Lifetime Health Cover
Lifetime Health Cover (LHC) is a Government initiative designed to encourage people to take out hospital insurance earlier in life and to maintain their cover.
Who pays LHC?
If you do not have hospital cover with an Australian registered health fund on your Lifetime Health Cover base day and then decide to take out hospital cover later in life, you will pay a 2% loading on top of your premium for every year you are aged over 30.
In most cases, your Lifetime Health Cover base day is the later of 1 July 2000 or the 1st of July following your 31st birthday.
For example, if you take out hospital cover at age 40 you will pay 20% more than someone who first took out hospital cover at age 30. The maximum loading is 70%.
Once you have paid a LHC loading on your private hospital insurance for 10 continuous years, the loading is removed. Your loading will then remain at 0% as long as you retain your hospital cover; or, if you cancel your cover after the loading is removed, as long as you do not exceed your permitted days without hospital cover (see below).
You can use the Lifetime Health Cover calculators to find out if you need to pay the LHC loading.
If you are on a couple or family policy, your loading is calculated as an average between the individual loading of the two adults. For example, if one person has 20% loading and the other person has 0% loading, the loading applied to the couples' policy is 10%.
General treatment (extras) cover, Overseas Visitors Health Cover, Overseas Student Health Cover, and international forms of insurance are not considered to be hospital cover for Lifetime Health Cover purposes.
Permitted days without hospital cover
If you have taken up hospital cover on or after your Lifetime Health Cover base day, then you can access the following 'permitted days without hospital cover' during which you don't have an active hospital policy, but your loading does not increase. For most people, your base day is the later of 1 July 2000 or the 1 July after your 31st birthday.
- Gaps in cover - to cover small gaps, such as switching from one fund to another, you are able to be without hospital cover for periods totalling 1094 days (i.e. three years less one day) during your lifetime, without affecting your loading. This is known as 'Days of Absence'.
If you use up your Days of Absence - that is, you have a total gap period of 1095 days - you will pay a loading on rejoining private hospital cover. The loading is an additional 2% on top of any previous loading, and will increase by 2% for every year after the 1094 days without cover.
- Suspension of membership - if you apply to your health fund to suspend your hospital cover for a short period (for example, to travel overseas for a holiday), and the fund agrees, this period of suspension isn't counted towards your 1094 days of absence. Suspension terms and conditions vary from fund to fund, so check with your fund as to whether you can suspend your policy.
- Going overseas - if you cancel your hospital insurance after your Lifetime Health Cover base day in order to go overseas for at least one continuous year, the days you spend outside of Australia aren't counted towards the 1094 Days of Absence. You are able to return to Australia for periods of up to 90 consecutive days, per visit, and are still considered to be overseas. Any periods of 90 days or more which you spend in Australia will be deducted from the 1094 Days of Absence.
Removal of LHC loading after 10 years
Your LHC loading can be removed after you have completed 10 years of continuous cover.
Please note that although you can break up your 10 years of continuous cover with any of the above permitted periods without hospital cover, the breaks in cover do not count towards the 10 years. For example, if you pay your loading for 9 years and then cancel your cover while living overseas for several years, you will still have to pay 1 more year of loading on rejoining for the loading to be removed.
You should also note that if you use up your full 1094 Days of Absence, the continuity of your 10 year period of cover is broken. If you rejoin hospital cover after 1094 Days of Absence has been exceeded, you will have to pay an increased loading and you will have to start your 10 years of continuous cover from the date of rejoining.
If you complete 10 years of continuous hospital cover, your loading will be reduced to 0%. If you later drop your hospital insurance and use up all your permitted periods without hospital cover, then when you rejoin you will incur a loading again. The loading will be your previous loading back plus any further loading that has since accrued (i.e. 2% for each further year beyond the permitted periods without hospital cover).
New migrants to Australia
If you are a new migrant to Australia, then you have until the later of 1 July following your 31st birthday or the first anniversary of your full Medicare registration to take out private hospital cover without incurring a Lifetime Health Cover loading.
If the latter applies to you, your Lifetime Health Cover base day is the 12 month anniversary of your registration for full Medicare benefits (i.e. when you are eligible for a blue or green Medicare card).
However if you are subsequently overseas on your Lifetime Health Cover base day and if you registered with Medicare on or after 1 July 2009, then you will not have to pay a Lifetime Health Cover loading if you purchase hospital cover within 12 months of your return to Australia. The anniversary of your return to Australia becomes your new Lifetime Health Cover base day.
If you miss your Lifetime Health Cover base day, you will have to pay 2% more for each year you are aged over 30 when you take out private health insurance.
Who is exempt from LHC?
If you were born on or before 1 July 1934, you are exempt from LHC. You can join a health insurer at any time in the future and pay the same premium as someone who takes out cover at age 30.
- Overseas on the 1st of July following your 31st birthday - If you are an Australian citizen or permanent resident who is overseas on the 1st of July following your 31st birthday, and your 31st birthday falls after 1 July 2000, you will not pay a Lifetime Health Cover loading if you purchase hospital cover by the first anniversary of the day you return to Australia. You are able to return to Australia for periods of up to 90 consecutive days, per visit, and are still considered to be overseas. So your 'return' is your first visit back of 90 days or more. If you do not purchase hospital insurance during this one year grace period and purchase insurance later, then loading will be applied based on your age at the date of joining.
