Turning 31 and Lifetime Health Cover

When you are young and healthy it can sometimes be difficult to understand the value private health insurance can play in your life.

Once you reach your 30s, life’s goals change. You may be considering starting a family or the knees aren’t holding up like they used to on the footy field.

Did you know that if you don’t have private hospital cover in place by July 1 following your 31st birthday, you will pay more for your cover than someone that joins earlier in life?

It is called Lifetime Health Cover, and it is a government initiative aimed at rewarding those who take out private health insurance before their 31st birthday by ensuring they pay a base premium amount for life providing they retain their cover.

WHAT IS LIFETIME HEALTH COVER? 

Lifetime Health Cover is designed to encourage you to take out private hospital cover earlier in life. 

If you do not have private hospital cover from the year you turn 31, you will pay a 2 per cent Lifetime Health Cover loading on top of your base rate premium for every year you don’t have cover.

For example, if you wait until your 40th birthday to take out private hospital cover, you could pay an extra 20 per cent for your hospital cover. 

The maximum lifetime health cover loading a person can pay is 70 per cent.

For example: Chris turns 31 on March 1, 2019 and takes out a singles hospital product on April 21, 2019 (before July 1 following his 31st birthday). The cost of his policy is $1000 a year. 

If Chris had waited until he was 36 years of age to take out the same hospital policy, he would have paid an extra 12 per cent for his policy, equating to $120.

If this Lifetime Health Cover loading was applied over a 10-year period, Chris would have paid $1200 more for his hospital product than if he had taken out the cover before he turned 31.

HOW DO I STOP PAYING MORE FOR MY INSURANCE?

Once you have paid a Lifetime Health Cover loading on your private hospital cover for 10 continuous years, the loading will be removed providing you retain your hospital cover.

If you cancel your cover after the loading is removed, you may have to pay the loading again in the future.

IS ANYONE EXEMPT FROM PAYING LHC?

Those who are born on or before July 1, 1934, can join a private health insurer at any time and pay the base rate premium for the product they choose. 

However, if you are a younger Australian citizen or permanent resident who is overseas when your Lifetime Health Cover loading deadline (for example, July 1 following your 31st birthday) takes place, you will not pay a loading if you purchase hospital cover before the first anniversary of the day you return to Australia.

You are also able to return to Australia for up to 90 consecutive days before travelling again and you will still be considered to be overseas.

New migrants to Australia who are aged 31 or over will not have to pay a loading provided they purchase hospital cover within 12 months of becoming eligible for Medicare.

Other provisions may apply to migrants, those covered by a Department of Veterans’ Affairs Gold Card and Australian Defence Force members.

WHAT HAPPENS IF I SWITCH TO A DIFFERENT HEALTH INSURER?

If you switch insurers, your Lifetime Health Cover loading moves with you. 

All registered health insurers are obliged to recognise the certified age of any contributor wanting to switch from another insurer.

The period of absence rule will apply to any gap in hospital cover if a member is not paid up to a date with their previous insurer.

Should you require further information about Lifetime Health Cover, please visit https://privatehealth.gov.au/health_insurance/surcharges_incentives/lifetime_health_cover.htm

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