lifetime health cover

Lifetime Health Cover is a Federal Government initiative that came into effect on 1 July 2000. Under Lifetime Health Cover, people who join a hospital cover earlier in life and maintain their hospital cover will pay lower premiums throughout their life compared to someone who joins later in life. For example, someone who joins at 30 years of age will pay a lower premium compared with someone who first joins at 50 years of age.

The lowest hospital premium you can pay is called the base rate premium. To qualify for the base rate premium, a person needs to take out hospital cover before 1 July immediately following their 31st birthday. People who join after this date will pay an additional premium loading of 2% (in addition to the base rate premium) for each year they are over the age of 30, up to a maximum loading of 70%. Importantly, the Federal Government Rebate applies to the whole premium under Lifetime Health Cover, including any applicable loading payable on the hospital base rate premium.

If a Lifetime Health Cover loading has been applied to your premium, it can be removed after you have held hospital cover for a continuous period of 10 years.

People born on or before 1 July 1934 can join a registered health insurer at any time and always qualify for the base rate premium. Other special provisions apply to people who were overseas when Lifetime Health Cover was introduced, people who were overseas when they turned 31, migrants, people covered by a Department of Veterans' Affairs Gold Card and members of the Australian Defence Force.

Lifetime Health Cover only applies to hospital cover, it does not apply to general (extras) cover.

The Government recognises that people may need to cease their hospital cover from time to time for various reasons such as during times of financial difficulty. Therefore people can cease their hospital cover for a cumulative period of up to 2 years and 364 days over their lifetime, for whatever reason, without incurring any premium loadings when they rejoin. The normal rules regarding waiting periods will still apply. This period without hospital cover is called a period of absence.

If a member ceases their membership for 3 years or more, calculated over their lifetime, they will have to pay an additional 2% loading for each full year of absence over and above the first 2 years when they return to private hospital cover. They will still pay a lower premium than someone of the same age who joins for the first time as they will receive recognition for the period during which they held hospital cover.

A period of absence applies to every adult covered on a policy and accrues over their lifetime. For example, if a person ceases their hospital cover for 1 year and 6 months, rejoins and ceases again for a further 1 year and 6 months, their total period of absence will be 3 years and they will have to pay a 2% loading when they rejoin.

If a person transfers from one fund to another, the clearance certificate will have to show a total of any days each adult beneficiary has been without hospital cover so as the accepting fund can record these days on the new policy.

Note: Any period of suspension, which has been authorised by the health fund, will not count towards a period of absence. In addition if a member is overseas for more than one year, the period overseas will not count towards a period of absence.

Health funds currently have the discretion to allow a member to suspend their membership under certain circumstances. For example, a member may be allowed to suspend their membership for a given period whilst they are travelling overseas. Any period of suspension which has been authorised by the health fund will not count towards a period of absence. In other words, an authorised period of suspension will not affect a person's certified age nor will it affect the premium they have to pay.

A St.LukesHealth member may suspend their policy for up to two years if they are travelling overseas or if they become unemployed and are eligible for unemployment benefits. They can also apply for a suspension under certain circumstances of financial hardship. Members should contact St.LukesHealth for details about suspending their policy if the need arises.

With effect from 1 April 2007, the Federal Government introduced a new ruling which allows health funds to remove any Lifetime Health Cover loading that applies to a person, after that person has held hospital cover for a continuous period of 10 years.

A period of 10 years can be interrupted by permitted days without hospital cover, however the permitted days are not counted towards the 10 years.

If after having their loading removed, a person subsequently ceases their hospital cover and rejoins again at a later date, their Lifetime Health Cover loading will be reapplied as if the loading had not been removed. If the period that the person was absent from hospital cover totals more than 1094 days (including any accumulated absence days), an additional 2% loading is added for each year they were absent from hospital cover.

Under Lifetime Health Cover, members can still transfer between funds. All registered health funds are obliged to recognise the certified age of any contributor wanting to transfer from another fund. The period of absence rule will apply to any gap in hospital cover if a member is not paid up to date with their previous fund.

Any period of absence days accumulated with the members previous fund, will transfer over to their new policy.

