Lifetime Health Cover (LHC) loading is an Australian Government initiative that aims to encourage Australians to take out and maintain a private hospital policy earlier in life. If applicable to you, the loading increases the cost of your hospital policy premiums by a percentage of your base rate for each year that you don’t hold cover after 1 July following your 31st birthday (base day).
If you purchase an eligible hospital policy before 1 July following your 31st birthday and continue to hold cover, you won’t incur the LHC loading for the length of time you hold hospital insurance.
LHC loading accrues at 2% every year that you don’t hold hospital cover after 1 July following your 31st birthday (your LHC base day). To avoid loading, you need to take out hospital cover before this date.
The maximum LHC loading is 70%. If applicable to you, the LHC loading will be added to the base premium of your hospital policy. This means that you will pay the loading each time you pay for your private hospital cover.
For an example of how LHC loading works, at the age of 40, you would need to pay 20% more for your hospital premium if you hadn’t held hospital cover at any point since 1 July following your 31st birthday.
Once you’ve held hospital insurance for 10 continuous years, any applicable loading will be removed. If you cancel your hospital cover after these 10 years and use up all your permitted Days of Absence , the loading will start again at 2% for every year you are without cover. (Days of Absence refers to the period where you can take a break from hospital cover and not accrue any LHC loading. This period totals 1,094 days (one day less than three years) throughout your lifetime.)
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Yes, it does. You’ll need to ask your current health fund for a Clearance Certificate, which details any previous LHC loading (if applicable), as well as the finer details of your cover like the type, level, join date, claims history and waiting periods served. This is so you can pass it on to your new health fund when asked. Alternatively, if you provide your new health fund with your previous health fund’s details, they will be able to request this information on your behalf.
No, LHC only applies to hospital cover. Holding standalone extras cover (also known as general treatment or ancillaries cover) and ambulance cover doesn’t stop you from accruing LHC loading.
To avoid LHC loading on your hospital cover premiums, you must hold hospital cover with a complying health fund by 1 July following your 31st birthday.
You may also fall under an LHC loading exemption category, in which case you might not be required to take out cover immediately, if at all.
If you and your partner have accrued LHC loading, your loading will be averaged between both of you. So, if you have 20% loading and your partner has a 10% loading, your policy would attract a 15% loading.
Family policies work in the same way. If you and your partner have any LHC loading applicable, it’ll be averaged between the two of you. If you’re a single parent with a family policy, you’ll only pay your applicable LHC loading.
If you’re an Australian resident and will be overseas on 1 July following your 31st birthday, you have a 12-month grace period to purchase hospital cover before attracting LHC loading. This grace period starts from the day you arrive back in Australia.
For any return visits you make to Australia for up to 90 consecutive days, you’ll still be considered overseas for LHC purposes. If you’re in Australia for more than 90 consecutive days, your 12-month grace period will commence from the date you return.
If you don’t purchase hospital cover before this grace period ends, you’ll be charged LHC loading as per usual if you didn’t take out hospital cover during the grace period.
If you’re heading overseas for a short period, you can reach out to your fund and apply to suspend your membership. If your fund agrees, this suspension period won’t count towards your 1,094 Days of Absence.
This suspension period will be treated as if you still hold cover, and you’ll not accrue any LHC loading. As this can vary between providers, though, it’s important you talk to your fund before suspending cover.
You can also cancel your hospital cover if you’re going to be overseas for at least 12 months, and it won’t be counted towards your 1,094 Days of Absence. Any return visits to Australia that are longer than 90 consecutive days will be deducted from this 1,094-day period.
If you move to Australia after 1 July following your 31st birthday and take out hospital cover within one year of becoming eligible for full Medicare benefits (a green or blue Medicare card), you won’t be charged LHC loading.
However, if you don’t purchase hospital cover within this one-year timeframe, you’ll be charged the full LHC loading that applies to you – that is, a 2% loading for each year after 1 July following your 31st birthday you didn’t have a hospital policy from a complying Australian health fund.
For example, if you’re 35 and didn’t take out health insurance within one year of becoming eligible for Medicare but are looking to take it out now, you would be charged an LHC loading of 10% on top of your hospital insurance premiums.
The LHC loading you pay each year doesn’t count towards the Australian Government Rebate. This means you cannot claim the LHC loading portion of your premiums as a reduced premium or as a part of your yearly tax return.
You may need to pay a Medicare Levy Surcharge (MLS) if you earn over $90,000 a year as a single or $180,000 a year as a couple or family. This is a tax charged on higher-income earners who don’t have private hospital cover. To see how you could be affected, try our Medicare Levy Surcharge calculator.
