Can you suspend your health insurance policy?
It's absolutely possible to suspend or “freeze” your health insurance policy for a period of time if you meet the conditions, but it’s not as simple as just stopping paying your premiums. To suspend your health insurance, you must apply to your health insurance provider and meet certain conditions, such as being fully up to date on paying your premiums.
Can I claim benefits while my policy is suspended?
While your health insurance policy is suspended, you don’t have an active hospital policy, so you’re not covered to make claims for any benefits or rebates from your health insurance provider.
When can I pause my health insurance?
If you fit into one of the three following situations, you may not have to pay any extra Lifetime Health Cover (LHC) loading because you took a break from having private health insurance:
1. No insurance – ‘Days of Absence’ gap in cover
You can go without any hospital cover for periods adding up to 1,094 days in total through your lifetime (i.e. three years less one day). In health insurance terms, this is referred to as 'Days of Absence'. This is useful for small gaps when you aren’t covered, such as when you switch from one fund to another. Once you’ve used up your Days of Absence, a LHC loading of 2% will apply to your premiums if you're over 31 years of age. The amount of LHC loading will increase by 2% for every year you spend without cover.
2. Insurance suspended – when health fund agrees
If you want to take a break from your premiums, maybe because you’re going on an overseas holiday or are experiencing financial hardship, you can apply to your health fund to suspend your hospital cover for a short period of time. If your health fund approves your application, this period of suspension doesn’t count towards your allowed 1,094 Days of Absence. Terms and conditions for suspending your health insurance policy may vary from fund to fund, and you may need to re-serve waiting periods if you have breaks in your hospital cover. Check with your health insurance provider to find out what they allow.
3. Insurance suspended – one year or more overseas
If you cancel your hospital cover so you can go overseas for at least one continuous year (e.g. for a gap year, working holiday, or sabbatical), the days you spend outside of Australia after the day when LHC would start to apply don’t count towards your allowed 1,094 Days of Absence. You can have short trips of up to 90 consecutive days (i.e. roughly three months in a row) back home to Australia, but if you stay in Australia longer than 90 days without getting hospital cover again, these days will count towards your allowed 1,094 days.
The Australian Government’s privatehealth.gov.au website says health insurers may grant suspensions for an agreed period of time at their own discretion.
If your health insurance provider doesn’t have a satifactory policy when it comes to allowing you to suspend your health insurance, it could be worth shopping around for a health insurance provider that may better suit your needs.
Keep in mind you typically must stick with a health insurance provider for at least 12 months before you can be eligible to suspend your policy.
How do I suspend my health insurance policy?
It should be relatively simple to suspend your health insurance policy. Just contact your provider by phone, email, or letter, or complete an online application to suspend your membership through the provider’s online membership portal.
You usually have to start paying your premiums again within 30 days of the suspension ending in order to keep your cover.
In the case of suspending your cover while taking an extended trip overseas, confirm your travel dates (you may be asked to supply proof) and contact your provider. It’s important you get this sorted before you hop on a boat or plane to your overseas destination, because you can’t usually apply to suspend your policy after you’ve already left the country.
When you return to Australia, you’ll typically need to notify your provider within 30 days of your arrival, and make a payment towards your membership immediately. This should reinstate your cover so you can once again make claims for medical services you receive within Australia.
Do my waiting periods keep going while my policy is suspended?
While your policy is suspended, your waiting periods are ‘on hold’. You’ll be able to continue serving the rest of your waiting periods when your policy resumes.
Do I pay the Medicare Levy Surcharge during suspension?
If you earn above the income threshold you’ll have to pay the Medicare Levy Surcharge (MLS) for that tax year, regardless of if your policy is suspended. This can cost you an extra 1% to 1.5% in tax, depending on your income.
