Lifetime Health Cover - Frequently Asked Questions

This page contains questions and answers regarding the Lifetime Health Cover.

Page last updated: 03 May 2016

Why do I need Private Health Insurance?

Private Health Insurance (PHI) is a ‘choice’ for all Australians. Those who have private health have peace of mind that comes with knowing they are covered for the best available medical treats when it becomes necessary. Private health provides member with the following benefits:

  • Gives you the option of being treated by your own doctor.
  • Shorter waiting times for elective surgery.
  • Control of when and where you want to be treated.
  • Helps with services not covered by Medicare such as chiropractic, dental, physiotherapy, optical, dietary advice and some alternative therapies.

What is Lifetime Health Cover (LHC)?

Lifetime Health Cover is a Government initiative that started on 1 July 2000. It was designed to encourage people to take out hospital insurance earlier in life, and to maintain their cover. LHC is a financial loading that can be payable in addition to the base rate premium for your private health insurance hospital cover. If you purchase hospital cover earlier in life, and keep it, you will pay lower premiums compared to someone who joins when they are older.

I received a letter about LHC, what do I need to do?

Each year the Department of Health posts letter to Australian citizens and permeant residents who recently turned 31 or registered for full Medicare benefits. The letters are sent to inform you about the LHC rules, which may affect whether you decide to purchase private hospital insurance.

Do people aged under 31 pay less under LHC?

No. A person who is aged under 31 when they take out hospital cover will pay the same premium as a person who first takes out hospital cover when aged 31. That is, they will pay the base rate premium.

How will LHC affect me?

If you don't have hospital cover before 1 July following your 31st birthday, you will pay an additional 2% of hospital cover premium every year you delay – up to a maximum of 70%. This extra cost will remain in place for 10 continuous years. No rebate is applied. LHC is an additional amount that you pay each year that will be applied on top of your premium.

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How do I avoid paying the LHC loading?

To avoid incurring a LHC loading, residents of Australia must ensure they hold appropriate hospital cover before they reach their LHC base day. Generally, the LHC base day for Australian citizens is 1 July following their 31st birthday.

How do I calculate my LHC loading?

As LHC can be complicated, there is a LHC Calculator available to people on the private health insurance website. People can check their LHC loading using the LHC Calculator at the following address: http://www.privatehealth.gov.au/dynamic/lifetimehealthcover.aspx

The calculator provides a printable calculation of your LHC loading based on your answers to a series of questions. Please note that the LHC Calculator will provide you with information based on legislation which commenced on 1 April 2007, The Private Health Insurance Act 2007 (the Act). If your current hospital cover commenced on or before 31 March 2007, your LHC loading, if any, is based on previous legislation (refer caller to Department of Health).

What if I take out Private Health Insurance after 1 July following my 31st Birthday?

People who purchase hospital cover for the first time after the 1 July following their 31st birthday will pay a LHC loading. This loading is based on the person's LHC age. The loading is 2% for each year the person's LHC age is over 30.

There is a LHC Calculator on the Private Health website at www.privatehealth.gov.au. This calculator will calculate your loading based on the answers you provide to a series of questions designed to determine your LHC age.

I have a LHC loading; will I have to keep paying this loading for as long as I have hospital cover?

Any LHC loading that a person is required to pay will be removed from their premium after 10 years of continuous hospital cover.

The accumulation of the 10 year period can be interrupted by “permitted days without hospital cover” without reverting back to zero. However, any “permitted days without hospital” cover does not actually count towards the accumulation of the 10 years. Only days on which you are paying the LHC loading will count towards your 10 years accumulation. If your 10 years of continuous hospital cover is interrupted by any “permitted days without hospital cover”, then the 10 year period is extended by that number of days.

You may change health insurer, upgrade or down grade your hospital cover without it affecting the accumulation of your 10 year period.

If you benefit from the removal of your LHC loading and then decide to cancel your hospital cover, you may become liable to pay a LHC loading again in the future.

It is important that you provide your insurer with appropriate evidence to help them to calculate when your LHC loading should be removed.

I have Hospital cover how can I see how much I have paid?

If you are unsure how much loading you are paying, then contact your health insurer or refer to the annual statement that your health insurer sends you detailing your LHC status.

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I am an Australian who was living overseas when LHC was introduced.

