Lifetime Health Cover - Key elements

This page contains information on Lifetime Health Cover (LHC).

Page last updated: 13 July 2010

LHC base day

A person’s LHC base day is the deadline by which they must have taken out private hospital insurance to avoid incurring a LHC loading.

For most people their LHC base day will be 1 July following their 31st birthday. However, there are some exceptions to this.

The LHC base day for new migrants to Australia is the later of 1 July following their 31st birthday and the anniversary of when they register for full Medicare benefits.

LHC age

Anyone who takes out private health insurance before their LHC base day has a LHC age of 30.

The LHC age of people who take out private health insurance after their LHC base day is whatever their age was on the 1 July before the day on which they took out the hospital cover.

Base rate premium

The base rate premium is the premium that the health insurer charges a member with a LHC age of 30 years.

LHC loading

If someone first takes out hospital cover after their LHC base day, a loading of 2% on top of their hospital cover premium will apply for each year their LHC age is above 30. This is called a LHC loading. For example, someone taking out hospital cover at the age of 30 is entitled to pay the base rate premium, provided they maintain their cover. Someone who first takes out cover at age 40 will pay an additional 20% on top of the base rate premium, and someone who waits until age 50 to join will pay an additional 40% on top of the base rate premium.

Maximum loading

The maximum LHC loading allowed is 70%. This translates to the loading applying for a LHC age of 65 and applies to people who first take out hospital cover at age 65 or over.

Special provision for people born on or before 1 July 1934

People born on or before 1 July 1934 are not affected by LHC. If people in this age group take out hospital cover at any time in the future they will pay the base rate premium, with no LHC loading.

LHC loading removal after 10 years

Any LHC loading that a person is required to pay will be removed from their private health insurance premium after 10 years of continuous hospital cover.

People who have their LHC loading lifted after 10 years of cover then later decide to cancel their hospital cover may have to pay a LHC loading again if they recommence private health insurance hospital cover after a certain time period.

Permitted days without hospital cover

People may cease their hospital cover for various reasons, such as travel overseas. In some situations, LHC allows for permitted days without hospital cover.

Anyone is able to access permitted days without hospital cover as long as they have held appropriate private hospital cover on and/or after their LHC deadline.

During any permitted days without hospital cover, a person is protected against increases to their LHC loading, despite not actually holding a hospital cover policy.

There are three different types of permitted days without hospital cover, and it should be noted that they work independently of one another. So, while a person is using one type, they cannot be using either of the other two.

Permitted days without hospital cover include:
  • Any days on which a person's hospital cover is suspended by their health insurer. Any periods of suspension are at the discretion of the health insurer.
  • Any days during which a person is overseas that form part of a continuous period overseas of more than one year. Please note that the person is allowed to return to Australia for periods of up to 90 consecutive days and still be considered to be overseas. Once they are in Australia for any period longer than 90 days, they are considered to have returned from the date they entered the country.
  • The first 1,094 days (1 day less than 3 years) that the person is without hospital cover. This 1,094 day period can be used intermittently (i.e. a year with hospital cover, followed by a year without hospital cover, followed by another year with hospital cover etc).
If you are unsure how much of your 1,094 permitted days without hospital cover you have used, your insurer should be able to inform you. Alternatively, you can refer to the annual statement that your health insurer sends you detailing your LHC status.

Waiting periods

The rules for waiting periods for hospital benefits are not affected by LHC. The current maximum waiting period before a person can claim benefits on their hospital cover is two months, except for obstetrics and pre-existing ailments where the maximum waiting period is twelve months.

Pre-existing ailments

The rules for pre-existing ailments are not affected. You are required to serve a maximum waiting period of twelve months before you are able to claim benefits under your hospital cover for pre-existing ailments.

A pre-existing ailment is an ailment, illness or condition, the signs or symptoms of which, in the opinion of a medical practitioner appointed by the health fund, existed at any time during the 6 months prior to the member joining a hospital table or upgrading to a higher level of cover.

Varying level of cover

Members will be able to vary their level of cover without adjustment to their LHC age.

Ambulance/General treatment cover

LHC does not apply to private health insurance for general treatment (also known as extras or ancillary cover) or ambulance cover.

Therefore, you need to take out a private health insurance policy that includes hospital cover, not just general/ancillary or ambulance cover, in order to be assigned a LHC age and lock in the base rate premium.

Couples/Families

The LHC loading for a hospital cover policy which covers a couple or family is calculated by using the average of the respective LHC loadings of the adults covered by the policy.

Portability

All health insurers are obliged to recognise the LHC age of any member wanting to transfer from another insurer. This means that members can transfer funds at any time without it affecting their LHC age.

Reciprocal Health Care Agreements

Australia has Reciprocal Health Care Agreements (RHCAs) with several other countries. For LHC purposes, eligibility for Medicare does not include people who have limited eligibility under RHCAs. This means that the grace period for migrants who have limited eligibility under a RHCA does not start until they are granted full eligibility for Medicare. Members who have limited eligibility under RHCAs do not pay a loading as their LHC base day has not yet been determined.

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