If you've been putting off purchasing private health insurance you may have heard the term Lifetime Health Cover (LHC) and wondered what it meant for you.
What is Lifetime Health Cover?
LHC is an initiative designed by the government to encourage people to take out and maintain hospital insurance earlier in life.
Started by the government in July 1, 2000, LHC is a financial loading scheme that applies to those people who wait until after their 31st birthdays to purchase hospital cover.
Hospital cover that is purchased after July 1 following the member's 31st birthday will incur a 2 per cent loading for each year the member is over the age of 30.
This means that a member who waits until they are 50 to purchase hospital cover could pay an extra 40 per cent on their health insurance policy. The maximum loading is 70 per cent.
Who is exempt from LHC?
The easiest way to avoid the LHC loading is to purchase hospital cover before July 1 following your 31st birthday. If you acquire private health insurance before this date and consistently maintain the cover, you will be exempt from LHC.
Additionally, new migrants to Australia will not have to pay LHC as long as they take out private hospital insurance within 12 months of their arrival.
Australians born before July 1, 1934, are also permanently exempt from the LHC loading.
What happens if there is a gap in my hospital cover?
It is important to maintain an adequate hospital cover policy or the LHC loading may be applied when you rejoin a health fund.
However, in order to cover short gaps in your cover, such as switching health insurance policy or provider, you are given a total of 1,094 days before the LHC comes into action.
This is three years less one day over your lifetime, to cover unforeseen and unpreventable gaps in your hospital cover.
What kind of cover do I need?
LHC only applies to hospital cover. General treatment policies, such as extras cover, do not affect your LHC loadings.
Overseas Visitors Health Cover, Overseas Student Health Cover and other international forms of insurance are not considered adequate forms of hospital cover for LHC purposes.
If you would like more information on your Lifetime Health Cover requirements, contact the team at HICA today.
HICA is a health insurance broker who can offer expert advice and guidance on finding the right private health cover for your needs.