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Federal Government initiated lifetime Health Cover (LHC) in July 2000, which was designed to encourage the people of Australia to take out private hospital insurance earlier in life and to maintain their cover.
In Australia, private health insurance is not ‘risk-rated’ like most forms of insurance. Private health insurers cannot refuse to insure any person and must charge everyone the same premium for the same level of cover, despite their risk profile and likelihood of using health services.
Australian citizens who do not take out private hospital cover before 1 July following their 31st birthday, generally face paying an annual 2% financial loading and in addition to the base rate premium to private hospital cover. For an instance if an individual waits until he/she is 35 to take out private hospital cover, they could pay an extra 10% on top of the premium. Gradually, if he/she waits till they become 40; they might have to pay 20% more and at 50 individual might end up getting paid additional 40%.

Henceforth, if individuals take out their private hospital cover before 1st July following their 31st birthday, he/she will not have to pay LHC as long as he/she continues to hold eligible cover. In most cases, it is unavoidable if LHC is not purchased and it increases 2% every year till individual is purchasing it. The maximum loading is 70%.

Who falls under LHC? 

  • If individual is a new migrant to Australia and aged 31 or more, he/she will not have to pay a LHC loading if he/she purchases hospital cover within 12 months of being registered for full Medicare benefits; 
  • If individual delays in purchasing hospital cover for more than 12 months after the registration, he/she will have to pay 2% more for each year over 30 when he/she purchases the hospital cover;
  • If you are on a couple or family policy, your loading is calculated as an average between the individual loadings 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%;
  • If individuals were born on or before 1 July 1934, they are exempt from the LHC loading and they can purchase hospital cover at any time and pay the base rate premium.

Any LHC loading that an individual pays, will be removed from their hospital cover premium after they have held hospital cover for 10 continuous years. However, if an individual cancel the hospital cover after the LHC loading has been removed, he/she may become liable to pay a LHC loading again in the future. Again, LHC is applicable only to cover hospitals; it does not cover private health insurance general treatment cover.

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