Under the LHC legislation, people who were Australian citizens or Australian residents on 1 July 2000 (when LHC was introduced) who turned 31 on or before 1 July 2000 and were overseas on 1 July 2000 are taken to have held hospital cover on their LHC base day.

You can have returned to Australia for periods of up to 90 consecutive days, and still considered to be overseas.

When you return to Australia for a period longer than 90 days you will be taken to be using your “permitted days without hospital cover” from when you return until when you take out hospital cover. If you exceed your “permitted days without hospital cover” i.e. remain without hospital cover for a period longer than 1094 days after your return to Australia, you will incur a LHC loading on the 1095th day of 2%. This loading will increase by 2% for every year you continue to be without hospital cover.

I am an Australian that was overseas on the 1 July following my base day.

If a person is overseas on their LHC base day (1 July following their 31st birthday or, for new migrants, the anniversary of when they are registered as eligible for full Medicare benefits), they have 12 months starting from the day they eventually arrive back in Australia to purchase hospital cover without paying a LHC loading.

If they delay purchasing hospital cover until after 12 months following their return to Australia, then they will be required to pay a LHC loading as normal, should they choose to purchase hospital cover in the future. This will be equivalent to an additional 2% on top of their hospital cover premium for each year they are over 30 at the time they purchase hospital cover.

Note: a person is able to make return visits to Australia of up to 90 consecutive days and still be considered to be overseas for LHC purposes. If they are in Australia for a period which exceeds 90 days then they are considered to have returned to Australia and their 12 month grace period commences from the date they returned

I am going overseas. Can I drop my private hospital insurance without incurring a LHC loading?

If you have private health insurance hospital cover and are going overseas, there are two ways to cease paying for your hospital cover during the period you are overseas without incurring a LHC loading on your private hospital insurance.

1: Suspension

you can apply to your health insurer for a suspension of your private hospital insurance. Periods of suspension may be granted at the discretion of your insurer. Your insurer decides how long the suspension will be. For LHC purposes, periods of suspension count as periods with private hospital insurance. You do not pay a loading for any period you were granted a suspension.

2: Cancellation

If you will be overseas for at least 12 months, you can cancel your private hospital insurance and when you return to Australia you do not have to pay a loading to cover your period overseas. This is different from suspension because it lasts as long as you are overseas - your insurer does not decide how long you can cancel for.

You can return to Australia for visits for up to 90 days at a time and you will still be considered to be overseas.

When you return to Australia for a period longer than 90 days you will be taken to be using your 1,094 “permitted days without hospital cover” from when you return until when you take out hospital cover. If you exceed your “permitted days without hospital cover” i.e. remain without hospital cover for a period longer than 1,094 days after your return to Australia, you will incur a LHC loading on the 1095th day.

If you commence private health insurance after you return, your insurer may ask you to provide evidence of your period overseas. You can obtain a copy of your international movement record from the Department of Immigration and Citizenship.

What are ‘permitted days without hospital cover’?

The Government understands that there are various reasons private health insurance members may need to drop their membership for brief periods. Therefore, the LHC legislation allows privately insured people who need to drop their membership, for whatever reason, a cumulative period of 1,094 days without hospital cover through their lifetime without affecting their LHC age. You can only use “permitted days without hospital cover” if you have held private health insurance hospital cover on or after your LHC base day and have been assigned a LHC age. If you want to find out how many of your “permitted days without hospital cover” you have used, you should contact your insurer.

What happens if I use all my ‘permitted days without hospital cover’?

You will only ever be permitted 1,094 days. If you exceed your permitted days you will be liable for an additional 2 percent loading for every 365 days you do not have appropriate hospital cover.

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I held health insurance whilst overseas.

Overseas health insurance does not count for the purposes of LHC. LHC operates under the authority of Australian legislation, namely the Private Health Insurance Act 2007 (the Act). The Act stipulates that only a Complying Health Insurance Product (CHIP) can protect people against incurring LHC loadings. A health insurance policy can only be a CHIP when it is offered by an Australian registered private health insurer and meets the requirements of the Act.

Do I need to provide any documentation to my insurer?

If someone commences private health insurance in Australia after returning from an overseas trip, their insurer may ask them to provide evidence of their period overseas. The insurer may request their International Movement Record form (Form 1359), which is available from the Department of Immigration and Border Protection.

The record can be downloaded from the following web address: https://www.border.gov.au/Forms/Documents/1359.pdf

I recently migrated to Australia.

