Lifetime Health Cover
What is Lifetime Health Cover?
Lifetime Health Cover (LHC) was introduced to encourage younger people to take out hospital cover earlier in life and to maintain that cover. LHC works by applying a financial penalty to those who choose to take out hospital cover after they turn 31 in the form of a two per cent loading for each year their age exceeds 30 when they do choose to join.
LHC applies to everyone who takes out hospital cover after July 1 following their 31st birthday (this day is sometimes referred to as your LHC base day).
For example, if you take out hospital cover at age 40 you will pay 20% more (2% for each year over the age of 30 x 10) than someone who first took out the same hospital cover at age 30.
Example scenario one:
Sally is 37 and has decided to take out a hospital policy with Westfund. Sally has not previously held private hospital cover. Her base premium is $1000 per annum. Sally must also pay a LHC loading of 14% (2% x 7 years), bringing her premium to $1140 per annum*.
If you’re on a couple or family policy, your loading is calculated as an average between the individual loading of the two adults. For example, if one person has 20% loading and the other person has 0% loading, the loading applied to the couples’ policy is 10%.
NOTE: Extras cover, Overseas Visitors Health Cover, and international forms of insurance are not considered to be hospital cover for Lifetime Health Cover purposes.
Example scenario two:
Bruce and Jennifer are 36 and 35 respectively and are taking out a family hospital policy with Westfund. Neither have previously held private hospital cover. Bruce’s LHC loading is 12% (2% x 6 years) and Jennifer’s is 10% (2% x 5 years) meaning a combined total of 22%. This loading will be halved, bringing their collective LHC loading to 11%. Their base premium is $5000 per annum; with LHC loading applied, their premium then becomes $5550 per annum*.
*Costs are for illustrative purposes only and do not reflect the pricing of any specific Westfund Health Insurance product.
Common questions
What's the maximum LHC loading I could pay?
The maximum LHC loading is 70%.
Who is exempt from LHC?
If you were born on or before 1 July 1934, you are exempt from LHC.
How long will I have to pay LHC loading?
Once you have paid an LHC loading on your private hospital insurance for 10 continuous years, the loading is removed.
Your loading will then remain at 0% as long as you retain your hospital cover; or, if you cancel your cover after the loading is removed, as long as you do not exceed your permitted days without hospital cover.
What are permitted days without hospital cover?
If you have taken up hospital cover on or after your Lifetime Health Cover base day, then you can access the following ‘permitted days without hospital cover’ during which you don’t have an active hospital policy, but your loading does not increase. For most people, your base day is the later of 1 July 2000 or the 1 July after your 31st birthday.
- Gaps in cover – to cover small gaps, such as switching from one fund to another, you are able to be without hospital cover for periods totalling 1094 days (i.e. three years less one day) during your lifetime, without affecting your loading. This is known as ‘Days of Absence’. If you use up your Days of Absence – that is, you have a total gap period of 1095 days – you will pay a loading on rejoining private hospital cover. The loading is an additional 2% on top of any previous loading and will increase by 2% for every year after the 1094 days without cover.
- Suspension of membership – if you suspend your hospital cover for a short period (for example, to travel overseas for a holiday), this period of suspension isn’t counted towards your 1094 days of absence.
- Going overseas – if you cancel your hospital insurance after your Lifetime Health Cover base day in order to go overseas for at least one continuous year, the days you spend outside of Australia aren’t counted towards the 1094 Days of Absence. You are able to return to Australia for periods of up to 90 consecutive days, per visit, and are still considered to be overseas. Any periods of 90 days or more which you spend in Australia will be deducted from the 1094 Days of Absence.
Information sourced from: privatehealth.gov.au
Does my extras cover count towards my years of continuous cover?
No, LHC relates to private hospital cover only.
Does my extras cover count towards my years of continuous cover?
No, LHC relates to private hospital cover only.
Does LHC apply to adult dependants with a disability?
A dependant person with a disability is treated as an adult for the purposes of Lifetime Health Cover (LHC). If they are covered by hospital cover on their LHC base day they will avoid paying a LHC loading. If a dependant person with a disability joins their family hospital cover for the first time after their LHC base day, a loading of 2% will apply for every year they are aged over 30, based on their age on the 1 July prior to joining.
Example 1: Lucy turned 31 in January 2019, so her LHC base day is 1 July 2019. In November 2021 at the age of 33, Lucy joins her family’s hospital cover as a dependant person with a disability. As Lucy had no hospital cover on her LHC base day Lucy’s LHC loading is 6%. Lucy is the only adult on the policy that has a LHC loading. The average LHC loading on the family cover is 2%. If a person has their own singles hospital policy with a loading, then transfers to a family or single parent policy as a dependant person with a disability, they will carry their loading with them.
Example 2: Archie takes out a singles hospital cover for himself in February 2018 at the age of 32. His LHC loading is 4%. In December 2021, Archie transfers to his mother’s single parent hospital cover as a dependant person with a disability. Archie’s individual loading is 4% and his mother has a loading of 0%. The average LHC loading on the single parent cover is 2%. Archie will be eligible to have his loading removed after he has maintained a hospital cover for ten continuous years.