Lifetime Health Cover Loading (LHC)

Lifetime Health Cover Loading

The Lifetime Health Cover Loading or LHC was first introduced by the Australian government in July 2000 to incentivize younger people to take up private health cover and maintain it.

The LHC is an additional fee or loading that is included in your hospital policy premium if you purchase cover later than your 31st birthday. It is a 2% loading on your premium that accumulates each year before taking out hospital cover. You can avoid the LHC by taking out cover before the 1st of July after your 31st birthday, otherwise known as your base day, and maintaining your policy.

Why is there a Lifetime Health Cover Loading?

Without the LHC, younger adults wouldn’t consider private health insurance until they were older and more susceptible to illness. The federal government introduced this initiative to improve efficacy and availability of both the public and private healthcare system.  

How is this helping the healthcare system?

Medicare does its best to cater to the growing demand of people needing hospital treatment. Because of the aging population, high obesity and substance abuse rates, more and more people are leaning on the public health care system. Waiting lists grow longer, and a strain is placed on health workers and the health system in general.

If more people have private health insurance, it would ease some of the colossal demands off the back of public healthcare. What this means for people who cannot afford to be privately insured is a quicker and more efficient treatment. What this means for private health insurance is a wider risk pool, which turns out to be beneficial for everyone eventually.

❝loading cannot exceed 70%❞

Let’s break the LHC down:

Say you are 37 years old and have never held hospital cover. You’ve been accumulating 2% per year for 7 years since your 31st birthday.

If you decide to take up health cover at 37, you’ve got yourself a 14% LHC debt, and this will be added onto your monthly premium. If your hospital premium costs $100 a month, expect to pay a total of $114.

How can you avoid Lifetime Health Cover Loading?

The only way to avoid paying the Lifetime Health Cover Loading is to take out hospital cover early in life. The LHC does have some special circumstances and exceptions which include:

  • Are a member of the Australian Defence Forces or hold a Department of Veterans’ Affairs Gold card
  • Were overseas when the LHC became applicable to you.
  • Are a new migrant to Australia and have held full Medicare benefits for less than a year.
  • Were born before the 1st of July 1934
  • Were 31 or older when the LHC was first implemented on the 1st of July 2000

You can’t avoid paying the Lifetime Health Cover Loading on your premium when you decide to take up cover.

How long will I have to pay the LHC?

Good news, it’s not forever and loading cannot exceed 70%. If you have been paying hospital cover with loading for 10 consecutive years, you will be exempted from paying the LHC.

Loading reapplies to you if you drop cover and then take it up again in the future after exceeding your grace period of 1094 days (see below).

What if I suddenly can’t afford hospital cover and what happens if go overseas?

The only thing certain in life is uncertainty. Because unexpected unemployment and unplanned overseas trips happen, the government has provisioned a 1094 grace period if you have hospital cover on or after your base day. This is 1 day shy of 3 years and can be used when:

  • You plan to switch health funds. You can be without hospital cover for 1,094 days while looking for a new insurer. This is known as ‘Days of Absence”
  • You suspend your hospital policy with your health fund to go on an overseas trip.

Note: If you plan to be out of Australia for one continuous year and cancel your hospital insurance, the days spent out of the country are not taken off your 1094 days. If you don’t resume cover within 90 days of your return, then days will be taken off your grace period. If your insurer agrees to suspend your policy for a short overseas trip, this will not affect your 1094 days grace period.

How does the LHC apply to a couples/family policy?

For couple of family policies, your loading will be calculated as an average between the individual loadings of the two adults.

Let’s look at Robert and Lisa.

Lisa has never had hospital cover and she is 40. Robert is 42 and has held continuous hospital cover for 12 years since his 30th birthday. Lisa’s individual loading is 20%. The LHC does not apply to Robert. They will be paying a 10% LHC loading on their family policy, as 10 is the average of 20% and 0%.

LHC Exemptions and Special Circumstances Explained

Australian Defence Forces members

Full-time service members of the ADF who receive medical cover from the Australian Defence Force are considered to have a hospital policy. This includes family members covered as adult dependants.

Holders of Department of Veterans’ Affairs Gold cards

Those holding a DVA Gold card and their widows or dependants are considered to hold a hospital policy. This will only apply to members whose names are on the card. If you were a Gold card holder at any point before the 1st of July 1999 and then had your card forfeited, the duration that you held your card may be claimed as time holding hospital cover.

New Migrants

New migrants over the age of 31 who take up hospital cover within a year of receiving full Medicare benefits will not have to pay the LHC. However, if you do not purchase a hospital policy within that time frame and then decide to take up hospital cover at a later point, loading will be calculated according to your age. So say you’ve been living in Australia since you were 31 but only took up a policy when you turned 41, you will need to pay 2% per year for 10 years on top of your premium.

