The LHC loading is a financial penalty to encourage Australians to take out private hospital insurance before 31. For every year after 30, you don’t have private hospital coverage, and a 2% loading is applied to your premium. This can increase up to 70%. Once applied, the LHC loading stays for 10 years.

For example, if you wait until 35 to take out private hospital insurance, you’ll pay an extra 10% on top of your base premium compared to someone who took out the cover before they turned 31. The longer you delay, the higher the loading. At 40, you’ll pay 20% extra; at 50, you’ll pay 40% more in premiums. While these percentage increases may not seem too bad at first, the extra costs can add up quickly.

Let’s look at a real example: A single person in NSW takes out nib Silver Hospital’s $500 excess at 35. Their base premium is $182.66 per month. With the 10% LHC loading, they would pay an extra $36.53 per month or $438.38 per year. Over 10 years, that’s $4,383.84 in extra premiums, assuming no rate increases.

However, health insurance premiums increase annually due to inflation and healthcare costs. With average premium increases of 2-4% per year, those extra costs can add up even more. A 3% annual increase could add over $5,000 over 10 years. So, delaying private health insurance can cost you a lot in the long run, especially when you factor in annual premium increases.

Also, note that the LHC loading only applies to hospital coverage. If you have extras cover but no hospital coverage by 31, the LHC loading will still apply, as the initiative is designed to encourage people to have private hospital insurance.

The LHC loading is for people who don’t have private hospital insurance by July 1 after they turn 31. From then on, you’ll be charged an extra 2% on top of your health insurance premium for every year you delay getting hospital coverage up to a maximum of 70%. Even after you get the cover you’ll keep paying the accumulated loading for 10 years. Let’s see who LHC loading affects:

Individuals 30+

For individuals, the LHC loading is simple. If you don’t have hospital cover by July 1 after your 31st birthday you’ll incur a 2% loading for every year of delay. For example Luke is 35 and takes out private health insurance. He delayed for 4 years so he’ll incur a 10% loading. If the base annual premium for his hospital cover is $1,500, the 10% loading will add $150, so his total annual premium is $1,650. Over 10 years, Luke will pay $1,500 extra due to the loading, assuming no premium increases.

Couples

For couples, the LHC loading is calculated by averaging the loadings of both partners. For example Layla and John recently took out a couples’ hospital policy. Layla has had private hospital cover since she was 28 so her LHC loading is 0%. John is 41 and has never had hospital cover so his LHC loading is 22% (11 years overdue). The combined LHC loading for their joint policy is the average of their loadings, which is 11%. So their premium will reflect this 11% increase split between both partners.

Families

In families, the LHC loading only applies to the adult members of the household. Children are exempt from the loading and don’t affect the surcharge. Continuing with Layla and John’s example, once they add their child to the family policy, the LHC loading remains 11%, but their total premium increases because of the extra family member. However, the LHC percentage doesn’t change because it only applies to Layla and John, not their child.

In all cases delaying private hospital cover until after July 1 following your 31st birthday increases premiums. For singles, couples and families it’s best to have hospital cover before this point to avoid the LHC loading.

• LHC loading affects people who don’t have private health insurance after they turn 31. Two ways to avoid or minimise the LHC loading are to take out private hospital insurance early and maintain continuous cover. Let’s break it down:

  Taking Out Private Hospital Cover Before 31 To avoid LHC loading completely, you must have hospital cover by July 1 after your 31st birthday. Once you pass this date without cover you’ll incur a 2% loading for every year you delay up to a maximum of 70%. If you take out private health insurance before 31, you won’t have any loading and will only pay your normal premium.

  Also, if you take out a hospital policy between 18 and 30, you may be eligible for a Young Persons Discount. This discount can reduce your premiums by up to 10% if you maintain continuous coverage, so it’s another good reason to get hospital coverage early. This discount phases out as you turn 41, but it’s a good way to save on premiums.

  Maintaining continuous hospital cover is as important as avoiding future LHC loading. If you let your cover lapse for an extended period you’ll incur loading on your premiums when you reapply for insurance. The government allows a “permitted gap” of 1,094 days (roughly three years) in your lifetime, where you can pause or drop your cover without incurring any loading. But if you exceed this gap, the 2% loading will start to apply for every year you’re without cover.

  Life can throw up challenges—financial or policy changes—that might cause you to drop your cover. But we recommend you have at least basic hospital cover to avoid future penalties. This way, you won’t incur extra loading later on.

Myth 1: LHC Loading is for Life. This is not true. Once LHC loading is applied, it only lasts for 10 years. After that you’ll just pay your normal premium without the loading.

Myth 2: Extras Cover will Help Reduce LHC Loading This is also not true. LHC loading only applies to hospital cover not extras policies. So even if you have extras cover it won’t help you avoid LHC loading. Only hospital cover counts towards avoiding the extra cost.

In summary, to avoid LHC loading, take out hospital cover before 31 and maintain it. If you do get the loading, remember it only lasts for 10 years. Taking out extra cover won’t affect your LHC as it only applies to hospital policies.

