Going Overseas? Take a Holiday From Your Health Insurance Premiums
Australian private health insurance won’t cover you while you’re overseas—that’s what travel insurance is for. With this in mind, it seems pointless to continue paying a premium for a service you can’t use, especially if you’re taking an extended trip. But if you cancel your insurance, where will that leave you when you return?
Enter the temporary suspension of your private health insurance. This is a handy trick that can save you money without putting you on the back foot when you get back home. Here’s what you need to know about suspending your insurance to travel overseas.
- Suspending your health insurance means you don’t have to pay any premiums but you also can’t make any claims.
- Arrange your suspension with your fund before you depart as it cannot be done afterwards.
- A temporary suspension should not affect your Lifetime Health Cover loading but it may affect your Medicare Levy Surcharge.
- 1 Why Should I Suspend My Health Insurance?
- 2 Am I Allowed to Suspend My Health Cover?
- 3 What Does a Suspension Mean for My Membership?
- 4 I’m Leaving Next Week. Is it Too Late to Suspend?
- 5 How to Suspend Your Health Cover
- 6 What If My Insurer Says No?
- 7 Will This Affect My Lifetime Health Cover Loading?
- 8 What About the Medicare Levy Surcharge?
- 9 What Happens When I Come Back to Australia?
Why Should I Suspend My Health Insurance?
Suspending your insurance is like pressing pause on your health cover. You won’t pay any premiums, but you’ll still remain a member of your fund. That allows you to maintain your current benefits and level of cover. Note that you will be unable to make any claims until you return home and ‘unfreeze’ your policy.
Suspending your insurance also preserves your waiting periods. If you were to cancel your fund, you’d wipe out any waiting periods you’ve already served, meaning you’d have to re-sit them when signing up for a new policy.
What’s more, if you develop any health conditions while you’re away you won’t face restrictions for pre-existing conditions because you’re already covered.
Am I Allowed to Suspend My Health Cover?
This is all up to your fund. Different funds have different rules, so contact your fund for details as early as possible during your trip planning. Here are a few factors insurers may consider:
What Does a Suspension Mean for My Membership?
You’re still a member of your health fund, but since you’re not paying any premiums you can’t claim any benefits. When you get back to Australia, just notify your fund to resume your coverage.
If you’re serving any waiting periods, they will also be paused. The clock will start ticking again when your membership resumes. The same goes for loyalty benefits, which typically do not accrue during a temporary suspension.
I’m Leaving Next Week. Is it Too Late to Suspend?
Again, this is up to your fund. Contact them as soon as possible and let them know you wish to suspend your health cover. Once you’ve left the country, you’re out of luck. Temporary suspensions cannot be done retroactively.
How to Suspend Your Health Cover
Contact your insurer via phone or email to let them know you’d like to suspend your policy due to an overseas trip. You may need to fill out an application form, which must then be approved before the suspension becomes active. If your application is not approved, your membership cannot be suspended.
You’ll need to know your exact travel dates and may even need to provide proof in the form of a confirmed itinerary. Your fund will be able to tell you what details are required.
What If My Insurer Says No?
If your insurer doesn’t grant temporary suspensions or refuses your request, you’re well within your rights to shop around for a fund that does. Portability rules let you transfer hospital cover without re-sitting any waiting periods, so you can switch at any time. The same rules do not apply to general cover, though some funds will recognise waiting periods already served for extras benefits too.
Give yourself plenty of time to compare funds and find a new one, because you may need to be with your new insurer for a minimum period of time before they’ll let you suspend coverage.
Will This Affect My Lifetime Health Cover Loading?
You’re in the clear on this one. A suspended policy is still considered coverage for the purposes of Lifetime Health Cover (LHC).
A quick overview on the LHC loading, if you’re not quite sure what it is:
- LHC is a government initiative designed to encourage people to take out private cover earlier in life and maintain that cover.
- Your LHC base day is typically 1 July after your 31st birthday.
- Take out cover after your base day and you’ll pay a 2% loading on top of your premium for each year that you are aged over 30 when you join
- Loading is removed after it is paid for 10 continuous years.
LHC does provide some wiggle room through its period of absence provision. According to this provision, eligible people can be without cover for 1094 days (that’s three years minus a day) across your lifetime without being liable for an extra loading.
To be eligible for the period of absence provision you must have taken out private hospital cover before your base date.
However, if your health fund agrees to grant you a temporary suspension for overseas travel, this time does not count towards your 1094 days. As long as you reinstate your membership within 30 days of your return, you can relax knowing your LHC is totally unaffected.
What About the Medicare Levy Surcharge?
Unfortunately a temporary suspension does not meet the requirements for exemption from the Medicare Levy Surcharge (MLS).
If the following applies, you will be liable to pay the MLS for the period your health cover is temporarily suspended:
- You earn $90,000 or more as a single or
- $180,000 or more as a family (plus $1500 for each child after the first)
What Happens When I Come Back to Australia?
When you come back, notify your insurer within 30 days of arrival. You may need to complete a reinstatement application to officially resume your health cover. Confirm your payment method and details and make your next payment immediately.
You may need to provide evidence of your travel dates, such as flight tickets or a copy of your passport. Your fund will let you know if they require these details. Once you’ve re-started your policy, your level of cover, benefits and waiting periods will all be the same as they were before the suspension. You’ll also be able to make a claim.
Temporary suspension of your health insurance could be just the ticket to saving money while hanging on to your health benefits. Plan in advance and you should be able to cross this item off your to-do list with minimal effort. Now you can focus on enjoying your trip—but don’t forget to get travel insurance before you go!
Disclaimer: The above information is correct and current at the time of publication
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