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Understanding Lifetime Health Cover

20 March, 2020
Lifetime Health Cover (LHC)

What is Lifetime Health Cover?

Lifetime Health Cover is an Australian Government initiative that encourages people to take out private hospital insurance earlier in life and to maintain their cover. If you take out hospital insurance earlier in life and you keep it, you won’t have to pay the Lifetime Health Cover loading.

Who needs to pay?

If you take out private hospital cover before the 1st of July in the year following your 31st birthday, you can save money on your private health insurance over time. If you haven’t taken out and maintained private hospital cover from the year you turn 31, you will pay an extra 2% loading on top of your premium for every year you are aged over 30.

Who doesn’t have to pay?

If you fit into one of the following categories, you don’t have to pay the Lifetime Health Cover loading:

  • you’re under 31 years old
  • you were born on or before 1 July 1934
  • you hold an appropriate level of private patient hospital cover before the 1st July following your 31st birthday
  • you are a new migrant to Australia and are over 31 and you had hospital cover within 12 months of registering for full Medicare benefits

There are also some other special circumstances where you don’t have to pay the loading.

How much is it?

If you take out hospital cover after your Lifetime Health Cover deadline (July 1 following your 31st birthday), you’ll have to pay a Lifetime Health Cover loading of 2% for every year you are over 30.

You can calculate how much you might have to pay by using the Lifetime Health Cover calculator at Privatehealth.gov.au.

How long does the loading apply for?

If you maintain continuous hospital cover for 10 years, you won’t need to pay the Lifetime Health Cover loading anymore. If you break up your 10 years of continuous cover with any periods without hospital cover, the breaks in your cover do not count towards the 10 years. For example, if you pay your loading for 7 years and then cancel your cover while living overseas for several years, you’ll still have to pay three more years of loading on rejoining.

If you’re new to Australia

If you’re new to Australia and are over the Lifetime Health Cover deadline (July 1 following your 31st birthday), special conditions apply. As a new migrant to Australia, you do not have to pay a Lifetime Health Cover loading if you take out hospital cover within 12 months of registering for Medicare. As a migrant, it is a good idea to consider taking out hospital cover in the first year after you register for Medicare. If you wait and take out hospital cover after this date you will pay more for your hospital cover as the price will also include the Lifetime Health Cover loading.

You can find out more about Lifetime Health Cover for new migrants at the Department of Health.

More information

Sources

https://www.health.gov.au/health-topics/private-health-insurance

https://www.humanservices.gov.au/individuals/subjects/how-claim-medicare-benefit/private-health-insurance-and-medicare

https://www.ato.gov.au/Individuals/Medicare-levy/Private-health-insurance-rebate/Lifetime-health-cover/

https://www.apra.gov.au/quarterly-private-health-insurance-statistics

https://www1.health.gov.au/internet/main/publishing.nsf/Content/lhc-factsheet-newmigrants

All information contained in this article is intended for general information purposes only.

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