Can I take a break from my health insurance? 

With many Australian households under financial pressure, you might be wondering whether you should ditch your health insurance to save money. Before you take that step, there’s an option you may not have considered: taking a break from your health insurance. 

It’s a little-known fact that health insurers allow you to hit pause on your policy, referred to as suspending your policy. Factors for putting your policy on pause can include financial hardship or overseas travel (for long periods abroad). Some will also allow suspensions in other circumstances, such as unemployment (including when your partner is unemployed, if it’s a couples policy). Every insurer is different so it’s important you check what’s available based on your policy.  

Suspending your policy 

Usually a suspension can’t last longer than 2 years, but every insurer has different conditions.  

You can suspend your policy for short periods (of at least 2 months, usually) or take one longer break, but there are often limits on how many suspensions you can have in a year, or even across your lifetime, in some cases. 

Suspending your health insurance won’t affect waiting periods that you’ve already served, but if you haven’t finished waiting periods, you’ll have to continue them when you resume your policy.  

How do I take a break from health insurance? 

If you want to suspend or take a break from your health insurance, don’t simply stop paying your premiums. Ask your insurer how to apply for a suspension, and check what conditions apply. Generally you’ll need to have held your policy for a set amount of time and not be behind in your premium payments.  

If you’re applying for a suspension because you’ll be overseas for a long period, make sure you apply before you leave Australia. Suspensions can only be approved in advance, not retrospectively.   

When your suspension finishes, you need to start paying for your insurance again within 30 days, or your policy may be cancelled. If that happens, you’ll need to buy a brand new policy and start your waiting periods all over again.  

To apply for a suspension, it’s important that you read the fine print and follow your insurer’s process carefully. Remember, you won’t be able to claim for any healthcare treatments or services on a suspended health insurance policy until you resume cover.  

What happens to the Medicare Levy Surcharge on suspended health cover? 

If you earn more than $93,000 as a single person or $186,000 as a couple or family, and you take a break from your health insurance, you’ll have to pay the Medicare Levy Surcharge (MLS) at tax time.  

If you earn below those thresholds, the MLS doesn’t apply to you. 

How is the Medicare Levy Surcharge calculated?

Do I have to pay Lifetime Health Cover Loading after suspending my health cover? 

If you suspend your health insurance for more than 1,094 days (which is around three years), you’ll have to pay the Lifetime Health Cover Loading (LHCL) when you resume your cover, even if you haven’t had to pay it in the past.  

What’s the Lifetime Health Cover Loading?

But if your suspension period is less than 1,094 days – which is known as your ‘Days of Absence’ – it won’t affect your LHCL eligibility. Here are some examples. 

If you’re looking for ways to save money on health insurance, why not look for a more affordable policy? Try our healthslips.com.au Calculator. It’s free to use, and easy to compare every insurer and every policy that’s relevant to you.

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.

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