2 in 3 Aussies regret not taking up health insurance earlier in life


Surprising data has revealed that more than 2 in 3 Aussies regret not taking out health insurance earlier, now that they are locked into Lifetime Health Cover (LHC) for a decade.

The survey of a nationally representative sample of 1200 Australian adults found that 2 in 3 Australians (69%) who were liable to pay the LHC wished they had purchased private health insurance earlier in life to avoid paying a Lifetime Health Cover (LHC) loading now. Regrets were especially high among respondents under 35 years of age, with almost all (91%) wishing they had purchased health insurance before the loading fee was activated.

So what is the LHC?

The LHC initiative places a two per cent loading fee on premiums for every year a person delays taking out health insurance after turning 31 years of age. It was introduced to encourage Australians to take out private hospital cover earlier in life and penalise those who fail to do so.

LHC is unlike other Government initiatives such as the Medicare Levy Surcharge, which is based on how much you earn. Unfortunately, many Aussies are failing to make the necessary enquiries and investigations to better understand it and don’t realise the full repercussions until it’s too late.

Many Australians don’t know what they’re paying for as part of their health insurance payments, in fact, the survey reveals over half of Aussies didn’t know what LHC really means! Health insurance suddenly becomes more expensive for those realising they’re up for additional costs like an LHC loading.

6 Tips to help understand LHC

  1. How LHC loading is calculated. An automatic two per cent loading fee is charged on premiums for every year you don’t have health insurance after turning 31. The maximum loading you can end up paying is 70 per cent… ouch. Use our LHC calculator to see when you’re affected.
  2. Deadlines to avoid the penalty. The deadline to avoid paying the LHC penalty is the first of July following your 31st Before then, you can lock in the lowest base rate premium for as long as you hold private hospital cover.
  3. Switching policies or funds. If you decide to switch your health insurance policy or change providers, you will not have to start fresh when it comes to LHC.
  4. Completing LHC payments. You cease paying any LHC loading you accrued after you’ve held 10 years of continuous hospital cover.
  5. Exemptions from LHC. If you are overseas at the time of the July 1 deadline after your 31st birthday and take out cover within 12 months of your return, you will not be penalised. Likewise if you are a new migrant aged 31 or over and take out cover within 12 months. Members of the Australian Defence Forces or Department of Veteran Affairs Gold Card Holders are exempt, as are those born on or before 1 July 1934.
  6. Loadings on joint policies. If you have a joint policy with your partner but you’ve both been without cover for different lengths of time, the LHC loading calculation will be averaged out between the two of you. For example, if you have a 20 per cent loading and your partner has a 10 per cent loading, your policy will then have a 15 per cent loading.

For more information and to get clued up, check out our page on all things LHC! If you need to talk to a health insurance expert call our award winning call centre on 13 32 32.

Ready to look at your options? Use our handy health insurance comparison tool.

Author comparethemarket.com.au

Launched in September of 2012, Comparethemarket.com.au – operated by Compare the Market Pty Ltd (CTM) – has teamed up with a range of Australia’s insurance providers so you can compare some of the latest deals, in one place, side-by-side. The team behind comparethemarket.com.au have experience in insurance, comparison, customer service and digital. If this was a stuffy corporate monologue, we’d tell you that we’re a bunch of subject matter experts specialising in User Experience, Customer Insights & Online Strategies. But to be honest, it’s just as accurate (and a whole lot easier) to say that we’re a bunch of people who want to make your experience with online comparison better. We pride ourselves on the fact that we’re forward-thinking, that we share an entrepreneurial spirit, and the fact that we like to have a bit of a laugh too. We’re all a bit too addicted to chocolate, but no one’s perfect, really.

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