Lifetime Health Cover is a Government initiative designed to encourage people to take out private hospital cover earlier in life, and maintain their cover throughout their lifetime.
Privatehealth.gov.au explains Lifetime Health Cover in the following manner:
If you take out hospital cover earlier in life and maintain your hospital cover, you will pay lower premiums throughout your life compared to someone who joins when they're older. To avoid paying a LHC loading, you need to take out a private health insurance hospital policy by the 1st of July following your 31st birthday. For each year you delay, you will pay 2% more for your premium, up to a maximum of 70%.
If you were born before 1 July 1934, you are exempt from LHC.
Once you have paid a LHC loading on your private health insurance for 10 continuous years, the loading is removed as long as you retain your hospital cover. Some other special circumstances apply, which are described below.
Certified Age at Entry
The age you take out hospital cover at determines your Certified Age at Entry, which then determines whether you have a Lifetime Health Cover age loading. As long as you take out hospital cover on or before 1 July following your 31st birthday, you are deemed to have a Certified Age at Entry age of 30, which entitles you to pay only the base rate health insurance premium (the lowest price possible) for as long as you continue to hold hospital cover. For every year that your Certified Age at Entry goes above 30, you receive a Lifetime Health Cover loading of 2%.
| Age when taking up Hospital Cover | Certified Age at Entry | LHC loading |
| On or before 1 July following your 31st birthday | 30 | 0% |
| After 1 July following your 31st birthday | 31 | 2% |
| 32 | 32 | 4% |
| 33 | 33 | 6% |
| 34 | 34 | 8% |
| 35 | 35 | 10% |
| 40 | 40 | 20% |
| 45 | 45 | 30% |
| ... etc, until 65 | 65 | Maximum 70% |
Why is the Certified Age at Entry important?
Your Certified Age at Entry (CAE) determines how much loading you pay, and remains applicable for as long as you continue to hold that hospital cover, regardless of your actual age. For example, if you took out Hospital Cover at age 30, you'll continue to have a CAE of 30 even if you're actually 48 years old.
What is a Lifetime Health Cover Loading?
Lifetime Health Cover loading refers to the extra sum that a person may be required to pay on top of the base rate health insurance premium – this is called a loading for late entry (joining after the threshold age of 30). If you have a CAE of 35 and the base health insurance premium on your chosen hospital cover is $80 p/m, then your Lifetime Health Cover loading of 10% means you'll need to pay $8 p/m extra. The earlier you take out hospital cover and keep it, the less you will pay compared to someone who joins health insurance when they are older.
Will I always have to pay a Lifetime Health Cover loading?
No – that's the great news. If you joined hospital cover later in life, but keep continuous cover for 10 years, then your Lifetime Health Cover age loading is completely removed and your CAE is automatically restored to 30, so you receive the lowest base rate health insurance premium from that point forward.
Is my Lifetime Health Cover affected if I change from a Single Policy to a Couple or Family Policy?
If you choose to go from a single policy to a couple or family policy, the premium you pay will take into account the CAE of both you and your partner, to average out the Lifetime Health Cover age loading. To work out your combined loading, use the following formula:
[(your age - 30) + (your partner's age -30)] = % age loading on your couples' cover
Does Lifetime Health Cover affect my Extras Cover too?
No, Lifetime Health Cover only applies to hospital cover, not extras. If you take out a combined hospital and extras health insurance policy, any Lifetime Health Cover age loading applicable will be calculated only on the cost of the hospital component of your cover.
Removal of Lifetime Health Cover age loading
Any Lifetime Health Cover age loading you are required to pay will cease when you have held hospital cover for a continuous period of 10 years. Your CAE will then be restored to the threshold age of 30.
Periods of absence
You are able to drop your hospital cover for a cumulative period totalling 1094 days (one day less than three years) during your lifetime without impacting on your Lifetime Health Cover age loading age. This can cover you for gaps such as unemployment or switching health funds. A gap of 1095 days will incur a 2% loading, and every 365 days without cover after that period increases your Lifetime Health Cover age loading by 2%.
Suspension periods
Members may suspend their membership for a time with the agreement of their health fund. This does not count towards the 1094 day period of absence that is allowed before your CAE is affected.
Overseas
If you are an Australian citizen or permanent resident who is overseas on your Lifetime Health Cover loading deadline (i.e. 1 July following your 31st birthday), you will not pay a Lifetime Health Cover loading if you purchase hospital cover within 12 months of your return to Australia. You are able to return to Australia for periods of up to 90 consecutive days, and still be considered to be overseas.
Time spent on Norfolk Island is classified as time spent overseas and this can have different effects depending on the actual dates you were a resident on Norfolk Island.
New migrants
If you are a new migrant aged 31 or over, you must purchase hospital cover within 12 months of Medicare Australia accepting your application for a Medicare card – your visa status at this time is not important. If you delay after 12 months of receiving Medicare cover, you will pay a Lifetime Health Cover loading 2% for every year over the threshold age of 30, as per the chart above.
Members of the Australian Defence Forces or Department of Veteran Affairs
Members of the Australian Defence Forces (ADF) have medical services provided by the ADF, and are considered to have hospital cover. If you are discharged from the ADF after 1 July following your 31st birthday, you are considered to be using your permitted days without hospital cover (i.e. 1094 permitted days in your lifetime), so you can take out hospital cover and still pay the base rate health insurance premium within 1094 days of being discharged. If you are discharged from the ADF before the 1 July following your 31st birthday, then the normal rules apply.
If you hold a Department of Veterans’ Affairs (DVA) Gold Card you are considered to have hospital cover. If you have held a Gold Card at any time since 1 July 1999, and the card was subsequently withdrawn by the DVA, you may claim the period you held the card as a period with hospital cover.
Lifetime Health Cover Calculator
To see if you have a Lifetime Health Cover age loading, try the Lifetime Health Cover calculator developed by the Private Health Insurance Ombudsman (PHIO).
