Lifetime Health Cover (LHC) loading is an initiative designed by the Government to encourage Australians to take out private hospital cover earlier in life. If you don’t take out private hospital cover by your 31st birthday, or you didn’t have cover before 1 July 2000, your monthly private health insurance premiums will cost more if you get covered later on.
LHC loading starts at 2% of your premium and increases by a further 2% each year until private hospital insurance is obtained. So, if you join at age 35, you’ll pay 10% more for your hospital cover than if you’d joined five years earlier. The maximum loading is 70%, reached after 35 years of no cover.
Even if you’re one day late in taking out cover (July 2nd after your 31st birthday), you’ll pay a 2% loading until you’re 41 years old. If you manage to take out cover by July 1st, you’ll lock in the lowest base rate premium (i.e. the price quoted by health funds). This price won’t be affected by LHC as long as you hold some form of hospital cover – even if you switch policies/funds.
See how you’re affected by Lifetime Health Cover by using our handy calculator. Get started.
So long as you have held hospital cover at the age of 31 and over, you can use the 1,094 ‘Days of Absence’ (i.e. three years, minus a day). You can choose not to hold hospital cover for these “Days of Absence”, and your current LHC loading will not be affected.
Be aware that breaks in cover do not count towards your 10 years of continuous cover. That being said, this only affects those who have already been paying the loading.
If you and your partner have been without cover for different lengths of time, your LHC loading calculation will be averaged between the two of you. For example, if you have 20% loading, and your partner has a 10% loading, your couples policy will have a 15% loading.
In certain situations, you may be eligible for an exemption from the Lifetime Health Cover loading if you fall under one or several groups outlined below:.
Yes. Ask your health fund for a Clearance Certificate, which details any previous LHC loading (if applicable), as well as the finer details of your cover (e.g. type, level, join date, claims history, waiting periods served etc.) You’ll need to pass on this document to your new health fund when asked.
To be clear, you only have to pay LHC loading if you take out hospital cover after July 1st, following your 31st birthday. If you do not take out private hospital cover, you’ll never pay this loading.
However, we believe that this type of health insurance can be invaluable to a huge number of Australians. With it, you can be treated as a private patient, have your own room (if one is available), and skip public hospital waiting lists. If this is something you’ll eventually want for yourself, avoiding the LHC loading in the future would be a smart move.
If you have any more questions about LHC loading, or you’re ready to review your options, you can always get in touch with our health insurance experts on the phone.