What Is Lifetime Health Cover Loading (LHC)?

29 June 2020
Signing up for health insurance by a certain age could help you to save money on premiums in the long run, while delaying could mean you have to pay Lifetime Health Cover (LHC) loading. Here’s Canstar’s guide on what it is and how to avoid it.

While Australia has a first-class public health system, it’s not entirely sustainable for the entire population to rely on it.  The government maintains a number of incentives for individuals to move over to the private health care system. Less people relying on our public healthcare system equals better quality of service for those who do, along with lower costs for the government. So to try and encourage more people to purchase private health cover, Lifetime Health Cover was introduced. If you’re less than clear on what this really means, Canstar is here to explain Lifetime Health Cover, and how the ‘loading’ aspect of the initiative works.

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Lifetime Health Cover Loading: a summary

  • Australians have until the 1st of July after their 31st birthday to take out an adequate level of private health insurance (hospital cover)
  • If you don’t do so, for every year following this you will incur a 2% surcharge on your health insurance premiums for whenever you do take out hospital cover
  • This can add up to a total surcharge of 70% once you reach the age of 65, but does not increase further beyond this point
  • The LHC Loading surcharge is removed after one has held an adequate level of private health insurance for 10 consecutive years

What is Lifetime Health Cover Loading?

As with the Medicare Levy Surcharge and the Private Health Insurance Rebate, Lifetime Health Cover (LHC) is an initiative designed to encourage young people to take out health insurance and, in doing so, reduce the burden on the public health system. Lifetime Health Cover loading applies to anyone who does not take out private health insurance with at least Hospital Cover. Lifetime Health Cover loading applies a 2% increase in premiums per year for every year after your 30th birthday that you don’t take out private health insurance.

For example, a person who does not have health insurance and takes out hospital cover when they are 40 years of age could potentially pay a premium loading of 20% (10 years multiplied by 2%). Provided they remain covered (and don’t take a leave of absence), that loading does not increase with age – it will stay at 20% until they turn 50, at which point they will have been covered for 10 consecutive years and their LHC loading will be removed.

These extra premium costs could add up considerably over time. You may like to consider how LHC loading may affect you if you are considering taking out a private health insurance policy, or are reviewing your existing cover. What is right for you will depend on your own unique circumstances, and seeking professional advice may assist your decision making. There are both pros and cons of private health insurance and some ways you may get a discount on health insurance.

If you’re comparing health insurance policies, the table below displays some of the hospital and extras policies currently available on Canstar’s database for a single female born in 1985 seeking cover in NSW without pregnancy cover. Please note the table is sorted by Star Rating (highest to lowest), followed by provider name (alphabetical) and features links direct to the providers’ websites. Use Canstar’s health insurance comparison selector to view a wide range of policies.

How much will Lifetime Health Cover loading cost me?

The price you will pay if you incur Lifetime Health Cover loading will depend on the original cost of your health insurance policy and the age at which you apply for a private health insurance policy with hospital cover.

Assuming a LHC loading of 20%, and using the average health insurance premiums for a single person with packaged cover (Hospital and Extras) that Canstar calculated (26 June, 2020), the potential annual cost for a single in delaying the purchase of health insurance could be as follows:

Impact of Lifetime Health Cover Loading by State and Age Hospital Cover is First Taken Out

Hospital Policies for a Single

Average Annual Premium $1,552 $1,650 $1,617 $1,511 $1,372 $1,564 $1,131 $1,559
Extra annual cost due to LHC Loading if you take out Hospital Cover for the first time at age…
35 10% $207 $220 $216 $202 $183 $209 $151 $208
40 20% $414 $440 $431 $403 $366 $417 $302 $416
45 30% $621 $661 $647 $605 $549 $626 $453 $624
50 40% $828 $881 $863 $806 $732 $835 $604 $832
55 50% $1,035 $1,101 $1,079 $1,008 $916 $1,044 $755 $1,040
60 60% $1,242 $1,321 $1,294 $1,210 $1,099 $1,252 $905 $1,248
65 70% $1,449 $1,541 $1,510 $1,411 $1,282 $1,461 $1,056 $1,456
Source: www.canstar.com.au.  Compiled on 26 June, 2020. Based on Hospital Health Insurance premium quotes for a single. The Australian Government Private Health Insurance Rebate, Base Tier for under 65s, of 25.059% has been applied to the average annual premiums, rebate is not applied to the LHC loading cost. National average premium is based on state averages weighted by state population of insured persons, per APRA March 2020 Quarterly private health insurance statistics.

