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Lifetime Health Cover Loading (LHCL) is one of the most misunderstood areas of health insurance. It’s a penalty the government created to encourage Aussies to take out Hospital Cover before the age of 31. After that age, if you’re starting Hospital Cover you’ll pay an extra 2% on Hospital Cover for every year over 30 you are, up to a maximum of 70%. After 10 years, the Loading finishes.
As your experts on all things health insurance related, healthslips.com.au is here to bust through the LHCL myths so you can make the best decisions.
Myth 1: I have to pay Lifetime Health Cover Loading for the rest of my life
Despite what the name suggests, Lifetime Health Cover Loading doesn’t increase your premiums forever. It lasts for 10 years, then it’s removed from your Hospital Cover premiums (so long as you’ve held continuous cover over that period).
Of course, if you cancel your Hospital Cover and don’t replace it with another policy, you’ll have to pay Lifetime Health Cover Loading again, for another 10 years, when you begin another policy, so make sure you don’t leave gaps in your cover.
Myth 2: Extras Cover will help me avoid Lifetime Health Cover Loading
Lifetime Health Cover Loading only applies to Hospital Cover, which means if you only have Extras Cover and don’t take out a Hospital Cover policy before you turn 31, the Loading will be applied to your Hospital Cover premiums when you do start a policy.
Myth 3: Switching policies means the Lifetime Health Cover Loading starts again
When you change Hospital Cover policies, your Loading stays the same – you don’t have to start the 10-year Loading period again. So if you’ve had the Loading for 3 years, you’ll only have to pay it for another 7 years regardless of whether you stay on that policy or change to a new Hospital Cover policy or insurer.
Myth 4: If I pay the Medicare Levy Surcharge, I won’t have to pay Lifetime Health Cover Loading
The Medicare Levy Surcharge (MLS) and Lifetime Health Cover Loading (LHCL) are 2 different government penalties. The MLS applies to every adult who earns over a certain amount (check the thresholds here) and doesn’t have Hospital Cover. The LHCL, however, applies to anyone who takes out Hospital Cover after the age of 31, regardless of income level. So having Hospital Cover means you’ll avoid having to pay the MLS, but if you didn’t take out and maintain cover before you turned 31, you’ll still have to pay the LHCL on top of your policy premiums for 10 years.
Myth 5: Our Lifetime Health Cover Loading will double if my partner and I buy a couples policy
On a policy covering 2 adults (think: a couples or family policy), the Lifetime Health Cover Loading is averaged out between you both. So if you have 2% Loading and your partner has 6%, a 4% Loading (the average) will apply to your joint policy. And if you have an 18% Loading and your partner has 0% because they’ve had continuous Hospital Cover since before they turned 31, a 9% Loading will apply to your joint policy.
Myth 6: After living overseas, I’ll have to start Lifetime Health Cover Loading again when I move back to Australia
Different rules apply if you’ve been living overseas. Here’s what you need to know about Lifetime Health Cover Loading (LHCL) when you move back to Australia permanently after a long stint away:
If you had Hospital Cover before turning 31, you’re still exempt from LHCL when you move back to Australia, as long as you haven’t been without cover for more than 1,094 days (including the time you were overseas). So effectively, if you’ve lived overseas for 3 years or more, you’ll have to start LHCL again when you take out a Hospital Cover policy.
If you didn’t have Hospital Cover before turning 31, when you move back to Australia you will have 12 months to purchase Hospital Cover before the LHCL will apply, regardless of how long you were overseas. So it’s a good idea to buy a policy as soon as you can. We recommend jumping on the healthslips.com.au calculator to find an affordable Hospital Cover policy that meets your needs. Our calculator searches every policy in Australia, making it easy to find the best policy for your budget.
Tip for new migrants
Different rules apply for new migrants to Australia. You will have one year from your ‘Base Day’ to take out Hospital Cover before the Lifetime Health Cover Loading (LHCL) begins. Your Base Day is either the 1 July following your 31st birthday, or the first anniversary of when you registered for Medicare – whichever of those dates falls last is considered your Base Day for LHCL as a migrant. So to avoid the Loading as a migrant, work out your Base Day then buy Hospital Cover within 12 months of that date.
healthslips.com.au does not provide general or personalised advice. Your particular circumstances are likely to impact the accuracy, completeness and relevance of the information or results. Take this into account before making a decision and talk to an expert for financial advice.
Trudie McConnochie
Writer and Researcher
Knowledge is power – that’s the guiding principle behind everything Trudie writes, and it’s a philosophy she brings to her work at healthslips.com.au. By breaking down complex information into easy-to-understand blogs and stories, she aims to empower Australians to make the best choices and an informed decision around private health insurance.
Trudie understands firsthand some of the complexity of private health insurance having moved to Australia from New Zealand and having to navigate a vastly different public healthcare system and health insurance structure.
Trudie holds a Bachelor of Communication Studies (journalism major) from the Auckland University of Technology.
