If you have reached age 30 and you do not already have private health insurance, now is the time to act. Waiting until you are older can mean extra costs that significantly increase your premiums. The longer you wait, the more you can expect to buy.
Buying Health Insurance After Age 30 Becomes More Expensive
Buying private hospital cover is very important for all Australians, as well as for certain foreign students and visa-holders. Depending upon your income, hospital cover may be required in order to avoid being charged a Medicare Levy Surcharge.
If you wait until age 31 to purchase Hospital cover, it becomes more expensive. This is because of Lifetime Health Cover (LHC). You are charged LCH loading if you do not have Hospital cover by your LHC base date. LHC loading means your premiums cost an extra two percent more for each year that you were over the age of 30 when you bought Hospital cover.
You do not want to pay this extra cost for cover. While you may not think you need cover now, most people begin to require significantly more health care as they get older. By the time you need cover, you could be paying far more than you would have if you acted earlier thanks to LHC loading. Instead of getting yourself trapped in this bad financial situation, take action before your 30th birthday and get covered.
- 1 Health Insurance Rebate Calculator
- 2 Medicare Levy Surcharge Calculator
Lifetime Health Cover After Age 31
Lifetime Health Cover is a financial penalty that applies if you wait too long to buy Hospital cover. LHC loading cannot be avoided if you have waited until after your 31st birthday in order to get covered, regardless of whether you buy a single’s policy, a family policy, or a couple’s policy. If you have waited, you will pay LHC loading.
Lifetime Health Cover loading is designed to incentivize young people to buy Hospital cover. Buying this by age 30 means you avoid this additional and unnecessary expense. You will get the peace of mind of knowing you can get care if you get sick, and you will also avoid adding to your future expenses.
Lifetime Health Cover loading can make health insurance significantly more expensive by adding two percent onto total premiums for every single year you wait to get covered. This means:
- At age 31, you will pay two percent extra
- At age 32, you will pay four percent extra
- At age 33, you will pay six percent extra
- At age 34, you will pay eight percent extra
- At age 35, you will pay 10 percent extra
- Age age 36, you will pay 12 percent extra
- At age 37, you will pay 14 percent extra
- At age 38, you will pay 16 percent extra
- At age 39, you will pay 18 percent extra
- At age 40, you will pay 20 percent extra
The extra cost continues to compound, up to a maximum of 70 percent extra. This can make Hospital cover much more expensive at the time when you need it most. While the government provides help paying for premiums in the form of a rebate (see this calculator to find out more), this does not pay for LHC loading.
Health Insurance Rebate Calculator
What About New Migrants Who are Over Age 30?
If you move permanently to Australia when you are over the age of 30, you will also be required to purchase private health cover in order to avoid Lifetime Health Cover Loading. You must take out private hospital cover within 12 months of the time when you register for Medicare.
If you wait more than 12 months after coming to Australia, you will have to pay LHC loading of two percent more for each year over age 30. The older that you are at the time of migrating to Australia, the higher the LHC loading is if you wait longer than 12 months to get covered.
Is LHC Loading for Hospital Cover, Extras Cover, or Both?
LHC loading is only for Hospital cover, not for Extras cover.
Is LHC Loading Ever Removed?
If you have waited until after age 30 to buy Hospital cover, you will need to pay LHC loading for a long period of time when you finally buy insurance. LHC loading is not removed until you have maintained 10 years of continuous Hospital cover.
What If You Had Coverage for a Period of Time Before Age 31?
If you have had Hospital cover prior to turning 30 but have not had continuous Hospital cover, you may need to pay LHC loading depending upon the amount of time you we without cover. You are allowed to be without cover for a total of 1094 days over the course of your life without triggering LHC loading. Once you have had a gap of 1095 days, LHC loading kicks in. For each 365 days that you go without cover, your LHC loading increases by two percent.
If you apply to your insurer for a brief suspension in cover and your health fund agrees to this suspension, this period will not count towards your 1094 days and will not impact your LHC loading.
Are There Other Financial Reasons to Buy Insurance at Age 30 (or Earlier)
Avoiding LHC loading is one of the most important reasons to get covered by age 30. However, it is not the only reason. You can also be charged a Medicare Levy Surcharge if you are not covered. This is assessed depending upon your income (either your individual income or family income if you are married or in a de facto marriage.) This calculator helps you to determine how much your Medicare Levy Surcharge will be if your income is above $90,000 as a single person or $180,000 as a couple.
Medicare Levy Surcharge Calculator
For many people, age 30 is a time when their career is really beginning to take off. Even if you are not yet being charged a Medicare Levy Surcharge, you could be in the future if you don’t have cover. By waiting to buy Hospital cover, you could end up not only being subject to the Medicare Levy Surcharge for not having cover, but also adding to the cost of premiums as a result of the LHC loading.
While LHC loading and Medicare levies can both have significant financial consequences, the biggest expenses may be incurred if you end up needing medical care that is not covered. As you get older, you may require more cover. Whether this is obstetrics cover as your family expands or cover for ailments that develop as you age, you do not want to end up paying out of pocket for necessary medical services. Get covered early so you can avoid financial hardship as you get older.