The government has just announced that they will be cancelling the private health insurance rebate for lifetime health cover loading amounts.
Most people don’t pay lifetime health cover as they obtain private health insurance by the deadline
Due to the lenient rules outlined below most people don’t pay a lifetime health cover premium on top of their private health insurance premium. If you don’t yet have private health insurance, this is another reason to make sure you register for adequate hospital cover (i.e. with a maximum excess of $500 for singles or $1,000 for couples/families) by the required date.
Lifetime health cover – what is it?
Lifetime health cover (LHC) is an increased premium on your private health insurance to encourage people to have and keep adequate health cover. If you didn’t have hospital cover on the 1st of July after you turned 31, when you take out private health insurance, you will pay 2% extra for each year you are aged over 31. For example a 40 year old would pay a 20% LHC premium. The maximum lifetime health cover loading is 70% (i.e. if you obtained private health insurance after you turned 65). If you were 65 or older in 2000 when the legislation started you do not have to pay a lifetime health cover loading.
I was overseas when I turned 31 – do I have to pay LHC?
For new migrants to Australia over 31 – you have up to 12 months after your registration for a Medicare card is accepted before you will pay lifetime health cover. Likewise – if you are an Australian resident overseas at the time of your 31st birthday, you have 12 months to purchase hospital cover after you return to Australia, and return trips up to 90 days can still be counted as being overseas.
Does switching funds or taking a break mean I will need to pay LHC?
You are allowed breaks of health insurance for up to 1,094 days over your lifetime (i.e. one day less than 3 years). This is a generous gap to make sure people who change funds don’t have to pay LHC when they renew their health cover.
But I’m going overseas for 3 years – will I have to pay LHC when I return?
Cancelling or suspending your private health insurance to go overseas is not included in the 1,094 days. As mentioned above, if you return to Australia for less than 90 days, a visit can still be counted towards you being counted as overseas.
Lifetime health cover loading shouldn’t last a lifetime
Previously, LHC premiums were forever, however now if you have continuous cover for 10 years then the LHC will no longer be charged.
For more information on lifetime health cover see www.privatehealth.gov.au.