If you don’t take out private hospital cover before 1 July after your 31st birthday, a LHC loading of two per cent is added to your premium if/when you do take out hospital cover in the future.
LHC loading increases by two per cent each year until you get hospital cover, and ceases once you’ve held cover (and paid LHC) for 10 years continuously. For example, if you take out hospital cover at age 35, you’ll pay an extra 10% on your premium until you’re 45, provided you’ve maintained cover during this time.
Why’s it important? If you want hospital cover at some point, it’s something you should be aware of if you don’t want to pay extra for cover. Learn more about LHC loading.
Of our four respondents, both Georgia and James had a solid idea of what the four-tiered health insurance categories are, and how they work.
James said, ‘I imagine they’re more to do with stages … so hard-to-cover things would be under four and simple things […] would be under one’.
Georgia said, ‘Is it your basic cover and then the levels progress up? So you’ve got your basic which might give you only hospital [cover] […] and then premium which will cover you for everything; you pay a higher cost, but you’d have more cover as well.’
Both Georgia and James were pretty much on point!
As of 1 April 2019, the federal government implemented a series of reforms that split hospital cover into four different tiers: Basic, Bronze, Silver and Gold. Insurers may choose to add extra benefits or treatments on top of the minimum requirements for each tier, and these policies will be marked by a ‘+’ or ‘plus’.
A Gold policy covers the broadest range of medical treatments and services, and the further down the tiers you go, the less you’ll be covered for.
This reform applies to all health funds, who have until 1 April 2020 to implement it.
Why it’s important: To implement this reform, health funds are moving – or have moved – existing policies into these new categories, which means your cover may have changed. Learn more about the four-tiered health insurance categories.
What is perhaps our most jargon-y of health insurance jargon stumped both Matthew (‘No idea!’) and Sam (‘I don’t know’).
James, however, said that the Medicare Levy ‘is what everyone pays, and the Medicare Levy Surcharge is a little bit extra you pay on your health insurance.’ (Not quite).
Georgia also knew the jargon terms, saying ‘the Medicare Levy is what everyone pays – 1.5% – and the Surcharge is if you earn above $150,000 and don’t have private health [insurance].’ (Pretty close!)
Once again, both Georgia’s and James’ only mixed up a few small details.
The Medicare Levy is a compulsory levy that goes towards funding the vitally important Medicare system, which many Australians rely on.
The MLS is an extra 1 to 1.5% tax charged to higher-income earners who don’t have hospital cover (and who don’t fall into an exemption category). The income threshold for MLS is $90,000 for singles and $180,000 for couples and families.
The MLS is paid at tax time and calculated as a percentage of your income for each day of the financial year in which you didn’t hold hospital cover. For example, if you take out hospital cover halfway during the financial year, you’ll still need to pay MLS for the months that you weren’t insured and earning over the threshold.
Why it’s important: You may be spending more money each year by paying the MLS than you would on premiums for hospital cover. Learn more about the MLS.