As from 27 February 2004, a new provision has been introduced allowing members who are overseas for extended periods to cease their hospital cover for the period they are overseas without facing penalty.

Under this change, all days for overseas periods of more than 1 year (including the first 365 days) are ,permitted days without hospital cover”. If a member drops cover because they are overseas for more than 1 year, when they re-join they do not have to pay a Lifetime Health Cover loading for this period. Any period when a person returns to Australia for less than 90 consecutive days, counts as part of the period overseas.

Members who are overseas for more than 1 year may still wish to consider the option of suspending their hospital cover rather than ceasing it altogether. This may assist in reducing or eliminating the need to re-serve waiting periods on return from overseas.

Overseas periods of 1 year or less will be counted as a period of absence unless the member has suspended their policy.

The Department of Health and Ageing has advised that the appropriate documentary evidence for a period overseas is a statement of movements in and out of Australia from the Department of Immigration and Citizenship. This statement can be obtained by lodging a ,Request for international movement records” with DIAC. This form can be obtained by contacting DIAC on 131881 or from the DIAC website at http://www.immi.gov.au/allforms/application-forms/forms_alpha2.htm#r.

As from 23 April 2004, Australians who are overseas on their 31st birthday have a 12 month grace period from the day they return to Australia to join hospital cover without incurring a Lifetime Health Cover loading. If a person covered by this provision does not join within this grace period, they will have to pay a LHC loading based on their actual age at joining, keeping in mind the standard birthday method used for calculating their certified age at entry.

In the above circumstance the person must provide proof to their health fund that they were out of the country on their 31st birthday.

The Department of Health and Ageing has advised that the appropriate documentary evidence for a period overseas is a statement of movements in and out of Australia from the Department of Immigration and Citizenship. This statement can be obtained by lodging a ,Request for international movement records” with DIAC. This form can be obtained by contacting DIAC on 131881 or from the DIAC website at http://www.immi.gov.au/allforms/application-forms/forms_alpha2.htm#r.

Australian citizens and the holders of permanent visas who were overseas on 1 July 2000 will be taken to have had hospital cover for the period of their absence. People in this category will be taken to be absent from Australia, notwithstanding that the period of their absence may be ‘broken' by short-term return visits to Australia (visits up to and including 90 days). Therefore, if the person was overseas on 1 July 2000, they will be taken to have hospital cover until their return to Australia. They will have been given a certified age at entry of 30 on 1 July 2000 and will be entitled to pay the base rate premium. The person will be able to return to Australia for brief periods for up to 90 days at a time. If they intend to return to Australia for a longer period, they will need to take out hospital cover with a registered health insurer. Any delay in taking out hospital cover after the person returns to Australia will be subject to the Lifetime Health Cover period of absence rules. Their days of absence start accruing from their first day back in Australia, if their stay extends beyond 90 days.

In the above circumstances members must provide proof to their health insurer that they were out of the country for the period they are claiming.

The Department of Health and Ageing has advised that the appropriate documentary evidence for a period overseas is a statement of movements in and out of Australia from the Department of Immigration and Citizenship. This statement can be obtained by lodging a ,Request for international movement records” with DIAC. This form can be obtained by contacting DIAC on 131881 or from the DIAC website at http://www.immi.gov.au/allforms/application-forms/forms_alpha2.htm#r. 

New arrivals, including migrants and refugees, entering Australia will be able to lock in the base rate premium, regardless of their age, as long as they take out private hospital cover within 12 months of becoming eligible for Medicare.

If they delay joining past this period, the normal Lifetime Health Cover rules will apply and their premium will be based on the age they are when they do join.

Reciprocal Health Care Agreements with other countries

Australia has Reciprocal Health Care Agreements with several other countries. For Lifetime Health Cover purposes, eligibility for Medicare does not include people who have limited eligibility under Reciprocal Health Care Agreements. This means that the grace period for migrants who have limited eligibility under a Reciprocal Health Care Agreement does not start until they are granted full eligibility for Medicare.

Additional information can be obtained by visiting the Department of Health and Ageing web site at http://www.health.gov.au/.