Research & Insights

What’s Lifetime Health Cover?

It affects Australians over the age of 31, but how is Lifetime Health Cover loading actually calculated and what do you need to know?

Health Agenda magazine
Updated June 2021

Launched by the Australian Government in 2000, Lifetime Health Cover (LHC) is an initiative aimed at encouraging people to take out hospital insurance earlier in life to ease the pressure on the Australian public health system.

LHC is a financial loading (an extra charge) that applies only to hospital cover and is calculated based on the age you get private hospital insurance.

If you get private hospital insurance before your 31st birthday and you continue to hold that cover into the future, you can avoid paying the LHC loading on your premiums. If you take out private hospital cover after your 31st birthday, you’re subject to a 2% annual loading, paid on your premium, cumulating each year, up to a maximum of 70%. This loading is paid yearly until you’ve had private hospital cover continuously for 10 years, after which the loading is removed.

The loading on a couple or family policy is slightly different. It’s calculated as an average between the individual loading of the 2 adults. For example, if one person has 30% loading and the other person has 0% loading, the loading applied to their policy is 15%.

You can have gaps in cover as long as the gap is less than 3 years minus 1 day (1,094 days). There are also allowances for Australians moving overseas and new migrants to Australia.

To understand more about how the Lifetime Health Cover loading works, go to the Department of Health, the Private Health Insurance Ombudsman and the HCF website.

Watch the video to find out more about how the LHC works and what this means for you when deciding to take out health cover.

What does this mean?

Here’s what it would look like in 4 different scenarios.

Matt, 32

Scenario: Took out private hospital cover before turning 31

Years without hospital cover after 30: 0

Annual loading percentage: 0%

Age after which loading is no longer applied: N/A

Sarah, 40

Scenario: Took out private hospital cover at 35

Years without hospital cover after 30: 5

Annual loading percentage: 10% (2% for each of the 5 years after 30)

Age after which loading is no longer applied: 45

Chris and Lauren, both 41

Scenario: Chris took out private hospital cover at 35; Lauren took it out at 40

Years without hospital cover after 30: 15 (combined)

Annual loading percentage:  15% (the average between them – Chris has 10%, Lauren has 20%)

Age after which loading is no longer applied: After Chris has had cover for 10 continuous years, the loading on their policy would increase to 20% until Lauren has had cover for 10 continuous years.

Carol, 65

Scenario: Took out private hospital cover at 44 but has had 10 years of continuous cover

Years without hospital cover after 30: 14

Annual loading percentage:  0%

Age after which loading is no longer applied: Stopped paying loading at age 54

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