Can I suspend my health insurance policy?


Article was originally published by TJ Ryan on February 3, 2017.

Want to take a break? You can suspend or ‘freeze’ your health insurance policy for a while in some situations.

Whether it’s for budgeting reasons, financial hardship, or taking an extended trip overseas, it can be useful to be able to suspend your health insurance policy until you’re ready to take it up again.

Can I suspend my health insurance policy?

Yes. You can normally suspend or ‘freeze’ your health insurance policy for quite a while in certain situations. You can’t just stop paying your premiums though; you have to apply to your health insurance provider and meet certain conditions, such as being fully up to date on paying your premiums.

When can you pause health insurance?

If you fit into one of the three situations below, you may not have to pay any extra Lifetime Health Cover (LHC) loading because you took a break from having private health insurance:

No insurance – Days of Absence gap in cover

You can go without any hospital cover health insurance for periods adding up to 1,094 ‘Days of Absence’ in total (i.e. 3 years less one day). This is useful for small gaps when you are not covered by any private health insurance, such as when you switch from one fund to another. Once you have used up your total Days of Absence allowed (1,094 days), you will pay LHC loading of 2% on top of any previous loading you were already paying. The amount of LHC loading you pay will increase by 2% for every year you spend without cover after the 1,094 Days of Absence are used up.

The table below features a snapshot of hospital & extras policies on Canstar’s database with links to providers’ websites, sorted by Star Rating (highest-lowest) then by provider name (alphabetically). Please note the results are based on a couple aged under 35 in NSW with no pregnancy cover.

Insurance suspended – when health fund agrees

If you want to take a break from your insurance premiums, maybe because you’re taking 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 warns that you may need to serve waiting periods again if you have breaks in your hospital cover. Check with your health insurance provider to find out what they allow.

Insurance suspended – 1 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 your LHC base day 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 3 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 of Absence.

If your health insurance provider doesn’t have a good policy when it comes to allowing you to suspend your health insurance, it could be worth shopping around for a more lenient health insurance provider. Keep in mind, you must normally stick with a health insurance provider for at least 12 months in order to be eligible to suspend your policy.

How do I suspend my health insurance policy?

It should be relatively easy to suspend your health insurance policy. Just contact your health insurance provider by phone, email, letter, or by completing an online application to suspend your membership through their online membership portal. You usually must 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 and contact your health insurance provider by phone, email, letter, or by completing an online application to suspend your membership through your provider’s online membership portal. It’s vital that you get this sorted before you hop on a plane to your overseas destination, because you cannot usually apply to suspend your policy after you have already left the country.

When you return to Australia, you will need to notify your health insurance provider within 30 days of your arrival, and make a payment towards your membership immediately. This should reinstate your cover so you can make claims again for medical services you receive within Australia.

Can I claim benefits while my policy is suspended?

No. While your health insurance policy is suspended, you are not covered to make claims for any rebates or benefits from your health insurance provider.

Do my waiting periods keep going while my policy is suspended?

No. While your policy is suspended, your waiting periods are ‘on hold’. You will be able to continue serving the rest of your waiting periods when your policy resumes.

Do I pay Medicare Levy Surcharge during suspension?

Yes. When your insurance policy is suspended, if you earn above the income threshold you will have to pay the Medicare Levy Surcharge for that tax year. This can cost you an extra 1% to 1.5% in tax, depending on your income.

 Main image source: art of sun/

Additional reporting by Ellie McLachlan and TJ Ryan.

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This content was reviewed by Sub Editor Jacqueline Belesky as part of our fact-checking process.

Nicola is a personal finance writer with nearly two decades of industry experience. A former chartered accountant, who holds a Bachelor of Commerce and a Master of Education degree, Nicola has contributed to several popular magazines including the Australian Women’s Weekly, Money and Real Living.

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