What Is The Lifetime Health Cover Loading In Australia?
Key Points
Who It Applies To: Anyone without private hospital cover who is over 31 years old.
Loading Amount: A 2% increase in premiums for each year you're over 30, capped at 70%.
Duration: The loading applies for 10 continuous years of holding private health cover. After this period, the LHC surcharge is removed, and you'll pay regular premiums.
This doesn’t apply to extras cover (like dental or optical), only to hospital insurance.
Lifetime Health Cover (LHC) is a key consideration for anyone purchasing private health insurance in Australia. Designed to encourage Australians to take out hospital cover earlier in life, the LHC loading applies an extra surcharge to your hospital insurance premiums if you don’t have hospital cover by the time you turn 31. In this guide, we’ll explain how LHC loading works, how it affects your health insurance costs, and most importantly, how you can avoid paying more than you need to.
COMPARE & SAVEWhat Is Lifetime Health Cover (LHC)?
The Lifetime Health Cover (LHC) is a government initiative designed to incentivise Australians to take out private hospital cover at a younger age and maintain it for the long term. The idea is that younger, healthier individuals help balance the risk pool in private health insurance, thereby offsetting the costs associated with older individuals who may need more frequent healthcare services.
LHC loading comes into effect if you don’t have an appropriate level of hospital cover before the 1st of July following your 31st birthday. If you wait until later to purchase hospital insurance, you will incur a 2% surcharge on top of your hospital cover premium for every year you are over 30, up to a maximum of 70%.
For example, if you take out hospital cover at age 35, you’ll face a 10% LHC loading (two per cent multiplied by five years). If you wait until age 45, that loading would grow to 30%.
How much will Lifetime Health Cover loading cost if I'm over 31?
If you don't have hospital cover by the 1st of July following your 31st birthday (also known as your 'LHC base day'), the lifetime loading fee will apply when you eventually take out eligible hospital insurance.
You'll get an extra surcharge on top of your premium for every year you don't take out hospital cover after your 31st birthday. Once you take out hospital cover, the applicable LHC loading is payable for 10 years.
Here's what percentage you'll have to pay on your premiums based on how old you are when first take out hospital cover:
Age | LHC Loading |
|---|---|
31* | 2% |
35 | 10% |
40 | 20% |
45 | 30% |
50 | 40% |
55 | 50% |
60 | 60% |
65 | 70% |
The maximum LHC loading that anyone can pay is 70%, and the loading stops after 10 years of continuous hospital cover.
Who is Exempt from LHC Loading
You don't have to pay the Lifetime Health Cover loading if any of the following apply to you:
You're under 31.
You took out hospital cover within 12 months of registering for Medicare after moving to Australia.
You were born on or before 1 July 1934
You are a member of the Australian Defence Force and considered to have hospital cover (unless you're discharged from the ADF before you turn 31).
You hold a Department of Veterans' Affairs Gold Card.
The government also allows you 'Days of Absence'. This is if you've previously held hospital cover but then stop for whatever reason. An example of this would be if you decide to switch health insurers but only hold an extras policy with the new insurer. You're allowed a total of 1094 Days of Absence (just under three years) during your lifetime.
If you use up your Days of Absence then you'll pay the LHC when you take out a new hospital cover policy. You'll get an additional 2% loading each year on top of any loading you already have. If you suspend your hospital cover due to a long overseas holiday, for example, or move overseas for a year or more, then this won't count towards your Days of Absence.
COMPARE & SAVEHow can I prove my Lifetime Health Cover loading cost if I need to?
You'll need to prove what LHC loading you've been paying, if any, when you switch health funds. You'll need to ask your old health fund for a Clearance Certificate that confirms your LHC loading status.
You then pass the certificate to your new health fund. If you switch funds via Compare Club, we'll take care of all the paperwork, including your Clearance Certificate.
Frequently Asked Questions
How does Lifetime Health Cover loading work if I move to a couples or family policy?
If you want to take out a couples or family policy, LHC loading is calculated by adding up your and your partner's individual LHC loading rates and dividing the sum in half (to get the average).
Does switching health funds affect my Lifetime Health Cover loading?
In short, no. You can take a break from having hospital cover for a total of 1094 days without it having any effect on your LHC loading.
I moved to Australia after I turned 31. Do I need to pay Lifetime Health Cover loading?
Yes, but you won't have to pay immediately. If you take out hospital cover within 12 months of registering for Medicare, you'll avoid LHC, no matter how old you are. If you miss that deadline then you'll have to pay a loading fee of 2% for every year you are aged over 30 and haven't held cover, no matter how old you are.
I'm moving overseas. Will this affect my hospital cover loading fee?
Provided you're living abroad for more than a year, then your LHC won't be affected. You can also return to Australia for up to 90 days at a time and this won't count towards your Days of Absence. If you're in Australia for longer than 90 days, then you're no longer considered to be overseas and this will eat into your Days of Absence.
Does LHC Loading Ever Expire?
Yes, LHC loading does expire after 10 continuous years of maintaining private hospital cover. If you’ve been paying LHC loading, your premiums will decrease accordingly after the 10-year threshold. For example, if you took hospital cover at age 37 with a 14% loading, after 10 years (at age 47), your premiums will revert to the base insurance rates, and the 14% surcharge will no longer apply.
COMPARE & SAVEFinal Thoughts
Lifetime Health Cover loading can be a confusing and expensive addition to your health insurance premium, but with careful planning, it’s avoidable in many situations. Whether you’re planning to take out cover before you turn 31 or navigating exemptions and grace periods, understanding your options is key to keeping your health insurance costs manageable.
To make an informed decision, make sure you compare health insurance policies easily. Our expert team is ready to guide you through the process# and ensure you’re not overpaying due to LHC loading or other factors.
Related Article
What Is The Lifetime Health Cover Loading In Australia?
Things You Should Know
*Over 137,000 customers who switched with Compare Club between 2018 - 2022 saved an average of $300 off their annual premium.
*As our customer you'll be provided with quotes directly from the insurer for the product you intend to purchase. We manage the application and deal with the administration work and insurer. We do not charge you a fee for the service we provide, the insurer simply remunerates us in return for setting up your policy. The financial and insurance products compared on this website do not necessarily compare all features that may be relevant to you. Comparisons are made on the basis of price only and different products may have different features and different levels of coverage. Compare Club does not compare all policies available in Australia and our partner insurers may not make all policies available to Compare Club.
This guide is opinion only and should not be taken as medical or financial advice. Check with a financial/medical professional before making any decisions.
Chris Stanley is the sales & operations manager of health insurance at Compare Club. With extensive experience and expertise, Chris is a trusted leader known for his deep understanding of health insurance markets, policies, and coverage options. As the sales & operations manager of health insurance, Chris leads a team of dedicated professionals committed to helping individuals and families make informed decisions about their health insurance needs.
Meet our health insurance expert, Chris Stanley
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