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Understanding the Lifetime Health Cover Loading

Understanding the LHC Loading
Georgia Carter Updated: 21 May 2021
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If your 31st birthday is around the corner you may be thinking about your health cover requirements and the looming Lifetime Health Cover (LHC) loading. You may have some unanswered questions about the LHC loading and whether you’ll need to pay any additional costs even if you’re planning to maintain your cover consistently throughout your 30’s.

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. Learn everything you need to know about this fee, when you’ll need to pay it and if there’s something you can do to avoid having to pay more for your health cover later on in life.

Key facts

  • The private health insurance loading fee is an additional 2% charge that is placed on top of your health insurance premium cost if you purchase private health insurance after the 1st of July following your 31st birthday.
  • You need to have at least a Basic Hospital plan to be exempt from paying the loading fee.
  • You can avoid paying the extra loading fees by applying for or purchasing a Hospital policy before the age of 31.
  • Generally, if you’ve immigrated to Australia you still have to pay the loading fee.

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What is the Lifetime Health Cover Loading?

The LHC loading was introduced in July 2000 to encourage the younger generations to purchase health care insurance before they reach the age of 31. This is an effort to alleviate the pressure that has been placed on the Medicare system.

The loading fee is an additional fee that is placed on top of your health insurance premium. The premium loading calculation adds the additional charge for every year you did not have Hospital cover after the base day when you’ve reached a certain age. If you purchase and maintain Hospital cover before this time, you will not have to pay the additional loading costs and charges.

Who needs to pay it?

Generally, you’ll only need to pay the loading fee if you have turned 31 and you don’t have an eligible Hospital policy. If you have purchased a Hospital plan or policy before the base date following your 31st birthday, you typically won’t need to pay the loading fee. However, you’ll need to maintain your cover or you may need to pay the loading again.

What happens when you don’t apply for health cover?

If you have not applied or purchased health cover before the loading age, you will have to pay an additional fee for every year you did not have cover. This extra charge will be placed on top of your health insurance premium when you do decide to purchase one later on in life. This generally means that you’ll pay more for your health cover than other people your age.

Do you still pay the loading if you have cover and then cancel it?

If you purchase cover after the base date following your 31st birthday and shortly afterwards cancel your policy, you will still need to pay the loading fee if you apply for cover later on. If you go without coverage for a few years and then decide to buy a Hospital plan or policy, you will generally have to pay the loading fee for each year you did not have cover.

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How to find the right policy to help you avoid the LHC loading

  • Review the various private health insurance companies that offer both Extras and Hospital plans and policies.
  • Compare and choose a Hospital plan or policy that best suits you and your family. You need to have, at the very least, a Basic Hospital Plan to avoid paying the loading fee.
  • You may want to opt for a policy with a higher co-payment or excess. An excess is the money you’re willing to pay upfront for the hospital treatment. By paying more upfront, you’ll generally save on your monthly premiums.
  • Check if you are eligible join one of the restricted health funds suited to your industry, for example, the Teachers Health and Defence Health Limited.
  • Take out the policy best suited for you in terms of health, budget, and dependents before you turn 31 years old.

Frequently asked questions and answers

  • What if you miss your LHC loading deadline?

    If you have not yet applied or purchased health cover before the loading deadline, which is the 1st of July following your 31st birthday, then a 2% loading fee will be charged on top of your policy payment when you do purchase health insurance.
  • Can you avoid this loading?

    You can avoid paying the extra loading fees by applying for or purchasing a Hospital policy before the age of 31. The minimum policy you must have to avoid paying the loading fee is a Basic Hospital plan.
  • Who doesn’t need to pay it?

    You are exempt from paying the loading fee if you were born before the 1st of July 1934, if you are a member of the Australian Defence Forces, if you hold a Department of Veterans’ Affairs gold card, if you’re a resident of Norfolk Island who turned 31 before the 1st of July 2016 and purchased health insurance before the 30th of June 2017, if you’re an Australian permanent resident who was overseas on the 1st of July following your 31st birthday and you purchase hospital cover one year after being back in Australia for 90 days or more, or if you were a new migrant when you registered with Medicare on or after the 1st of July 2009.
  • Do you still pay the loading if you’ve immigrated to Australia?

    Yes, the Lifetime Health Cover loading generally applies to immigrants moving to Australia. An exception is if you have purchased a private Hospital policy before the first anniversary of your finalised Medicare registration, which refers to the date you registered for either interim or full Medicare benefits.
  • Is there a grace period for the loading?

    The loading fee will only be applied after the 1st of July following your 31st birthday. In other words, if you have just turned 31 and the 1st of July that occurs after your birthday has not come to pass yet, you have until that date to apply for or purchase health insurance and the loading fee will not be applied to you.

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