Private health insurance

Changes to Lifetime Health Cover

This section of the website contains information on changes to Lifetime Health Cover. Lifetime Health Cover (LHC) was introduced in July 2000 and involves a penalty for people aged over 30 who do not hold private health insurance hospital cover.

• Fact Sheet
• Questions and Answers
• Printable version of Changes to Lifetime Health Cover (PDF 25 KB)

Fact sheet

Changes to Lifetime Health Cover

Lifetime Health Cover (LHC) today

Lifetime Health Cover (LHC) was introduced in July 2000 and involves a financial loading for people aged over 30 who do not hold private health insurance hospital cover and then take it out.

For each year after the 1July following a person's 31st birthday, a 2% loading (cumulative) is added to the cost of the private health insurance premium up to a maximum of 70%. Those born before 1 July 1934 are exempt from the penalty.

Health insurers are required to charge different premiums based on the age of each particular member depending on when they first took out private health insurance.

Currently, health insurers charge the financial loadings on top of premiums paid by people who did not have private hospital cover while they were younger or did not join before 1 July 2000.

The loadings have meant that a person who delays joining until the age of 40 has had to pay 20% more than someone who joined at the age of 30.

Changes are being made to the Lifetime Health Cover arrangements

There are two changes to be made to LHC.

Firstly people who do not have private health insurance and are about to be affected by LHC will be sent a letter from Medicare Australia reminding them of their LHC deadline and that they may incur a LHC loading.

Secondly, people who have paid a LHC loading on their private health insurance for 10 continuous years, will be entitled to have the loading removed.

People who benefit from removal of the loading, and then leave health insurance to rejoin in the future, will be subject to the LHC loading at the rate that would have applied had the loading not been removed.

Why have the new arrangements been introduced?

The Government is committed to ensuring that private health insurance remains affordable for people who have private health insurance.

The new arrangements will mean that those who do not have private health insurance and are about to be affected by LHC will be given every opportunity to take out cover. Top of page

Previously, LHC loadings were for life and could never be removed. The Australian Government is now rewarding people who hold continuous cover for 10 years by removing their LHC loading.

People who are paying the LHC loadings will be encouraged to retain their private health insurance because the loading will be removed after 10 years.

When will the changes be made?

From 2010, the first beneficiaries of the removal of the LHC loading will begin receiving reductions in their premiums. The reductions will remain as long as the member retains their cover.

Commonly asked questions about the changes are addressed in the attachment.

Questions and Answers

Changes to the Lifetime Health Cover loadings

What is Lifetime Health Cover?

Lifetime Health Cover (LHC) is a Government initiative introduced in July 2000. It is designed to encourage people to take out private health insurance earlier in life, and to maintain their cover.

What does it mean for me?

The change means that people will no longer have to pay any LHC cover loadings after they have held private health insurance cover continuously for 10 years on which they have paid the loading.

When will members have their loadings removed?

The first reductions in premiums will occur after July 2010, for those members who joined in 2000 and have paid a loading continuously over the ten years.

How many people will the new arrangements affect?

Currently, approximately 60,000 people each year who take out private health insurance are subject to a LHC loading.

Do I have to have been a member of the same fund for the Lifetime Health Cover loadings to be removed?

No. The legislation protects a member's right to change funds without penalty.

The LHC loadings will be removed if a person pays a loading on their private health insurance for 10 years regardless of the number of funds of which they may have been a member.

What happens if I drop my private health insurance after the loading is removed?

If you drop your cover after the loading has been removed, and then rejoin a health insurer the LHC provisions will reapply.

You will be subject to the LHC loading at the rate that would have applied had the loading not been removed.

Do the new arrangements change the arrangements for general cover (previously called ancillary)?

People who only have general health insurance cover do not have to pay the LHC loadings.

Lifetime Health Cover loadings only apply to hospital cover. Top of page

Will this increase the premiums of other private health insurance members?

No. The change is not expected to have an impact upon premiums for other members.

What will be the impact on waiting periods?

None. There will be no changes to the rules relating to waiting periods.

What will be the impact upon private health insurance membership?

The new arrangements should aid member retention by rewarding members who pay the loading on their private health insurance for 10 years continuously.

What will be the impact upon the private health insurance rebate?

None. There will be no impact upon the private health insurance rebates. If you are eligible for the 30%, 35% or 40% rebate, the relevant rebate will continue to apply to the total premium you have paid.

Why is this change being introduced?

Currently the LHC loadings cannot be removed. The change will mean that those people who have held their private health insurance for 10 years continuously to which the loading has applied will have their loading removed.

Notice of Lifetime Health Cover deadlines

When will people begin receiving letter from Medicare Australia about their upcoming LHC deadline?

The first letters to be issued by Medicare Australia were sent in June 2007.

How many people will the new arrangements affect?

Over 300,000 people each year turn 31 years old or registed for Medicare benefits.

These people may all become subject to a LHC loading.

What will be the impact upon private health insurance membership?

The new arrangements may increase membership as those notified of their LHC deadline take advantage of this notice and avoid a loading by joining a private health insurance insurer. Top of page