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What is LHC loading?

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.

Four important things to know about LHC loading

  1. The deadline to avoid this penalty is July 1st following your 31st birthday.
  2. The loading applies to the cost of hospital cover only, not extras cover.
  3. You cease paying this loading after 10 years of continuous hospital cover.
  4. The LHC loading you pay each year doesn’t count towards your annual Private Health Insurance Rebate.

What if I’ve missed my deadline?

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.

Can I take a break from being covered once I’m older than 31?

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.

How are couples affected by LHC?

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.

Special circumstances/exemptions

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:.

  • Australian citizens or permanent residents who were overseas at the time of the deadline are exempt from the loading, provided they take out hospital cover within 12 months of their return. They may need to provide their new health fund with an International Movement Record to establish that they were previously abroad, and therefore do not owe any LHC loading.
  • New migrants aged 31 or over are not required to pay LHC so long as they take out hospital cover within 12 months of becoming eligible for Medicare.
  • Current members of the Australian Defence Force (ADF) have their healthcare expenses taken care of by the ADF. Therefore, they do not need to pay LHC. Once they leave the ADF, they’ll begin to attract LHC loading after 1,094 days – if they’re over 31. If they’re younger than 31, they’ll be treated the same as any other Australian citizen in relation to their LHC loading.
  • Department of Veteran Affairs Gold Card holders do not pay LHC, as they are considered to be covered by an equivalent hospital policy.
  • Anyone born on or before 1st of July, 1934 is exempt from LHC.

I want to switch health insurance. Does my LHC transfer to my new policy?

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.

Everyone is telling me to get health cover before June 30. Will I pay more if I don’t?

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.

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