If you are a new migrant to Australia your LHC base day will be the later of:

  • 1 July following your 31st birthday; or
  • The first anniversary of the day you registered for full Medicare benefits.

If you take out private health insurance hospital cover before your base day you will not have to pay a LHC loading on your cover. If you take out hospital cover after your base day you will have to pay a LHC loading of 2% for every year you are aged over 30.

I live/have lived on Norfolk Island.

From 1 July 2016, Norfolk Island residents will be eligible for Medicare benefits and therefore subject to LHC. There is a 12 month grace period for those aged over 31 to purchase private health insurance hospital cover with an Australian registered insurer without incurring an LHC loading. Residents that purchase hospital cover after their LHC deadline will have to pay an LHC loading of 2% more on their hospital insurance premiums for each year they are aged over 30 when they first take out hospital cover.

I have Private Health Insurance in my country does this count?

No, overseas health insurance does not count for the purposes of LHC. LHC operates under the authority of Australian legislation, namely the Private Health Insurance Act 2007 (the Act). The Act stipulates that only a Complying Health Insurance Product (CHIP) can protect people against incurring LHC loadings. A health insurance policy can only be a CHIP when it is offered by an Australian registered private health insurer and meets the requirements of the Act. However, migrants have a grace period of 12 months from when they register for full Medicare benefits to purchase hospital insurance without incurring a loading.

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How do I obtain my Medicare Eligibility Letter?

A health insurer may request that a new migrant provide a written statement from the Medicare showing their registration date in order to determine whether a LHC loading should be applied to their premium.

These letters formally known as Medicare Eligibility Letters can be issued by Medicare to Medicare card holders upon request. Migrants can obtain their letters from their local Medicare office or by contacting Medicare on 13 20 11.

Is there a list of Australian Registered Insurance providers can I join?

Health funds are either registered as a ‘restricted’ or ‘open’ membership organisation.

A ‘restricted’ membership organisation provides policies only through specific employment groups, professional associations or unions. For example ‘Defence Health’ provide serving / former members of the ADF and the Defence community and their families.. ‘Doctors Health Fund’ provides doctors & health practitioners & their employees and families. There are currently 10 listed organisations that fit into this category. http://www.privatehealth.gov.au/dynamic/restrictedfunds.aspx

An ‘open’ membership organisation provides policies to the general public. For example singles, couples, students, pensioners. There are currently 23 listed organisations that fit into this category. http://www.privatehealth.gov.au/dynamic/healthfundlist.aspx

Larger ‘open’ membership insurers offer different policies for different states, or the same policies at different premiums. These state differences are based on the different costs of benefits and health services in various states and, in some cases, different state government health arrangements.

You should make sure the health insurer you select provides adequate cover in the state or region where you live. If you are considering moving interstate, you should check with your insurer about your cover in your new area.

I can't afford hospital cover.

All Australians are entitled to receive free public hospital treatment under Medicare. This means that you do not have to take out private hospital cover in order to have access to high quality hospital services.

The decision to purchase private health insurance is a personal choice. People who cannot afford the premiums for private health insurance or do not wish to take out private health insurance for any other reason, continue to have the right to access the public hospital system through Medicare on the basis of clinical need.

I currently have private health insurance but am experiencing financial difficulty.

If you have private health insurance and are unable to afford your premiums due to financial hardship you have a number of options.

Option 1

You might like to consider approaching your health insurer to seek a suspension of your membership. You can suspend your membership without incurring a loading on your premium.

Option 2

You may also be able to drop your cover without incurring a loading on your premium. Under the LHC “permitted days without hospital cover” provision members are able to drop their cover for a cumulative period of 1094 days in their lifetime without affecting their LHC age. However, if you exceed your “permitted days without hospital cover” i.e. remain without hospital cover for a total period longer than 1094 days, you will incur a LHC loading or, if you already have a LHC loading this will begin to increase, by 2% for every year (or partial year) that you remain without hospital cover. You must have held hospital cover on or after your LHC base day and been assigned a LHC age before you are able to access “permitted days without hospital cover”.

Option 3

You may also like to consider changing your level of private health insurance to a lower level of cover that is more affordable. As long as you maintain some level of hospital cover with a registered health insurer you will satisfy the LHC requirements.

I want to change my private health insurance provider?

Under LHC you are able to transfer from one insurer to another without incurring any extra LHC loading.

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Can I vary the level of my private health insurance cover without affecting my LHC status?

