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A Guide to the Lifetime Health Cover Loading

Megan Fraser Updated: 28 June 2022
Types of Health Insurance

If you’re heading into your 30s without health insurance, it’s generally a good idea to start thinking about it. Delaying could mean you have to pay Lifetime Health Cover (LHC) loading, designed to encourage young people to sign up for private health insurance. If you’re older and have not signed up for Hospital cover already, the LHC loading will affect you too.

You could avoid having to pay the Lifetime Health Cover loading by signing up for health insurance before your 31st birthday. This means you’ll be able to save money on your premiums in the long run – so don’t delay. Compare basic Hospital policies to find the right cover to keep you protected and free from any loadings on your premiums.

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Why does Australia have the Lifetime Health Cover loading?

Medicare is a first-class public health system in Australia, but it’s not sustainable for everyone to rely on. The Federal Government offers many incentives so that more people move to private healthcare instead of relying solely on the Medicare program.

By implementing the Lifetime Health Cover Loading, the government and medical authorities can ensure high-quality service when needed most. The Australian government has created several different programs designed specifically with your needs in mind: they provide financial assistance when switching providers or expanding coverage.

What is the lifetime health cover loading?

In an effort to relieve pressure on Medicare, the LHC loading was introduced in July 2000. This new tax is only imposed upon those who do not have private Hospital cover in place before turning 31 years old when they decide to purchase health insurance later on. The LHC loading has been designed with one goal: to get young people covered before they lose their eligibility for free medical services and relieve pressure on the public system.

This loading fee is a government initiative that requires your insurer to add a 2% loading fee on top of your health insurance premiums for every year you don’t have cover after you’ve turned 31. This means there is generally only one way to avoid paying it: purchase and maintain Hospital cover before this time.

Why buy private health insurance before you turn 31?

Once you turn 31, your hospital cover will be subject to a 2% loading for every year that it’s not in place. But if you purchase private health insurance before turning 31, you will not be subjected to paying the extra loading costs. By buying eligible private health insurance, you’ll generally be able to save more money in the long run.

Additionally, health insurance providers might provide individuals aged 18 to 29 a discount on their private Hospital premiums. You may also be able to take advantage of rebates when tax season rolls around. Typically, you’ll be able to claim up to 33.413% of your private health insurance premiums. However, it’s important to note that not all insurer’s offer this so it may be a good idea to compare policies from several providers.

Does Lifetime Health Cover loading apply to everyone?

No, the lifetime health cover loading fee does not apply to everyone in Australia. There are some people who aren’t required to have LHC applied. This includes veterans and members of the Australian Defence Force, as well as those born before July 1st 1934, that will get an exemption from having it done because they’re already in possession of their original certificates.

If you’ve turned 31 and don’t have an eligible Hospital policy or plan yet you’ll generally be required to pay the loading. Typically, the loading on your premium will increase each year you don’t have cover. It’s usually a good idea to compare policies to help you save on these loadings.

Generally, you’ll need to pay the lifetime health cover loading if you:

  • Did not purchase a Hospital policy before 1 July following your 31st birthday
  • Were born after 1 July 1934
  • Are not a member of the Australian Defence Force or a Veterans’ Affairs Gold Card holder.
  • Are an Australian citizen and were overseas on 1 July following your 31st birthday and didn’t purchase private Hospital cover before the first anniversary of the day you returned to Australia.

How is the LHC loading calculated?

The Lifetime Health Cover (LHC) Loading is a tax on top of your hospital cover premium. It’s not until you turn 31 that this extra kicks in, but it can add up. Remember that an extra 2% is added to your yearly Hospital cover premium and the loading is generally capped at 70%.

For example, if you are a single member and take out Hospital cover at age 35, your yearly premium will have an additional 10% placed on it. If you’re a couple or are taking out coverage for the whole family, the loading fee is the average adult fee. If one member has a loading fee of 18% and the other does not have a loading fee at all, 9% is the loading fee applied to the entire premium cost.

Check your LHC loading

Age% LHC LoadingWhat you’ll pay extra per year
31 years old2%$40*
32 years old4%$80*
33 years old6%$120*
34 years old8%$160*
35 years old10%$200*
36 years old12%$240*
37 years old14%$280*
38 years old16%$320*
39 years old18%$360*
40 years old20%$400*

Source: Privatehealth.gov.au

lhc concept 01

How to pay the Lifetime Health Cover loading

Generally, your insurer will factor any loadings which may be applicable when they calculate your premiums. This typically means you won’t need to pay the loading separately. It’ll be deducted from your account automatically when your premium is paid. So, generally, all you’ll need to do is pay your premiums as stated by your insurer using your preferred payment method.

How does health insurance help you avoid the LHC loading?

