also pointed to a lack of clarity around policy inclusions as a barrier to use, especially among singles.
One in five individuals with single policies said they avoided making hospital claims because they weren’t confident about what their insurance covered and feared unexpected charges. This uncertainty was less pronounced among families (12%) and couples (9%).
Additionally, 22% of both singles and families reported never needing to make a hospital claim, while only 10% of couples indicated the same.
In response to these challenges, Money.com.au advises families and individuals to explore no-gap or known-gap providers and consult their health fund before scheduling procedures.
Whitelaw noted that many insurers provide access to affiliated hospitals and practitioners who offer services with limited or no out-of-pocket costs.
Consumers are also encouraged to understand how their excesses and benefit limits operate, as these features vary by policy and can influence overall affordability. For instance, some funds apply per-person excesses or waive them for children under a certain age.
In a separate survey released in May, Money.com.au reported that 40% of singles with extras insurance only made one or two claims per year. In comparison, lower levels of underuse were found among those with couple (20%) or family (31%) policies.
Whitelaw said this trend reflects a lower frequency of services used under extras cover among single policyholders.
“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.
Survey data showed the average single made three extras claims annually, mostly for basic treatments. Around 26% submitted three to five claims, 16% made six to 10, while only 9% made more than 10. Another 9% had not made any claims at all.
In contrast, 17% of couples claimed more than ten times per year, with 26% falling into the six-to-ten bracket. Families followed a similar pattern, although fewer made high-frequency claims.
Introduced in 2020 to streamline health insurance comparisons, the tiered classification of hospital cover – ranging from Basic to Gold – still causes confusion among policyholders, according to the another Money.com.au survey.
Over half of respondents with hospital insurance said they only partially understood how the tier system works, and 13% said it was just as confusing as the previous approach.
Whitelaw said that while the tier system was intended to simplify the market, feedback suggests that many consumers still struggle to grasp what is included in each level.
