Lifetime Health Cover loading is a penalty that applies to anyone who takes out private health insurance after their 31st birthday. The loading increases your premium by 2% for every year you don't have private health insurance over the age of 30. But it's completely avoidable – just take out a hospital policy before you turn 31.
Avoiding the Lifetime Health Cover loading is pretty straightforward – you just need to take out hospital cover by 1 July following your 31st birthday. We've listed some for you below. All prices are based on a single individual with less than $97,000 income and living in Sydney.
The Lifetime Health Cover (LHC) loading adds a 2% fee for every year you don't have hospital cover over the age of 30. It's a government initiative designed to encourage Aussies to buy private health insurance sooner rather than later. Basically, it means you're charged a penalty if you only buy health insurance when you're older.
The LHC loading kicks in shortly after your 31st birthday. So if you wait until you're 40, you'll be charged an extra 20% on top of your premium; if you wait until you're 50, it'll be 40% extra, and so on. The maximum penalty anyone can be charged is an additional 70% on top of their premium. That penalty stays in place until you've held private health insurance for 10 continuous years.
If you never get private health insurance, you'll never have to pay LHC loading. But remember, almost half of all Australians have health insurance and many of them only decide to buy it later in life, so you might end up changing your mind further down the line.
The LHC may seem like a big additional expense but Australian Medical Association (AMA) data suggests Australians who take it out earlier in life don't actually save money in the long run. You're still better off taking it out until later in life.
"If you're considering private health insurance, it's important to know how it impacts your taxes. The Medicare Levy Surcharge (MLS) is an additional tax for higher-income earners without private health cover. If you get insurance part way through the year, the MLS is only charged for the days you were without coverage. For example, if you're uninsured for half the year, you'll pay only half the MLS. This apportioning can significantly reduce your surcharge, making it a smart move to get covered sooner rather than later."
For most people, the Lifetime Health Cover loading deadline is 1 July, immediately following your 31st birthday. This is known as your "base day". However, your base day may be different if you were overseas on this day, you were born before 1 July 1934 or if you're a recent migrant to Australia.
If you are a new migrant and are over the age of 31, you will have to get hospital cover within 12 months of being registered for full Medicare benefits in order to avoid LHC loading.
The cost of Lifetime Health Cover loading depends on how long you've gone without private health insurance and what level of cover you choose.
The table below uses the current base price of various policies offered by a major Australian health fund. Without taking annual price hikes into account, it shows how much your premiums could increase if you wait to buy health insurance.
| Bought at 30 | Bought at 40 | Bought at 50 | Bought at 60 | |
|---|---|---|---|---|
| Basic | $68 | $81.60 | $95.19 | $108.80 |
| Bronze | $80 | $96 | $112 | $128 |
| Silver | $99 | $118.80 | $138.60 | $158.40 |
| Gold | $168 | $201.60 | $235.20 | $268 |
Exemptions for the LHC loading include:
You can use the Australian government's Lifetime Health Cover loading calculator to work out how much you'll pay. It also has a Ten Year Continuous Cover calculator if you want to work out when you'll stop paying the charge.
What is the private health insurance rebate and how has it changed?
Unsure of how to complete the Medicare Levy Surcharge section of your tax return or claim your rebate? This article can help you.
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