Health insurance can be confusing enough without the added pressures of Government surcharges and loadings. We’ve answered the most commonly asked questions to give you the facts on when and why you should consider getting cover.
What happens if I don’t have health insurance after I turn 31?
To be honest, nothing. But when you do decide to take out hospital cover you could be faced with a Lifetime Health Cover (LHC) loading – which means you will pay more for your cover. For every year after your 31st birthday that you are without hospital cover, you will pay an additional 2% on top of your hospital cover premiums when you take it up.
What is the LHC loading and how does it work?
Introduced by the Australian Government the LHC was designed to encourage people to take out hospital cover earlier in life and maintain it. You have until 1 July following your 31st birthday to take out hospital cover without being penalised. If you don’t hold hospital cover on 1 July following your 31st birthday, for every year that you don’t have cover, you’ll be required to pay an additional 2% on top of your hospital premiums.
If you choose to take out hospital cover by 31, you’ll have a 0% LHC loading compared to someone who takes out cover at 40 who will have a 20% loading. When you have a loading, you will need to keep paying this for 10 years before it’s removed.
There are a few exemptions and permitted absent days to take into account for switching between funds and time you may be overseas. You can read more about the LHC loading and how it’s applied at privatehealth.gov.au.
Will this affect my partner?
Not directly, everyone has their own loading. If you have a 10% loading and your partner has a 0% loading and you choose to combine your cover, the loading will be averaged out across the membership, meaning you’ll have an overall 5% loading on your couple policy.
Is this different to the Medicare Levy Surcharge?
Yes. The Medicare Levy Surcharge is a percentage-based levy that Australians earning over $90,000 ($180,000 for a couple or family) are required to pay if they don’t have an appropriate level of private hospital cover.
This is not to be confused with the Medicare Levy which all Australians are required to pay. You can learn more about the Medicare Levy Surcharge and your income for health insurance purposes at ato.gov.au.
Am I better off to get hospital cover or pay the loadings?
The bottom line is, it’s up to you. Let’s say you’re looking at a single policy in NSW and your income, say $91,000, means you’ll be required to pay the Medicare Levy Surcharge (MLS). Without hospital cover, you would pay a MLS of around $910 a year, or you could take out Phoenix Health Bronze Hospital for $1,093.41 a year.*
Based on this comparison, for the cost of 3 coffees a month more, you can take out hospital cover and invest in your wellbeing rather than your tax bill.
Our Bronze Hospital cover offers benefits for emergency and non-emergency ambulance Australia wide and treatment as a private patient in a private hospital for a core range of services including things like appendix and tonsil removal and joint reconstructions. When the time comes that you do need a more comprehensive hospital policy, you’ll avoid a Lifetime Health Cover loading surcharge and any waiting periods you’ve already served will upgrade with you. Waiting periods apply, see individual cover information sheets for more information.
I’m still under 31, is there any incentive in getting cover sooner?
Yes, if you’re aged 18-29 you’re eligible for an age-based discount of up to 10% off your hospital premiums. The discount is calculated at a rate of 2% per year that you are under 30, so if you joined when you’re 26 you’ll be eligible to receive an 8% discount.
The discount is retained for 10 years and then reduces by 2% each year. Like the LHC loading, it’s averaged out for couple and family policies. It is up to each health fund if they choose to offer the age-based discount but in the interested of making private hospital cover more affordable to members, Phoenix Health offers the discount on all levels of hospital cover. You can read more about the Age Based Discount at privatehealth.gov.au.
What about extras cover?
Extras cover provides benefits for services that aren’t covered by Medicare, like dental check-ups, prescription glasses, physio appointments and even remedial massage! It can be added to any Phoenix Health hospital product or taken out by itself, but if you wish to avoid LHC loading or the MLS you will need hospital cover.
We’ve got a range of extras covers with percentage-based benefits, so you’ll always know what you’ll get back. Check out our range of Extras Covers.
What happens if I’m with another fund and switch to Phoenix Health?
For any waiting periods you’ve already served with your current health fund, these will switch with you.^ Likewise, if you have any discounts or loadings with your current health fund, these will be recorded on a Transfer Certificate and applied to your new cover so you don’t have to start again.
Still have questions?
* Premium for Bronze Hospital Cover is based on a single NSW policy with Tier 1 rebate, no LHC loading and a $750 excess. Medicare Levy Surcharge amount for illustrative purposes only. For a quote specific to your circumstances click here or contact the Phoenix Health Team. Waiting periods may apply. ^For more information about waiting periods please click here or contact the Phoenix Health Team.