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Will I have to pay Lifetime Health Cover loading?

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Lifetime Health Cover

Lifetime Health Cover is a government initiative to encourage Australian permanent residents to take out Hospital cover through an Australian registered health fund at a younger age and to maintain that cover over their lifetime. This initiative penalises permanent resident taxpayers who do not take out this cover from July 1 following their 31st birthday (or 12 months after migrating to Australia) by adding a 2% health insurance loading on their premium for each year they delay joining a hospital cover after their cut-off date.

For example, a person who first takes out hospital cover at age 44 will pay a 28% loading for their insurance. If a Lifetime Health Cover loading is payable, it applies to Hospital cover but does not apply to the cost of any Extras cover. The maximum Lifetime Health Cover loading is 70%, which would apply a person aged 65.

In most instances, the first day of the new fiscal year (1 July) following your 31st birthday is the base date for Lifetime Health Cover and joining an eligible hospital cover before that date ensures that you receive the lowest rate for as long as you continue to hold Hospital cover.

If you have recently turned 30 years old, now is the time to seriously consider taking out private health insurance.

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Lifetime Health Cover Exemptions

There are exemptions and special circumstances that may exclude you from paying a Lifetime Health Cover loading. For example, those born on or before 1 July 1934 are exempt from the Lifetime Health Cover loading. Similarly, special conditions apply to members of the Australian Defence Force (who are already covered as part of their service), those living overseas and those holding a Department of Veterans’ Affairs Gold Card.

Does the loading apply to my Extras cover?

The loading only applies to Hospital cover and not to Extras cover.

What if I switch between health funds?

Switching health funds does not affect your Lifetime Health Cover loading provided the health insurance transfer includes Hospital cover.

Allowed days without Hospital cover

There are certain circumstances where you may not have private health cover and are not liable to pay the loading. These are called ‘Days of Absence’.

Gaps in cover

Under Lifetime Health Cover, members are able to drop their health insurance for a cumulative period of 1094 days absence, without paying any additional loading on their premium. If you drop your cover for more than this cumulative period, a Lifetime Health Cover loading or penalty will apply when you rejoin.

Suspension of health fund membership

If your health cover membership is suspended for a short period of time, for a reason agreed to by your health fund, this period may not count as part of your 1094 days of absence.

Travelling overseas

If you are relocating overseas or travelling for a period of 1 continuous year or longer, the time spent outside of Australia may not count towards your 1094 days of absence. You are also allowed to return to Australia for periods of up to 90 days in a row and still be considered overseas, however, any periods over 90 days spent in Australia will be deducted from your 1094 allowable days of absence.

I’m an Australian resident but I currently do not live in Australia

If you are not an Australian resident for tax purposes then you are not liable to pay the health insurance loading on your hospital cover. Consult with your accountant to confirm this if necessary. If you are older than 31 years when you return to Australia permanently, you should buy private health cover within 12 months of your return to avoid paying any health insurance loading.

You may need to supply an international movement record from immigration, supply it to your health fund on or after joining, to have your Lifetime Health Cover loading reassessed.

I moved to Australia after my 31st birthday

If you are over 31 years old and now reside in Australia as a permanent resident, you should get private health cover within 12 months of your migration date. You may be subject to a Lifetime Health Cover loading if you do not purchase private health cover at this time.

How long will I have to pay the loading for?

If you are required to pay the health cover loading then you must pay this for 10 years from the time you take out private health insurance, regardless of how old you are or the amount of loading applied to your hospital cover premiums. You should still have private health insurance after the 10-year period has ended but you will no longer be required to pay the additional lifetime health loading.

Which funds qualify as ‘Australian registered health funds’?

ACA Health Benefits Fund Limited
Australian Unity Health Limited
BUPA Australia Pty Limited
CBHS Health Fund Limited
Cessnock District Health Benefits Fund Limited
CUA Health Limited
Defence Health Limited
Doctors’ Health Fund Pty Ltd, The
GMHBA Limited
Grand United Corporate Health Limited
HBF Health Limited
Health Care Insurance Ltd
Health Insurance Fund of Australia Limited
Health Partners Limited
health.com.au Pty Ltd
Hospitals Contribution Fund of Australia Ltd, The
Latrobe Health Services Limited
Medibank Private Limited
Mildura District Hospital Fund Ltd
National Health Benefits Australia Pty Ltd
Navy Health Ltd
NIB Health Funds Ltd
Peoplecare Health Limited
Phoenix Health Fund Limited
Police Health Limited
Queensland Country Health Fund Ltd
Queensland Teachers’ Union Health Fund Limited
Railway & Transport Health Fund Ltd
Reserve Bank Health Society Ltd
Teachers Federation Health Ltd
Transport Health Pty Ltd
Westfund Limited

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Lifetime Health Cover can be tricky to understand. We can help you understand Lifetime Health Cover and if or how it applies to your personal circumstances. Give us a call today on 1300 421 154 and let us help you feel confident you are making the right decision with your health insurance.

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