There’s a particular envelope that arrives every March or April, and most of us open it with a small wince. It’s the letter from the health fund explaining that premiums are going up again, this year by an average of 4.41%, the largest single increase since 2018.
When a bill rises, the instinct is to look for something to cut. For a lot of Australians in their sixties and seventies, the first thing on the chopping block is extras cover. Hospital cover feels essential; extras can feel like a nice-to-have.
That instinct is worth pausing on, because the arithmetic often runs the other way. The services extras cover pays for are precisely the ones you start using more, not less, as the years go on.
The services you actually start claiming
Extras cover, sometimes called general or ancillary cover, pays towards routine healthcare you receive outside a hospital. Medicare doesn’t fund most of it. The typical list includes general and major dental, optical, physiotherapy, chiropractic, podiatry, psychology, remedial massage, speech therapy, orthodontics, acupuncture and hearing aids.
Read that list again with a sixty-fifth birthday in mind.
Dental is the obvious one. Adult dental sits almost entirely outside Medicare, and the work gets more involved with age: crowns, bridges, periodontal treatment, extractions. A single crown can run well past a thousand dollars.
Optical stops being occasional, because reading glasses become progressive lenses and prescriptions change more often.
Hearing aids are the quiet budget-wrecker. They’re expensive, they aren’t covered by Medicare for most adults, and the need for them climbs steeply through the sixties and seventies.
Physiotherapy and podiatry shift from injury treatment to maintenance: managing a knee, keeping a back working, looking after feet that have done a lot of walking.
None of these are catastrophic costs in the way surgery is, which is exactly why they slip through the cracks in a retirement budget. They’re the four-hundred and eight-hundred-dollar costs that arrive several times a year and never quite get planned for.
Cover is not the same as a plan
Roughly 55% of Australians held some form of extras cover as of March 2025, which sounds reassuring until you look at how many of them know what their policy actually pays.
Extras policies come in tiers, usually basic, mid-level and top, and each service inside them carries its own annual benefit limit. A policy that technically “includes dental” might cap dental benefits at a figure you’ll clear in one visit. Two policies at a similar monthly price can differ enormously in what they hand back over a year.
So the useful question isn’t whether you’re covered. It’s what you claimed last year, and what you would have claimed if the limits were higher.
You can answer that with an old-fashioned method. Dig out twelve months of receipts and statements, add up what you actually spent on dental, optical, physio and the rest, then set that against your premiums and your benefit limits. Most people find one of two things: either they’re paying for a tier of cover they never touch, or they’re hitting a limit in June and paying full price for the second half of the year.
Either finding is worth money, and both are invisible until you look.
The switching detail almost nobody knows
Here’s a genuine trap. With hospital cover, portability laws mean that if you switch funds, you generally don’t re-serve waiting periods you’ve already completed.
Extras cover has no equivalent legal protection.
In practice, most funds do waive extras waiting periods for people transferring across with equivalent cover, but they aren’t obliged to, and the detail varies fund to fund. If you switch in March and your new fund resets a twelve-month wait on major dental, the crown you were planning becomes a cash purchase.
If you’re considering a change, ask one question before signing anything: which waiting periods will you waive, and will you put that in writing?
Where this sits in the bigger retirement picture
Health costs are one of the more slippery lines in a retirement budget, which is part of why estimates of what you need to retire vary so widely. As Reader’s Digest has explored, the real figure is often a lot less than people assume, provided the recurring costs are actually mapped rather than guessed at.
It also sits alongside the other insurance decisions that change shape in later life. The calculus on life insurance in your golden years is genuinely different from the calculus at forty, and the same is true of health cover. With broader economic shifts reshaping senior living and retirement plans, the cost of staying well at home has become a larger share of the picture than it once was.
The through-line is that these are all decisions that reward a review and punish autopilot.
A modest annual ritual
Health insurance is designed to be forgotten about. The premium comes out automatically, the letter arrives once a year, and unless something goes wrong there’s no prompt to look under the bonnet.
So make your own prompt. When the premium letter lands, around the start of April when the increases take effect, put an hour aside. Pull your claims history. Check your limits against what you actually used, then ask whether the tier you’re on still matches the body you have now rather than the one you had a decade ago.
Then check what else is available. The major funds hold close to 80% of the market between them, which means the field is more concentrated than most people realise, and it also means the differences between the remaining options are worth knowing about. It takes a couple of minutes to compare your health insurance with Compare Club and see how your current policy stacks up against the alternatives.
You might conclude you’re on the right policy. That’s a perfectly good outcome, an hour spent confirming something rather than discovering it.
But if you’re one of the many people paying for a top-tier extras policy while claiming at a basic-tier rate, or hitting your dental limit halfway through every year, that hour will pay for itself several times over. And it will do so in the part of the budget where the costs are least dramatic and most relentless.