The ‘continuity’ benefit is transferable between funds and allowance is made for small gaps in cover. The maximum loading is 70% and that loading would apply to anyone who first takes out health insurance at age 65 or more. As previously mentioned, the loading is removed once a person has held private health insurance for 10 years.

How can I calculate my Lifetime Health Cover loading?

You can calculate your LHC loading with the Australian Government’s Lifetime Health Cover calculator. There’s also a calculator that could help you to work out when the loading is due to cease.

Are there any exceptions to Lifetime Health Cover loading applying?

There are exceptions or consideration for special circumstances which apply to the LHC loading rule:

  • A period of 1,094 days of absence is provided over your lifetime to allow for:
  • Persons born before 1 July 1934 are exempted from the loading rule.
  • Persons overseas on 1 July 2000 or who turned 31 while overseas are exempted from the LHC rule, if cover is purchased within a year of returning to Australia.
  • New migrants are exempted from the LHC as long as cover is taken out within 12 months of being registered for Medicare. New migrants who miss their Lifetime Health Cover base day, however, will have to pay a loading of 2% for each year they are aged over 30 when taking out hospital cover.
  • Australian Defence Forces (ADF) members who are considered to have hospital cover are exempt, as are adult dependents if medical services are provided by or through the ADF. Veterans are exempt. This requires holding a Department of Veterans’ Affairs (DVA) Gold Card, and the cardholder may be a veteran or the widow or widower and/or dependant of a veteran.There are some other exceptions, with information available on the Private Health Insurance Ombudsman website.

How can I prove my Lifetime Health Cover loading if I need to?

In some circumstances, such as when joining a new insurer, you may need to prove to your provider what level of LHC loading should be applied, or if you should be exempt from this extra charge.

You may need to supply your new insurer with documentation, such as a:

  • Clearance Certificate: This is a statement from your previous health insurer that displays what LHC loading – if any – you paid (as well as other details, such as any waiting periods you’ve served).
  • Medicare registration date letter: New migrants, who are aged over 31, typically have 12 months from the date of their Medicare benefits registration to purchase hospital cover without a LHC loading. You can ask for a letter from Medicare, detailing your registration date.
  • International Movement Record: In some cases, such as returning to Australia from overseas (after you turned 31), you may need to ask the Department of Home Affairs for a Form 1359 – a ‘Request for international movement records’. This will show what date you last were in Australia for more than 90 days or more. That’s because the 12 month period you have to buy health cover before LHC loading kicks in begins “the first time you returned for 90 days or more”, according to the Ombudsman.

Should I consider private health insurance?

There can be many benefits of having health insurance, and some sign-up offers can apply. Hospital cover could help you to get treated more quickly for illnesses or injuries not deemed a serious emergency, including elective surgeries such as a knee reconstruction or a C-section. Extras cover is available to help cover the cost of medical and health services including optical, dental, physiotherapy and more.

As Australia’s biggest financial comparison site, Canstar compares more brands than any other. Our Health Insurance Star Ratings and Awards consider three types of health insurance policy (hospital cover, extras cover and packaged hospital and extras cover) and we have also revealed which health insurer had the most satisfied customers in Australia in 2020. You may find it helpful to compare health insurance policies with Canstar.


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An image of Mitchell WatsonMitchell Watson is Canstar’s Research Manager, specialising in home loans, health insurance, margin lending and online share trading. He has an extensive knowledge of financial products and the ways that Australians can make the products work best for them.