Lifetime Health Cover (LHC) loading is a government rule that can increase the cost of your hospital cover if you don’t take it out before turning 31.
It’s designed to encourage people to join earlier, helping keep the system balanced, but it also means waiting can lead to higher premiums.
Key Points
- LHC loading increases the cost of hospital cover if you take it out after 31
- It adds 2% for each year you’re over 30, up to a maximum of 70%
- The loading is removed after 10 years of continuous hospital cover
- You can avoid it by taking out hospital cover before 1 July after your 31st Birthday
What is Lifetime Health Cover loading (and why does it exist)?
Lifetime Health Cover (LHC) loading is a government rule that can increase the cost of your hospital cover if you don’t take it out before turning 31.
It was introduced on 1 July 2000 to encourage people to take out private health insurance earlier in life, rather than waiting until they’re older and more likely to need hospital treatment.
When does LHC loading apply?
LHC loading applies if you don’t take out hospital cover before 1 July following your 31st birthday. This date is when your LHC status is assessed, and it determines whether a loading will apply.
In practical terms, if you take out hospital cover before this date and are under 31, you won’t pay any LHC loading. If you take it out after, a loading may be added to your premium based on your age at the time.
There are some situations where the rules differ:
- If you were overseas on 1 July after your 31st birthday, you have 12 months from the date you return to Australia to take out hospital cover without paying LHC loading
- If you’re a new migrant, you have 12 months from the date you become eligible for Medicare to take out hospital cover without paying LHC loading
This assessment date is often referred to as your LHC base day, but the key thing to understand is that it usually falls on 1 July after your 31st birthday.
How is LHC loading calculated?
LHC loading is applied to the hospital portion of your premium. It’s added on top of the base cost of your cover and calculated separately from the Australian Government Rebate on private health insurance.
For example, if your hospital cover costs $150 per month and you have a 20% loading, you would pay $180 per month for your hospital cover. Over a year, that’s an additional $360. While the LHC loading percentage stays the same, any increases in your premium will increase the dollar amount you pay.
LHC loading is capped at 70%, which applies if you wait until age 65 or older before taking out hospital cover.
If you want to estimate what your LHC loading might look like based on your own situation, you can use the Australian Government’s LHC calculator.
How long do you pay LHC loading?
You pay LHC loading until you’ve held hospital cover for 10 continuous years. After that, the loading is removed.
Using the example above, the additional premium would apply for 10 years. After that, your premium would return to the base cost (subject to normal premium changes over time).
What happens if you cancel your cover?
If you cancel your hospital cover after taking it out, you don’t automatically lose your LHC status.
You’re allowed to be without hospital cover for up to 1,094 days (just under three years) in total without affecting your LHC loading. These are known as your ‘Days of Absence’.
If you exceed this limit, LHC loading will apply again when you take out hospital cover. Any previous loading is carried forward, with an additional 2% added for each year beyond your allowed Days of Absence.
For example, if you had a 20% loading, used 1,095 days of absence and then took out hospital cover again, your LHC loading would increase by 2% to 22%, and your 10 years of continuous cover would start again.
Is LHC the same as the Medicare Levy Surcharge?
Lifetime Health Cover (LHC) loading and the Medicare Levy Surcharge (MLS) are often confused, but they’re different.
LHC loading is based on your age when you first take out hospital cover. If you delay taking out cover after turning 31, a LHC loading will apply.
The Medicare Levy Surcharge is based on your income. If you earn above a certain threshold and don’t have an appropriate level of hospital cover, you may need to pay an additional tax.
This means you can be affected by one, both, or neither – depending on your age, income and whether you have hospital cover.
You can learn more how how these fit together in our guide to government initiatives or read our article on the Medicare Levy Surcharge.
Does LHC apply to extras cover?
No, LHC loading only applies to hospital cover.
If you only have extras cover, or are considering extras cover on its own, LHC loading won’t apply.
Is it worth getting cover before 31?
For many people, taking out hospital cover before turning 31 is less about needing it immediately, and more about avoiding higher costs later on.
Because LHC loading increases the cost of your premium the longer you wait, taking out cover earlier can help you avoid paying more over time.
Whether it’s worth it will depend on your situation, but understanding how LHC works can help you make a more informed decision, particularly as you approach your early 30s.
If you’re weighing up your options, you can get a quick quote to see what hospital cover might look like for you.
