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 following your 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.
You can either take out a hospital policy before 1 July following your 31st birthday, and LHC loading won’t start accruing if you continue to hold your policy…
You don’t take out a hospital policy.
As such, your LHC loading starts accruing at 2% every year until you take out cover or until the loading hits the 70% cap (whichever occurs first).
Five years later, you decide to take out hospital cover for the first time. Your LHC loading is 12% and is charged on top of your hospital policy base premiums.
Once you hold cover continuously for 10 years, LHC loading no longer applies (if you continue to hold cover).
Even if you’re one day late in taking out cover (e.g. 2 July after your 31st birthday), you’ll still accrue a 2% loading. If you take out cover a year later, your loading will be even higher.
Here’s how much more you may need to pay annually if you’ve never had cover and take out a $1,800 policy at the following ages:
| Age | Your LHC loading (%) | How much extra you’ll pay annually* |
| 31 | 2% | $36 |
| 40 | 20% | $360 |
| 50 | 40% | $720 |
| 60 | 60% | $1,080 |
| 65 | 70% (the cap) | $1,260 |
| Based on a hospital policy that costs $1,800 each year (before the rebate is applied). | ||
If you take out cover by 1 July following your 31st birthday, you’ll pay the base rate premium (i.e. the price quoted by health funds), minus any rebates or discounts that you’re eligible for. This price won’t be affected by LHC as long as you hold some form of hospital cover, even if you switch policies or funds.
Yes, you’re granted 1,094 permitted Days of Absence that you can use if you’re unable to maintain continuous hospital cover. LHC loading won’t start accruing within this grace period, and your current loading (if any) won’t be affected. However, there’s only one set of 1,094 days you’re granted, which never refreshes – once it’s used up, that’s it.
Once you’ve used up your Days of Absence, LHC loading will start accruing again at a rate of 2% for every year you didn’t hold hospital cover after 1 July following your 31st birthday.
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.
If you use up your Days of Absence and don’t have a hospital policy, you will likely pay an LHC loading of 2% of your base premiums for each year you didn’t hold hospital cover after 1 July following your 31st birthday.
Example one:
Let’s say you’re 39 years old. You’ve held your hospital policy continuously since you were 29 and therefore haven’t accrued any LHC loading.
You then take a break from your cover for two years (730 days) before resuming cover. As you haven’t used up all your Days of Absence, you haven’t accrued any LHC loading. Keep in mind that if you take another break, you’ll only have 364 permitted days before you’ll start accruing LHC loading.
Example two:
You’re 41 and already paying a 6% loading on your policy, as you didn’t take out cover by 1 July following your 31st birthday.
You’ve held cover continuously for the last eight years but decide to take a break – and you end up using all your Days of Absence. Once this grace period lapses, your LHC loading increases to an 8% loading.
If you’re already paying the loading, be aware that breaks in cover don’t count towards your 10 years of continuous cover. If you use up all your permitted Days of Absence, you’ll have to restart your 10 years of continuous cover from the date you resume cover.
You may be eligible for an LHC loading exemption or delay if you fall under one or more of the categories below:
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 $93,000 a year as a single or $186,000 a year as a couple or family (From 1 July 2023). 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.
Whether or not you take out cover is a decision you’ll need to come to on your own. However, we believe that this type of health insurance can be invaluable to Australians, even to those who are younger.
With cover, you can:
If you think you’ll eventually want private hospital insurance in the future, avoiding the LHC loading now could be a smart move.
To make finding cover simple, try our health insurance comparison tool. Our handy service lets you easily compare policies from some of Australia’s top insurers in one place.
We break down cover features, premiums, excess options and whether LHC loading might apply to you so that you can make a more informed decision.
If you’d prefer to talk through your options, you can always get in touch with our health insurance experts on the phone.
