Lifetime Health Cover (LHC) is a Government initiative designed to encourage people to take out private hospital cover earlier in life, and to maintain their cover. Under LHC, health funds are required to charge a loading based on the age of each particular member when they first take out hospital cover with a registered health insurer.
Who does the loading apply to? Those who do not have private hospital cover on 1 July following their 31st birthday are required to pay an additional 2% for each year they delay taking out hospital cover.
For example, a person turning 40 on 3 December 2009 would have until 1 July 2010 to take out Hospital Cover with the loading of a 39 year old (18%).
The maximum loading a person can be required to pay is 70%.
Lifetime Health Cover loadings do not apply to Extras Cover.
Exceptions to Lifetime Health Cover
Those born on or before 1 July 1934 are exempt from paying any loadings.
The following groups may have different Lifetime Health Cover rules:
- Migrants and refugees
- New Zealand citizens
- Australian citizens returning from overseas
- Norfolk Islanders
- Those who have held a Veterans Affairs Gold Card at any time since 30 June 1999
- Former members of the Australian Defence Force (and their dependants)
- Staff of the Australian Antarctic Division of the Department of Environment and Heritage
If you believe you fall into this group, please visit www.privatehealth.gov.au or contact CBHS for more information.
Periods of absence
Under Lifetime Health Cover members are able to drop their cover for a cumulative period of 36 months in their lifetime without affecting their hospital contribution rate. However, after 36 cumulative months absence, their contribution will increase by 2% for each additional 365 days of absence (i.e. you are permitted 1,094 days without hospital cover before being required to pay additional loadings).
Certain periods are exempt from inclusion in these days without hospital cover. They are:
- Periods during which you were overseas for more than one year (you are still treated as being overseas during any period of return that is less than 90 days).
- Periods of suspension granted by your health fund.
Periods of suspension
Members may suspend their membership for a period of time, with the agreement of CBHS. These periods of suspension do not count towards the 36 months cumulative absence that is allowed before a member's certified age at entry is affected. For more information on the rules that apply to suspending your cover, please contact the Member Care Centre on 1300 654 123.
Changes to LHC
From 2010, people who have paid a LHC loading on their private health insurance for 10 continuous years, will be entitled to have the loading removed.
If a member who is paying a LHC loading is without hospital cover for even one day that is not a permitted day without hospital cover, then under the PHI Act, that member's ten year period must begin counting down again from zero, as the period would no longer be ‘continuous’.
Permitted days without hospital cover are defined in section 34-20 of the PHI Act as any of the following that occur after a person ceases to have hospital cover for the first time after his/her LHC base day.
Changes to rebate on LHC
On 27 June 2013, the Australian Parliament passed legislative changes to the Australian Government Rebate on Private Health Insurance.
Effective from the 1 July 2013, the Australian Government Rebate will no longer apply to the Lifetime Health Cover component of hospital cover premiums.
For more information click here