The long-term financial impact of Lifetime Health Cover (LHC) loading can be significant if you wait until later in life to take out private hospital cover. For every year you delay after the 1st of July following your 31st birthday, a 2% loading is added to your premium. This may not seem like much, but it adds up over time.

Let’s look at an example. A single person in NSW takes out private health insurance for the first time at 50. They will have 20 years of delayed cover which is 40% LHC loading on their premiums. Using the nib Silver Hospital $500 excess policy as an example with a base monthly premium of $182.66, this person will pay an extra $73.06 per month due to the loading. That’s an extra $876.76 per year or a minimum of $10,521 over the 10-year loading period. And that’s not even taking into account any premium increases over time, which could add another 2-4% per year.

By comparison, if the same person had taken out hospital cover before 31, they would have avoided this cost entirely and saved thousands of dollars.

In addition to avoiding LHC loading, private hospital insurance has many other benefits that enhance your healthcare experience:

• Shorter Waiting Times: Public hospitals have long waiting times for elective surgeries. With private health cover you have faster treatment options and shorter waiting times for non-emergency procedures.
• Choice of Doctor: One of the biggest advantages of private cover is being able to choose your doctor or specialist. This is especially important if you have a trusted doctor or need ongoing specialist care.
• Private Room Options (Where Available): Unlike public hospitals, where you may have to share a room, private hospital cover gives you access to private rooms when available. This can be a big comfort, especially for overnight stays.
• Tax Benefits: Private hospital cover can also help you avoid the Medicare Levy Surcharge, a tax applied to Australians who earn above a certain income and don’t have hospital cover. This is an extra financial incentive to keep your cover.

In summary taking out hospital cover early saves you from LHC loading and all the benefits.

While LHC loading affects most Australians who delay taking out private hospital cover beyond 31, there are several exemptions for specific groups. Let’s break them down:

• Australian Defence Force (ADF) Members: Those actively serving in the ADF are exempt from LHC loading as they have health cover through the military. As long as they are in service, they won’t need private hospital cover to avoid the loading.
• Department of Veterans Affairs (DVA) Gold Cardholders: If you have a DVA Gold Card, you are exempt from LHC loading as the card provides full medical services. You don’t need private hospital insurance for these veterans to avoid LHC fees.
• Born Before 1st July 1934: By law, anyone born on or before this date is exempt from LHC loading regardless of when or if they take out hospital cover. This exemption was put in place for older Australians who may not have had private health insurance earlier in life.

If you’re not in an exempt group, the government provides some flexibility through the Days of Absence rule. Without LHC loading, this allows you to go without private hospital cover for up to 1,094 days (approximately three years). You can use these days all at once or spread them across your lifetime.

Here’s how it works:

• If you had private hospital cover on or after your LHC Base Day (1 July after your 31st birthday), you can temporarily drop your cover without penalties as long as the total time without cover is under 1,094 days.
• If you exceed this limit, 2% LHC loading will apply for each additional year without cover.

If you suspend your health insurance for extended overseas travel, the time spent overseas won’t count towards the 1,094 Days of Absence if it’s more than 12 months. However, once you return to Australia and stay for more than 90 consecutive days, the clock starts again on your Days of Absence.

New Migrants to Australia

If you’re a new migrant to Australia, the Lifetime Health Cover (LHC) loading rules are slightly different when you first gain access to Medicare. Your LHC base day—the date by which you must take out hospital cover to avoid LHC loading—will be whichever of the following is later:

1. 1st July after your 31st birthday, or
2. First anniversary of your full Medicare registration.

This means you have until that base day to take out private hospital cover without LHC loading which applies a 2% penalty for each year you delay getting hospital insurance after your base day.

Example: New Migrant

Diya registered for full Medicare benefits on June 15, 2023, and turned 31 on February 20, 2024. In this case, Diya’s LHC base day would be July 1, 2024, the latter of the two dates. If he doesn’t take out hospital cover by this date, he will be LHC loaded—2% for each year of delay.

For example, if Diya delays taking out hospital cover until 2029 at age 36, he would be 12% loaded (2% per year for 6 years). Using the earlier example from nib Silver Hospital cover with a base premium of $182.66 per month, this 12% loading would add $21.92 per month (or $263.01 per year), resulting in an additional $2,630.10 over the 10-year LHC loading period.

Migrants Returning from Overseas

If a new migrant like Diya was overseas on his LHC base day and returned to Australia after his base day had passed, he would have 12 months from the date of his first return (for a stay of 90 days or more) to take out hospital cover and avoid LHC loading. In this case, his first long-term return anniversary would be his new base day.

For example, if Diya returned to Australia on 5 August 2025, he would have until 5 August 2026 to take out hospital cover and avoid LHC loading. If he meets this deadline, he won’t incur the extra premium costs of LHC loading.