If you apply for a Hospital policy before the age of 31 will generally help to avoid paying an extra loading fee. The minimum coverage you need is called Basic Plans. Health insurance can be a great way to protect yourself from the high costs associated with medical treatment.

Hospital insurance to avoid the private health insurance loading

InsurerPremium Per MonthBenefits
Medibank$108.10
  • Dental surgery
  • Tonsils, adenoids and grommets
  • Rehabilitation
  • Hernia and appendix
Bupa$108.10
  • Private room at a Member Plus Hospital
  • Unlimited urgent Ambulance by road.
  • Accident-related services
  • Dental Surgery
  • Knee and Shoulder Reconstructions
  • Tonsils, adenoids and grommets
  • Joint reconstructions
  • Hernia and appendix
  • Gynaecology treatments
HCF$102.30
  • Full palliative care
  • Joint reconstruction
  • Dental surgery
  • Male reproductive system
  • Gynaecology
  • Miscarriage and termination of pregnancy
nib$102.30
  • Emergency ambulance cover
  • Immediate necessary treatment needed because of an accident
  • Joint reconstructions
  • Treatment and/or removal of hernia, appendix, tonsils, adenoids and grommets
  • Gastroscopy and colonoscopy
HBF$102.45
  • Minimum coverage includes Accident Inclusion and basic lung and chest treatment
Australian Unity$107.70
  • Dental surgery
  • Tonsils, adenoids and grommets
  • Rehabilitation
  • Hernia and appendix
Teachers Health$119.70
  • Dental surgery
  • Hernia and appendix
  • Joint reconstructions
  • Tonsils, adenoids and grommets
GMHBA$104.95
  • Blood Ear, nose and throat
  • Miscarriage and termination of pregnancy
  • Bone, joint and muscle
  • Eye (not cataracts)
  • Pain management
  • Brain and nervous system
Defence Health$109.72
  • Bone, joint and muscle
  • Hernia and appendix
  • Dental surgery
  • Joint reconstructions
  • Gastrointestinal endoscopy
  • Tonsils, adenoids and grommets
CBHS$109.72
  • Emergency ambulance services
  • The ability to choose your doctor in a public hospital
  • Hospital Substitute Treatment and Better Living programs

Source: Privatehealth.gov.au (June 2022; premium estimates based on a single Basic Hospital policy for an adult living in NSW)

If I temporarily suspend my health cover, will I have to pay the loading?

Not necessarily. There is a one-time grace period, which consists of 1,094 ‘Days of Absence’, where you are allowed to take care of any hospital cover obligations. LHC loading won’t start accruing within this time frame, and your current charges (if any) won’t be affected either.

Frequently asked questions and answers

  • Do immigrants to Australia have to pay the LHC loading?

    Yes, the Lifetime Health Cover loading generally applies to immigrants moving into Australia. Exceptions are found if you have purchased a private Hospital policy before your finalised Medicare registration date. This refers not just to new arrivals but also to those who have been living here longer than tenancy agreements allow–in other words: newcomers might need shorter periods of cover
  • Is private health insurance worth it to avoid the loading?

    Health insurance can be a good investment for Australians of all ages. Whether you choose to get cover or not is up in the air, but we think it’s worth considering because there could always come an accident where having this kind provides peace of mind knowing your medical expenses are taken care of. In addition, taking out private hospital insurance at a younger age may be more affordable. Think of it this way: If you don’t have insurance and have an accident, you will have to pay the medical expenses in full, which is a hefty cost. Then, if you are over the age of 31 and want to start a hospital plan, you will have to pay an additional charge.
  • What if I miss my Lifetime Health Cover loading deadline?

    If you miss the deadline to pay the fee, it will be added to your next instalment. The 1st of July after your 31st birthday is when the 2% loading fee may apply when paying for policies. Therefore, therefore, recommend that you should purchase even the most basic private Hospital policy before this date to avoid paying the Lifetime Health Cover loading fee.
  • Is anyone exempt from pay the LHC loading?

    The lifetime health cover loading fee does not apply to everyone in Australia. There are some people who aren’t required to have LHC applied, including veterans and members of the Australian Defence Force as well as those born before July 1st 1934, that will get an exemption because they’re already holding their original certificates with proof from departments like Indigenous Services or Social Security Office stating when it was first issued at no cost upon request; this way you don’t need another document verifying your status anymore.
  • How long do you have to pay the Lifetime Health Cover loading?

    Generally, you will have to pay the Lifetime Cover Loading Fee for 10 continuous years. Once those initial ten years have passed, you won’t need to pay the loading again. However, if your policy were to lapse or you cancel your hospital cover, you will generally need to start paying the loading again if you purchase hospital cover at a later date. It’s typically a good idea to have Hospital cover earlier than your 31st birthday to avoid any unneccessary costs.

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