Lifetime Health Cover (LHC) loading explained
Australia is fortunate to have Medicare, our public healthcare system. While Medicare provides access to excellent care, the system's sustainability relies on a mix of public and private healthcare options. To reduce pressure on Medicare, the Government incentivises Australians to use private healthcare through various initiatives. One of these is the Lifetime Health Cover loading (LHC).
What is Lifetime Health Cover loading?
LHC is a Government initiative designed to encourage Australian citizens and permanent residents to obtain and maintain private Hospital cover earlier in life. If you don't purchase cover before a certain age, an additional percentage is added to your private health insurance premiums for each year you remain uninsured after that age. The additional percentage added to your premium is referred to as loading.
Who has to pay a Lifetime Health Cover loading?
If you haven't taken out private Hospital insurance before your Lifetime Health Cover base day - the later of 1 July 2000, or 1 July following your 31st birthday - and maintained continuous coverage, a loading will be added to your Hospital cover premiums for each year you remained uninsured. This additional cost is applied to your policy as soon as you purchase private health cover. Once you have paid the LHC loading for 10 consecutive years of continuous coverage, you will no longer be required to pay this loading. Note that this only applies to Hospital cover, not Extras cover.
Lifetime Health Cover base day
Your LHC base day is the later of 1 July 2000 or 1 July following your 31st birthday. Some special circumstances may apply if you are a new migrant or an Australian who has been living overseas. Visit privatehealth.gov.au for more information.
Calculating the Lifetime Health Cover loading
The LHC loading is an additional 2% on top of your policy cost for each year you are aged 31 and over and don't have Hospital cover, up to a total of 70%. It is based on your age on 1 July prior to joining. For example, if you don't take out private Hospital cover until you're 40, you'll pay 20% more on your premiums than someone who took it out before their 31st birthday.
If you have a couple or family policy, the loading is calculated as the average between the individual loadings of both adults. So, for instance, if one has a 20% loading and the other has 0%, the total loading added to your policy would be 10%.
Visit privatehealth.gov.au for more information and calculators.
Permitted days without Hospital cover
Unfortunately, there aren't many exemptions to the loading if you don't have Hospital cover before 1 July, following your 31st birthday. However, there are instances when you get an extension or permitted days without Hospital cover. During these periods, your loading will not increase. These include:
Gaps in cover. During your lifetime, you can have gaps between having Hospital cover for a total of 1,094 days (3 years, less one day), without it affecting your LHC loading, also known as 'Days of Absence'. An example of this is switching from one insurer to another. If you exceed the gap limit of 1,094 days, then you will pay a LHC loading when you rejoin, which will be an additional 2% for every year without cover after this period.
Suspension of cover. If your health insurer has approved you to suspend your hospital cover for a short period (for example, when travelling overseas), the approved period will not count toward your 1,094 Days of Absence. You must verify with your insurer whether they offer this option and understand the applicable terms and conditions.
Going overseas. If you're an Australian citizen or permanent resident who was overseas on July 1 following your 31st birthday (after July 2000, when LHC was introduced) and have recently returned to Australia, you have 365 days from your arrival date to obtain private Hospital cover without incurring LHC loading. You can stay in Australia for up to 90 days without it affecting your 365-day limit. But, if you stay longer than 90 days, those extra days will be taken from your 365-day total.
Special circumstances exempting Lifetime Health Cover loading
There are special circumstances of exemption from LHC loading. These are:
A citizen or permanent resident born before 1 July 1934 is exempt from LHC. However, you can still take out private health cover if you need it.
You're serving in the Australian Defence Force (ADF) – if you're currently serving on continuous full-time service, your private health cover is provided by the ADF. If you leave after 1 July, following your 31st birthday, you have 1,094 days to take out private Hospital cover until the LHC loading is applied. But if you're discharged before 1 July following your 31st birthday, the standard LHC rules apply.
You have a Department of Veterans' Affairs Gold Card – if you have a Gold Card, then you automatically have Hospital cover too. However, if you've held the card since January 1999 and it is taken away, this will be taken into account when calculating whether LHC loading affects you.
Hospital cover tiers and categories
Hospital cover across all health funds is categorised into four tiers: Basic, Bronze, Silver, and Gold.
Basic - All Basic covers must include Hospital Rehabilitation, Hospital Psychiatric Services and Palliative Care on a restricted basis as a minimum requirement.
Bronze - Have the same required inclusions as Basic. In addition, Bronze covers include 18 further hospital services, such as brain and nervous system, joint reconstructions, as well as ear, nose and throat.
Silver - Have the same required inclusions as Bronze, and include an additional 8 groupings of hospital services, such as heart and vascular system, dental surgery and lung and chest.
Gold - All Gold covers must not exclude or restrict any Medicare recognised hospital services, making Gold the most comprehensive cover.
Qantas Health Insurance offers the following range of Hospital cover.
Basic Hospital
Bronze Hospital Plus
Silver Plus Standard Hospital
Silver Plus Select Hospital
Silver Plus Advanced Hospital
Gold Top Hospital
If you want to learn more about our policies and get the best cover to suit your needs and budget, call our Qantas Health Insurance experts on 13 49 60 and they'll be happy to chat through options with you. Alternatively, click here to get a quick Qantas Health Insurance quote today.