Yes. You are able to upgrade or downgrade your hospital cover policy under LHC without affecting your LHC age. If you have a LHC loading the same percentage loading will apply to any hospital cover premium regardless of whether you change to a higher or lower level of cover.

The only circumstances under which your LHC loading would be affected by a variation to your private health insurance cover would be if you changed from a policy that includes hospital cover to a policy that does not. In this case, “permitted days without hospital cover” would apply. That is, your LHC loading would be unaffected for the first 1,094 days that you were without hospital cover. On the 1,095th day, your LHC loading would increase by 2%, and would continue to increase by 2% for each year you are without hospital cover from that point onwards.

I want to change from a single policy to a family or couples policy how is my LHC loading affected?

If in the future you decide to take up family or couples cover, there is no problem doing so. The premium that you pay for your couples or family cover will take into account your LHC age as well as you partner's LHC age. In case of joint hospital cover, the LHC loading is determined by averaging out the respective loadings of the adults covered by the policy.

So, if two adults decide to purchase a family hospital cover policy and both are liable to pay a LHC loading, then their health insurer will determine the applicable LHC loading by adding the two LHC loadings together and then dividing the result by 2.

The same would apply if only one of the adults covered by the same family hospital cover policy had a LHC loading.

Special Circumstance - born on or before 1 July 1934.

People who were born on or before 1 July 1934 are not affected by LHC. They can take out private hospital cover at any time and pay the base rate premium.

Special Circumstance - Australian Defence Force member.

Under LHC, everyone who is a member of the Australian Defence Force (ADF) on continuous full-time service and whose health services are provided by or through the ADF are taken to have hospital cover for LHC purposes for the period that they are a member of the ADF.

When you are discharged from the ADF you will be taken to be using “permitted days without cover” until you take out private health insurance hospital cover. If you exceed the “permitted days without hospital cover” LHC loadings will apply should you choose to take out hospital cover in the future.

Therefore, if you were a member of the ADF on 1 July following your 31st birthday or 1 July 2000 you will not have a LHC loading if you take out hospital cover immediately after discharge. If you already had a LHC loading when you joined the ADF this will remain the same as when you joined the ADF if you take out hospital cover immediately after discharge.

Special Circumstance - Veteran

The Department of Veterans’ Affairs (DVA) on behalf of the Australian Government provides convenient access to health and other care services for veterans, war widows and eligible dependants. There are 3 categories of DVA health cards, they include: Gold, White and Orange.

More information regarding DVA card entitlements can be viewed at: http://www.dva.gov.au/providers/dva-health-cards

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Can I apply for an exemption from my LHC loading?

No. There is no means by which the Minister or the Department of Health and Ageing can reduce or remove a correctly calculated LHC loading. According to the current legislation, the only means by which a person may have their LHC loading removed is by paying their LHC loading for a continuous period of 10 years.

I have served 10 Year continuous cover how is this calculated?

As LHC can be complicated, there is a LHC Calculator available to people on the private health insurance website. People who are currently paying for hospital cover with a LHC loading. It will help you determine if you have paid a loading on your hospital cover for at least ten years. Address: http://www.privatehealth.gov.au/dynamic/lifetimehealthcover.aspx

It is based on the provisions of the Private Health Insurance Act 2007. Under that legislation, any loading you are required to pay ceases after ten continuous years, or where more than ten years have elapsed, after ten years only interrupted by certain periods overseas, or other permitted breaks.

What documentation should I provide to my insurer as evidence of my 10 years of continuous hospital cover so my LHC loading can be lifted?

Your private health insurer should be provided with a copy of any documents that have been used to calculate or verify your LHC loading such as transfer certificates or leaving certificates from previous insurers, records of policy suspension, international movement records etc.

If you have changed insurers taking out private health insurance you should obtain a copy of your records from your previous insurer or grant them permission to provide your records to your new insurer on your behalf. You should maintain a copy of these documents for your own records.

How does LHC affect me after my loading has been dropped?

If you benefit from the removal of your LHC loading and then decide to cancel your hospital cover, you may become liable to pay a LHC loading again in the future.

If your LHC loading is removed after 10 years of continuous cover and you later cancel your hospital cover, then on the first day after the cancellation that is not a “permitted day without hospital cover” you will incur a LHC loading of 2% in addition to any amount that previously existed before it was removed.

The loading will increase by 2% each year until you re-join hospital cover.

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