Health Insurance Loading

Nearly 30? Find out what the Lifetime Health Cover loading is and how it may affect you here with Savvy.

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, updated on July 10th, 2023       

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Health Insurance Banner - Young woman looking at health insurance documents at a desk

If you’re approaching 30 and still don’t have private health insurance, the clock is ticking. If you don’t get your health insurance sorted out before the 1st July following your 31st birthday, you could end up paying far more for your health insurance for years to come.

You can find out all about health insurance loading, and how to avoid it, here through Savvy. Learn the key information you need to know about the Lifetime Health Cover loading in our informative guide.

What is the Lifetime Health Cover loading?

The Lifetime Health Cover (LHC) loading is an initiative by the Australian Government to encourage Aussies to take out health insurance at a younger age. The way it works is as follows: 

  • It is an additional 2% you will have to pay for your hospital cover health insurance, on top of the cost of your standard policy, for each year you are aged over 31 (if you weren’t insured on your ‘base day’) 
  • The LHC loading base day is July 1 following your 31st birthday 
  • The maximum LHC loading that can be applied is 70% 
  • Once you’ve paid LHC loading for ten consecutive years, you’ll no longer have to pay it 
  • LHC loading only applies to hospital cover policies, not extras policies

How do I avoid paying the LHC loading?

To avoid paying the LHC loading, you’ll need to have an eligible hospital health insurance policy in place offering ‘appropriate private patient hospital cover’ on your LHC base day (see above).

The Australian Government defines an appropriate level of private health insurance as:

  • For singles, a private health insurance hospital cover policy with an excess of $750 or less
  • For couples and families, a private health insurance hospital cover policy with an excess of $1,500 or less

The following people are also exempt from paying the LHC loading:

  • Aussies born on or before 1 July 1934
  • Aussies aged under 31 years of age
  • Migrants and residents who don’t qualify for Medicare benefits
  • New migrants aged over 31 who took out hospital cover within 12 months of becoming eligible for Medicare benefits

You can compare the cost of health insurance policies quickly and easily right here through Savvy. Getting a range of quotes will only take a few minutes, and you can even ask for a call-back from a health insurance specialist to help you decide which policy may be best suited to your personal situation.

How much will health cover cost to avoid paying a health insurance loading?

The cost of your private health insurance hospital cover will depend on several factors. These include:

  • The tier or level of cover you choose to buy: you can choose between basic, bronze, silver and gold tier policies, with gold tier being the most expensive option and offering the highest level of cover
  • The excess and co-payments you choose: excess costs vary from zero to a maximum of $750 for singles. Co-payments also range from zero up to $100 per day of hospital stay, often capped at between $500 and $700. Some insurers won’t require you to pay an excess or co-payment in certain situations, but the higher the excess you agree to, the less your policy is likely to cost
  • Your age: there are also age-related premium reductions permitted. For example, some insurers may offer a 2% discount on the cost of your policy for each year you’re covered under 30, capped at a 10% reduction, which can last until it begins being phased out at age 41
  • The rebates and reductions you may be entitled to: these can include the Private Health Insurance Rebate, and reductions to the Medicare Levy for certain categories of people (such as low-income earners and pensioners)

Because the average cost of health insurance in Australia varies so much, it’s important to compare policies to find one which matches your health cover needs with your budget. You don’t have to use the same health fund for your hospital cover and your extras insurance – you can mix and match to make sure you get the best deal.

If you're considering whether health insurance is worth it for you, you can get a free quote through Savvy to find out exactly what cover you could get at different levels. Our partner’s trusted panel of insurers can offer no-obligation quotes including full details of the cover on offer, which only takes a few minutes. You can even ask for a call-back from a health insurance specialist to offer further insights to help you decide which policy may be the right one for your personal circumstances.

What additional costs are there for people who don’t have health insurance? 

Although paying for health insurance may stretch some people’s budget, the cost of not having private health insurance in Australia can add up too.  These are the ways in which you’ll have to contribute to the Medicare system through taxes if you don’t have private health insurance: 

  • Medicare Levy Surcharge: this surcharge has to be paid in addition to the standard Medicare Levy (which is normally 2% of your income). It only applies to singles earning over $90,000 p.a., and couples/families earning over $180,000, and is either an additional 1%, 1.25% or 1.5% tax on your income, depending on your taxable income for that financial year.  
  • No Private Health Insurance Rebate: most Aussies who have private health insurance are entitled to assistance with the cost of their premiums in the form of a government rebate. This rebate can either be claimed back at tax time in the form of a lump sum or directly from health insurers, who can reduce the cost of premiums by the relevant rebate amount. Rebates range from 8.2% for high-income earners, up to as high as 28.7% for older Australians and pensioners on a low income. Those in the highest income tier may not be eligible for the health insurance rebate. 

(All figures quoted are correct as of February 2023, but subject to change).

Frequently asked questions about health insurance loading

How many Days of Absence are permitted to be exempt from paying LHC loading?

The Permitted Days of Absence that you don’t have to have health cover for in your lifetime equals 1094 days (or three years) without affecting your LHC loading. So if you have held cover on or after the LHC base day and suspend your private health insurance, such as if you’re going to live overseas, this suspension period doesn’t count towards your Permitted Days of Absence.  

Is the private health insurance rebate paid on the LHC loading portion of premiums?

No – the Australian Government does not pay the private health insurance rebate on the LHC loading component of a health cover policy. For example, if you have to pay a 30% loading on top of a standard hospital cover policy premium, your Medicare rebate will only be applied to the standard cost of the policy and not to the additional 30% LHC loading.  

How is LHC loading calculated for a couples health insurance policy?

LHC loading is averaged out if two people with different LHC loading percentages choose to take out a couples policy together. For example, if one person has a 8% loading, and the other has a 4% loading, the increase would be averaged out to 6% for that couples policy.  

How do I find out if I have to pay the LHC loading?

The Australian Government provides a LHC loading calculator to help you work out if you have to pay a loading or not on your health insurance premiums. This is the most accurate way of finding out what, if any, loading applies to the cost of your health insurance.  

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