What is Lifetime Health Cover?
Lifetime Health Cover involves a financial loading (LHC loading) on your private health insurance hospital cover (hospital cover). It is designed to encourage people to take out hospital cover earlier in life, and to maintain their cover. If you take out hospital cover earlier in life, and keep it, you will pay lower premiums compared to someone who joins when they’re older.
If you don’t want to pay a LHC loading you need to buy hospital cover with an Australian registered health insurer before your LHC deadline. Your deadline is 1 July following your 31st birthday; or for new migrants to Australia, the later of:
- 1 July following your 31st birthday; and
- 12 months from your registration for Medicare.
LHC loadings apply only to hospital cover. They do not apply to private health insurance general treatment cover (also known as ancillary cover or extras).
If you take out hospital cover before 1 July following your 31st birthday, you will avoid paying a LHC loading on your hospital cover.
If you take out hospital cover after this date you will pay a LHC loading of two per cent for each year you are over 30. For example, if you take out hospital cover at the age of 40, you’ll be paying an extra 20 per cent on the cost of your hospital cover. If you wait until you are 50, you’ll pay 40 per cent more. And so on, up to a maximum of 70 per cent more.
What if I miss my Lifetime Health Cover loading deadline?
If you take out hospital cover after your LHC loading deadline you will have to pay a LHC loading of two per cent for every year you are over 30. If you maintain continuous hospital cover for 10 years the LHC loading is removed and you will no longer have to pay the LHC loading on your hospital cover. However, if you choose to cancel your hospital cover then take it out again later you may have to pay a LHC loading when you rejoin.
- Naomi turns 31 on 1 March 2008. She takes out a singles hospital cover policy on 21 April 2008 (before 1 July following her 31st birthday). The cost of her chosen hospital cover policy is $1,000 per year. If she had waited until August 2008 (after 1 July following her 31st birthday) she would have to pay an extra two per cent on the cost of her policy ($1,020 per year). If Naomi had waited until October 2013, when she would be 36 years of age, to take out the same hospital cover policy, she would have to pay a LHC loading of 12 per cent. This would be an extra $120. The LHC loading will apply for 10 years of continuous hospital cover, so over this period she would pay an extra $1,200.
- Matt is aged 55. He has a private health insurance policy for general cover to help him pay for his glasses and dental treatment but he does not have hospital cover. If he now decides to take out hospital cover he will have to pay a LHC loading of 50 per cent. That means if he takes out the same singles hospital cover as Naomi it will cost him $1,500 per year instead of $1,000. Over the 10 years in which the LHC loading applies he will pay an extra $5,000.
Are there any other special circumstances?
If you are an Australian citizen or permanent resident who is overseas on your LHC loading deadline (i.e. 1 July following your 31st birthday), you will not pay a LHC loading if you purchase hospital cover before the first anniversary of the day you return to Australia. You are able to return to Australia for periods of up to 90 consecutive days, and are still considered to be overseas. Other considerations include if you are a member of the Australian Defence Forces (ADF) or if you hold a Department of Veterans’ Affairs Gold Card.
Where can I find out more about Lifetime Health Cover?
There is a government website that provides information on private health insurance and Lifetime Health Cover. The web address for this site is: www.privatehealth.gov.au. Alternatively, you can call the toll free line of the Department of Health on 1800 307 446.