- Over 31 and overseas on 1 July 2000 - If you were an Australian citizen or permanent resident who was aged over 31 and overseas on 1 July 2000, then you are considered to have held hospital cover on your base day. This means you have access to the 'permitted days without hospital cover' as summarised above. If you are overseas for at least 12 months, then no loading accumulates in that time, and you can be in Australia for visits of up to 90 days and still be considered to be overseas. When you are in Australia (i.e. any visits of 90 days or more) you have up to 1094 'Days of Absence' to purchase private hospital cover without paying a loading. The 1094 'Days of Absence' is a lifetime limit and cannot be renewed; if in future you have any breaks in your cover while living in Australia, the time spent without cover will also be deducted from this period. If you use up your Days of Absence - that is, you have a total gap period of 1095 days - you will pay a 2% loading on rejoining private hospital cover. The loading will increase by 2% for every year after that without cover.
- Norfolk Island - Prior to 1 July 2016, time spent on Norfolk Island was classified as time spent overseas and this can have different effects depending on the actual dates you were resident on Norfolk Island. From 1 July 2016, this will no longer apply and time spent on Norfolk Island will be equivalent to time spent in Australia. Norfolk Island residents who are aged over 31 at 1 July 2016 have until 1 July 2017 to purchase insurance without incurring a Lifetime Health Cover loading; if purchasing from or after 1 July 2017, a loading will apply. Residents of Norfolk Island can purchase the same policies as residents of NSW.
From 1 July 2016, residents of Norfolk Island will be eligible for Medicare benefits and will therefore also be able to purchase Australian private health insurance policies. Norfolk Island residents who are aged over 31 will have a 12 month grace period, to 1 July 2017, to purchase insurance without incurring a Lifetime Health Cover loading; if purchasing from or after 1 July 2017, a loading will apply based on their age at the time of joining. (For younger residents, they will have until their normal LHC base day of the 1 July following their 31st birthday to purchase insurance without incurring a loading.)
- Australian Defence Forces (ADF) - If you are a member of the Australian Defence Forces (ADF) your medical services are provided by the ADF, so you are considered to have hospital cover.
From 1 July 2000 onwards, if you discharge from the ADF after the 1st of July following your 31st birthday, you have 1094 Days of Absence to join a health fund and still pay the base rate premium. If you discharge from the ADF before the 1st of July following your 31st birthday, then the normal rules apply.
- Department of Veterans' Affairs (DVA) - if you hold a Department of Veterans' Affairs (DVA) Gold Card you are considered to have hospital cover. If you have held a Gold Card at any time since 1 July 1999, and the card was subsequently withdrawn by the DVA, you may claim the period you held the card as a period with private health insurance.
Establishing your LHC loading
If you are transferring between private health funds or joining as a new member, in some circumstances you may need to supply supporting documents to your new health fund to have the correct loading applied. Depending on your circumstances, you may need to obtain one or more of the following:
Clearance Certificate - If you are transferring between private health funds or rejoining private health insurance after a period of absence, you should obtain a Clearance Certificate from your previous health fund and provide this to your new health fund on or after joining. This will establish your previous LHC loading, if any; and if transferring between funds, will also provide information about waiting periods you have already completed. You can find contact details for any health fund on this website.
Medicare registration date letter - If you are a new migrant to Australia aged over 31, then you normally have 1 year from the date of your Medicare registration for a blue or green Medicare card to purchase hospital cover without a loading. If you have joined or intend to join private hospital cover within 1 year of Medicare registration, you will need to confirm the applicable date by requesting a letter from Medicare - contact Medicare (Department of Human Services) or visit your local Medicare branch. Supply the letter to your health fund on or after joining to have your loading reassessed.
If you registered with Medicare on or after 1 July 2009 and you were overseas on the anniversary of your Medicare registration, then you should also obtain an International Movement Record - see below.
International Movement Record - You may need this document if:
- you were overseas on the 1 July following your 31st birthday, and you intend to purchase or have purchased private hospital cover within 1 year of your return; or
- you were aged over 31 and overseas on 1 July 2000, and you intend to purchase or have purchased private hospital cover at any time after your return; or
- you are a new Australian migrant who was aged over 31, you registered with Medicare on or after 1 July 2009, and you were overseas on the anniversary of your Medicare registration date, and you intend to purchase or have purchased private hospital cover within a year of your return (in this case, you should also obtain a Medicare Registration date letter); or
- you cancelled your hospital cover after the age of 31 and after 1 July 2000, and then went overseas for a period of at least 12 months, and you now intend to purchase or have purchased private hospital cover at any time after your return (in this case, you should also obtain a Clearance Certificate).
If you fall into one of these categories, then to confirm your entry and exit dates from Australia you can request an International Movement Record from the Department of Home Affairs. The application form (Form 1359) can be downloaded online. When you have received the record from Home Affairs, supply it to your health fund on or after joining to have your LHC loading reassessed.