Overseas after the 1st of July following your 31st birthday or base day

Australian permanent residents and citizens who turned 31 after the 1st of July 2000 who are overseas on their base day are exempt from paying the LHC. When they come back into Australia, they will still be considered to be overseas 90 consecutive days into their visit. You will have officially ‘returned’ to Australia on the 91st day and will need to take up a hospital policy 1 year from this ‘return’ day to avoid paying the Lifetime Health Cover Loading.

Born before 1st of July 1934

Anyone born before this time or is currently around 85 years old is exempt from paying the LHC.

Held Medicare registration before the LHC was introduced (July 1st 2009)

If you are an Australian citizen or permanent resident who turned 31 or over before the 1st of July 2009, you are considered to have held hospital cover on your base day. The loading will only apply to you if you take up and then drop cover for longer than 1094 days (grace period)

If these exceptions and special circumstances do not apply to you, talk to a Health Deal agent today. A hospital policy to suit your specific needs will be recommended to avoid LHC and/or prevent this penalty increasing further, whilst also providing peace of mind for any potential hospitalisation needs in the future.

Perfect Health Insurance
Articles

How to Find the Perfect Health Insurance Policy

How to Find the Perfect Health Insurance Policy Let’s face it – a medical emergency can knock on your door at any time. This uninvited …

Read More →
how much ambulances actually cost
Articles

how much ambulance costs in Australia

Here’s how much ambulance costs in Australia If you’ve ever needed to use emergency transport services, the fee might be enough to set off your …

Read More →
health insurance rate rise 2020
Articles

Are you ready for the rate rise?

Are you ready for the rate rise? Australians are bracing themselves for another massive health insurance increase next April, with some reports suggesting it could …

Read More →
Getting your first hearing aid
Articles

Getting your first hearing aid

Getting your first hearing aid Loss of hearing occurs for a number of reasons. Age, family history, and what kind of sound environment you’ve been …

Read More →
Lifetime Health Cover Loading
Articles

Lifetime Health Cover Loading (LHC)

Lifetime Health Cover Loading (LHC) The Lifetime Health Cover Loading or LHC was first introduced by the Australian government in July 2000 to incentivize younger …

Read More →
VAPING E-CIGS UNDER FIRE
Articles

VAPING – E-CIGS UNDER FIRE

VAPING: E-CIGS UNDER FIRE Vaping has been amassing a lot of steam lately. Here we take a look at some of the reasons why e-cigs …

Read More →
Medicare Levy Surcharge
Articles

Medicare Levy Surcharge

Medicare Levy Surcharge Explained Medicare Levy Surcharge: Every financial year when the tax man comes around Australians who earn a high income find themselves forking …

Read More →
Pre existing Conditions
Articles

Pre-existing Conditions Explained

Pre-existing Conditions Explained In health insurance, you will come across the terms pre-existing and new conditions and its waiting periods. You might be wondering why …

Read More →
Tackling Obesity through Family Time
Articles

Tackling Obesity through Family Time

Tackling Obesity Through Family Time Finding fun things to with the kids that do not involve technology can challenging. Lots of young ones would like …

Read More →
best health insurance in Australia
Articles

What is the best private health insurance in Australia?

What is the best private health insurance in Australia? (5 Minute Read) Looking for the best private health insurance in Australia? You’re not alone! Every …

Read More →
Renee Tan made the process simple.
Renee Tan made the process simple.
Tanya 17/10/2019
Read More
Renee Tan made the process simple. She very clearly explained all the options and changes and how that would and could impact our health insurance. Renee gave great service, which makes me want to recommend your services to my family and friends.
Responded very quickly to my email for…
Responded very quickly to my email for…
Shirley 17/10/2019
Read More
Responded very quickly to my email for help on finding a medical fund. Mark that I spoke to was great at helping and explaining everything to me that I needed to know. went through every step in detail and always asked if I had any question during the course of our conversation
Excellent service
Excellent service
Kristine 16/10/2019
Read More
Excellent service. Daniel is really good in explaining everything and very patient.
Daniel listened to what I wanted
Daniel listened to what I wanted
Lorraine 16/10/2019
Read More
Daniel listened to what I wanted , sent me email to review and called back when he said he would , also saved me $50+ per month , and kept adult kids on policy for a bit longer .
Wasn’t pushy
Wasn’t pushy
Shaylee 01/10/2019
Read More
Wasn’t pushy, asked what I required gave me adequate thinking time and I got off the phone a happy customer
This team and in particular Daniel
This team and in particular Daniel
Peter 20/09/2019
Read More
This team and in particular , Daniel was very helpful , took the time to explain in detail all aspects , and was very understanding and patient Highly recommend them
Previous
Next
Compare Health Insurance
I understand and accept Packleader Group's Privacy Policy. I agree that Health Deal may call me during call centre opening hours, and email or SMS me, about the services it provides.

Leave a Comment

Your email address will not be published. Required fields are marked *

Scroll to Top