Lifetime Health Cover Loading explained

Many people are confused by the concept of Lifetime Health Cover loading and have given up even trying to understand what it is or how it works. This is a huge mistake, as Lifetime Health Cover loading affects you, particularly if you are under the age of thirty-one, or turned thirty-one not too long ago. Educate yourself on the ins and outs of Lifetime Health Cover loading to ensure you make the best and most cost-effective health insurance decisions.

What is Lifetime Health Cover loading?

The Lifetime Health Cover loading system was designed to urge everyone in Australia to purchase private health insurance policies offering hospital cover at an early age, and to continue holding on to these policies for the duration of their lives. Lifetime Health Cover loading achieves these aims by making it more expensive to obtain hospital cover later rather than earlier in life.

Because of this, you are encouraged to obtain hospital cover from an approved insurer registered in Australia before the 1^st of July after you turn thirty-one. If you do not, you are obliged to pay a 2% Lifetime Health Cover loading on your insurance premium for each year of your age over thirty, up to a maximum of 70%. This means that if you are thirty-two years of age when you first get hospital cover, you will have to pay 4% loading on top of your insurance premium. If you are forty, the amount of loading increases to 20%.

Does Lifetime Health Cover loading ever go away?

If you maintain your hospital cover for ten years, Lifetime Health Cover will stop being payable. You are allowed to stop your hospital cover for a total of 1,094 days before you have to begin paying Lifetime Health Cover loading beginning at 2% and increasing by 2% each year you are without cover. This means that if you go without hospital cover for three years, you will be liable to pay Lifetime Health Cover loading on your next premium.

If you leave Australia for periods of more than one year, the time you spend outside of Australia does not count towards the 1,094 days’ grace you are given before being made to pay Lifetime Health Insurance cover.

Exemptions

Under a number of circumstances, persons above the age of thirty-one may be exempt from paying Lifetime Health Cover loading. For instance, persons born before 1 July 1934 do not have to pay Lifetime Health Insurance cover. If you have newly immigrated to Australia and are over the age of thirty-one, you are given a twelve month grace period from the day you get Medicare to get private health insurance hospital cover before Lifetime Health Cover loading kicks in.

It pays to familiarise yourself with the rules governing Lifetime Health Cover loading. Avoid paying more than you have to for health insurance coverage by minimising the amount of Lifetime Health Cover loading you have to pay.