Once LHC loading is applied to your hospital cover premium, it doesn’t last forever. LHC loading is removed after 10 continuous years of holding hospital cover. However, there are scenarios where breaks in cover can interrupt this 10-year period and result in extra years of LHC loading. Here are three examples to illustrate how this works in different situations:

1. Example: 10 Years Continuous Cover

Sarah gets 10% LHC loading when she takes out hospital cover at 35. She keeps her cover for 10 years. She pays 10% more on her premium for this period than someone without LHC loading. For example, if her base premium is $150 per month, the LHC loading adds $15 per month, so she pays $165 per month. After 10 years of continuous cover, her loading is removed, and she now pays the base premium of $150 per month.

2. Example: Break in Cover after 5 Years

David gets 10% LHC loading and keeps his cover for 5 years. He then takes a break from his health insurance for 1 year and is not covered. Then he re-takes out hospital cover for 6 years.

Here’s how it works:

• After 5 years, David’s LHC loading period has accumulated for half the required time.
• When he drops his coverage for one year, he uses part of the 1094 days of absence (roughly three years without penalty).
• When he re-joins his cover, the remaining 6 years count towards the 10-year loading period. So David removes his LHC loading after 11 years, including his 1-year break.

3. Example: Longer Break in Cover

Emily gets 10% LHC loading and has had hospital cover for 8 years. She then drops her cover for 4 years and exceeds the 1094 days of absence. When Emily re-joins her cover after 4 years, her LHC loading period resets.

• The 8 years she had previously had hospital cover don’t count towards removing the loading because her absence was more than the allowed period.
• When Emily re-joins coverage, she will have to have hospital cover for a full 10 years again before her LHC loading is removed. So Emily will have to pay the 10% loading for another 10 years, and it will add significant cost to her premiums.

Does LHC Loading Apply to Extras Cover?

No, LHC loading does not apply to extras cover. LHC loading is only tied to hospital cover. Even if you have extras cover (which includes services like dental, optical or physio) this will not help you avoid LHC loading. To avoid the loading, you must have private hospital cover (or a combined hospital and extras policy) before your LHC base day, which is generally the 1st of July following your 31st birthday. Having extras cover only will not affect your LHC status.

Will I Still Pay LHC Loading If I Cancel My Hospital Cover?

Yes, if you cancel or drop your hospital cover for an extended period of time, you will be subject to LHC loading when you re-join. The government allows a 1094-day gap (approximately 3 years) over your lifetime, which means you can be without hospital coverage. If you exceed this gap, LHC loading will apply when you re-join the cover. It’s important to keep track of how many days you’ve been without hospital insurance, as exceeding the limit will reset the LHC loading, and it will add 2% to your premium for each additional year.

How Does LHC Loading Work for Couples?

For couples the LHC loading is calculated on each individual’s loading rate and then averaged for the couple’s joint policy. For example, let’s say Layla has had hospital cover since she was 28, and therefore, her LHC loading is 0%. John has never had hospital cover and is 41 so he has 22% LHC loading (2% per year for 11 years). When they take out a couples’ hospital policy, their combined LHC loading will be 11%, which is the average of John’s 22% and Layla’s 0%. This average loading will be applied to their joint premiums.

New Migrants to Australia and LHC

New migrants to Australia also need to be aware of LHC loading, which applies from their LHC base day. The base day for new migrants is the latter of:

• The 1st of July following your 31st birthday, or
• The first anniversary of your full Medicare registration (this means the date you are granted full or interim Medicare benefits with a blue or green Medicare card).

For example, if you register for full Medicare on 15 June 2024 and are over 31, your base day would be 1 July 2025. You need to have hospital cover before this date to avoid LHC loading. If you don’t, you will get a 2% loading for every year after your base day until you join cover.

In summary, new migrants should keep track of their Medicare registration date and have hospital cover before their LHC base day to avoid or minimise LHC loading.

There are over 50 different health funds in Australia today from which you can get your policies to avoid paying the LHC loading, and each provider has its own unique policy and services. Health Deal’s comparison tool is handy in this situation. You can use this tool to find a better health fund policy for yourself that suits your needs and budget and potentially save thousands of dollars you would otherwise have to pay as LHC loading. In this article, we will take you through everything you need to know about hospital-only cover, what it means for you and your health, and more, so let’s get started.

In summary, LHC loading is an expense that can be reduced or avoided if you plan ahead. All you need to do is get and keep hospital cover. For this, you can use the Health Deal Insurance Comparison tool. Here, you can compare health insurance policies, costs and providers. For expert advice on private insurance, contact Health Deal at enquiries@healthdeal.com.au. Call our experts on 1300 369 399. Get in touch now to speak with an insurance expert for personalised advice and support.

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This guide is for informational purposes only and should not be taken as financial advice. While we strive to provide accurate and up-to-date information, health insurance policies and benefits may change. Always check with a financial professional before making any decisions. Health Deal compares selected products from a panel of trusted insurers but does not compare all products in the market. For the most current information, please refer to the official Lifetime Health Cover loading information provided by the Australian Government or speak with one of our health insurance experts.