The Lifetime Health Cover (LHC) loading is a government policy designed to encourage Australians to take out private hospital cover earlier in life. Understanding this system can save you thousands of dollars over your lifetime in health insurance premiums.
What is Lifetime Health Cover Loading?
LHC loading is an additional charge added to your hospital cover premiums if you don't take out private health insurance by 1 July following your 31st birthday. The loading increases by 2% for each year you delay, up to a maximum of 70%.
How the Loading Works
Here's how the penalty accumulates:
- Age 31: No loading if you have hospital cover by 1 July
- Age 32: 2% loading on premiums
- Age 35: 8% loading on premiums
- Age 40: 20% loading on premiums
- Age 65+: Maximum 70% loading
Avoiding LHC Loading
To avoid LHC loading completely:
- Take out hospital cover before 1 July following your 31st birthday
- Maintain continuous hospital cover
- Consider health insurance options for young adults to get started early
The loading can be removed after maintaining continuous hospital cover for 10 years. Understanding how this interacts with the Medicare Levy Surcharge and government rebates is crucial for financial planning.
Exceptions to LHC Loading
You may be exempt from LHC loading if you:
- Were overseas when you turned 31
- Are a new migrant to Australia
- Had continuous hospital cover but switched to a different level
FAQs
Can I remove LHC loading once applied?
Yes, the loading is removed after you maintain continuous hospital cover for 10 years.
Does LHC loading apply to extras cover?
No, LHC loading only applies to hospital cover, not extras cover like dental and optical.
What if I was overseas when I turned 31?
You may be eligible for an exemption. Contact your insurer with documentation of your overseas residence.