Health Insurance and Lifetime Health Cover
If the only thing that you dread more than the prospect of being hospitalised is the idea of private health insurance comparison, you’re not alone. While we can all agree that health insurance cover may be a valuable investment should we ever be in need of extensive medical treatment, it’s nevertheless an expensive investment to make.
However, putting off purchasing hospital insurance can make securing private health insurance even more expensive. The government’s Lifetime Health Cover initiative rewards you for taking out hospital insurance earlier in life, and adds a financial loading charge should you procrastinate.
Image by GDS Infographics
The Lifetime Health Cover Initiative
Lifetime Health Cover (LHC) is an Australian Federal Government initiative that began in 2000 as a way to reward citizens for taking out hospital insurance at a younger age, and for maintaining their hospital cover throughout their lifetime.
Australians who purchase hospital cover before they turn 31 pay the lowest premiums, while those who wait until after age 31 will pay a higher premium, one that grows the longer you delay coverage.
Avoid the LHC Loading
The only way to avoid paying some amount of LHC loading is to purchase hospital cover by the 1st July following your 31st birthday. Those who wait until after this date to purchase hospital insurance may be required to pay the LHC loading fee.
LHC loading fees can add up the longer you delay purchasing hospital cover. The loading starts at 2% for each year you are over 30. A citizen who waits until age 40 to purchase cover could end up paying an extra 20% for his hospital cover. Wait until age 50, and you could be stuck paying 40% more for your cover. The maximum loading is 70%. Those born before 1934 are exempt from LHC loading.
If unforeseen circumstances such as unemployment or an overseas move make it impossible or illogical for you to pay for your hospital cover, you need not fear being bumped up to LHC loading when you resume payment for your cover. The government allows you to suspend hospital cover for a total of three years (or 1,094 days) during your lifetime without affecting your Lifetime Health Cover loading status. However, If you drop your hospital cover for longer than the three years or 1,094 days, you will most likely incur an LHC loading when you purchase hospital cover again.
In certain circumstances, the 1,094 day period can be extended. For instance, if you’ve lived out of the country continuously for more than 12 months and have made visits back home of less than 90 consecutive days at a time, or if your health fund has agreed to a period of suspension, such as during a time of unemployment or inability to work, you may not be assessed an LHC loading when you pick up hospital cover again.
New to Australia?
Those over age 31 who are migrating to Australia need to obtain hospital cover within 12 months of registering for Medicare benefits, or risk incurring loading charges. Delay purchasing cover more than 12 months, and you will pay 2% more for each year you are over age 30 when you do purchase your hospital cover.
Reap the Rewards of Continuous Cover
Even if you do put off purchasing your hospital cover so long that you are forced to pay LHC loading, there is good news. Any LHC loading assessed to your hospital cover premium will be removed after you have continuously had cover for 10 years. If you have breaks in your hospital cover after the loading has been removed, you may become liable to pay a LHC loading again in the future.
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