Lifetime health cover (LHC) is a complex policy. The incentive to buy private health insurance early on in life is designed to help people plan for the treatment of any health conditions as they get older.
The rules around LHC can sometimes cause confusion. So much so, in fact, that the government recently sent a letter to anyone approaching their 31st birthday and without health insurance who would therefore be in line for the first 2 per cent annual premium loading.
However, there are other reasons why some people may not pay the loading. Here are five exemptions that could lead to you paying the base premium amount, even if you're over 31 and currently without private health insurance.
1) You're over 81
If you were born before 1 July 1934, you are exempt from the loading when taking our your first private health insurance policy. Whether you want to take out health insurance today or at any time in the future, you will pay the same premium as a 30-year-old.
2) You were overseas on your 31st birthday
Australian citizens and permanent residents who were living overseas (including Norfolk Island) on 1 July following their 31st birthday will not pay a lifetime health cover loading if that birthday was after 1 July 2000. This comes on the condition that the individual purchases hospital cover within a year of returning to Australian shores. You can return to Australia for up to 90 consecutive days and still fall under the "overseas" banner.
3) You were overseas on 1 July 2000
If you were abroad on 1 July 2000 (when LHC came into play) and over the age of 31, you have 1,094 days upon returning to Australia to buy private hospital cover before the 2 per cent loading begins to be added on each year.
This three-year 'Days of Absence' period, as it's known, can cover any breaks in your insurance during the time spent back in Australia.
4) You are in the Australian Defence Force
ADF members are covered by their employer for hospital cover and therefore can avoid the LHC loading. If you leave the forces after 1 July following your 31st birthday, the 'Days of Absence' period applies. Again, such people will have 1,094 days to purchase private health insurance before the loading begins. If you are discharged before this birthday and date, the usual LHC rules apply.
5) You are a Department of Veterans' Affairs Gold Card holder
A DVA Gold Card includes hospital cover, so members are considered to be within the rules and able to avoid the LHC loading. If your card is withdrawn and you have held it since 1 July 1999, that period will be factored into determining when the LHC loading begins to apply.
For more free and expert assistance with LHC, or any other health insurance query, contact HICA today on 1300 44 22 01.