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Private Health Insurance for 30 Year Olds

Jonathan June 14th, 2016 0 comments

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 31 can mean extra costs that significantly increase your premiums.  The longer you wait, the more you can expect to buy.

Buying 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 is required in order to avoid being charged a Medicare levy.

If you wait until age 31 to purchase coverage, it becomes more expensive. This is because of Lifetime Health Cover Loading (LHC).  You are charged LCH loading starting on June 30th of the year after you turn 31 and the amount keeps going up every single year that you do not have coverage. LHC means your insurance costs an extra two percent above the standard premiums for each year above age 30. A person who is 31 will pay an extra two percent.  At age 32, you will pay an extra four percent, and so on.

You do not want to pay this extra cost for coverage. While you may not think you need coverage now, most people begin to require significantly more healthcare as they get older. By the time you need coverage, 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 for your 30th birthday and get covered.

Lifetime Health Coverage Loading After Age 31

Lifetime health coverage loading is a financial penalty that applies if you wait too long to buy private hospital coverage.  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 required in order to try to incentivize young people to buy coverage.  Buying private health insurance 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 coverage 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 health insurance prohibitively expensive at the time when you need it most. While the government provides help paying for premiums in the form of a rebate or tax credits (see this <a href=”/health-insurance-rebate-calculator/”>calculator</a> to find out more), this rebate does not pay for LHC loading.

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.

Medicare Levy Surcharge Calculator

The Medicare Levy surcharge is an additional fee paid on top of the 2% Medicare Levy Surcharge that most Australian taxpayers pay. You can avoid the surcharge if you have Private Health Insurance (Hospital Cover).

The exact surcharge level you'll need to pay depends on your income level and relationship/family status. Use the slider and dropdown menu below to determine what surcharge you're liable for if you don't have private hospital cover.

Please select status

Your Medicare Levy Surcharge is 1% of your income, or $2050
Singles
Families
$90,000
$180,000
$90,001-105,000
$180,001-210,000
$105,001-140,000
$210,001-280,000
$140,001
$280,001
Medicare Levy Surcharge
Standard Tier 1 Tier 2 Tier 3
All ages 0.0% 1.0% 1.25% 1.5%

If you wait more than 12 months after immigrating 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.
<h3>Is LHC Loading for Hospital Cover, Extra Cover, or Both?</h3>
LHC loading is only for private hospital cover, not for extras or general cover.

Is LHC Loading Ever Removed?

If you have waited until after age 30 to buy private health 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.
<h3>What If You Had Coverage for a Period of Time Before Age 31?</h3>
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 went without coverage. You are allowed to be without coverage 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 coverage 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 Health Insurance 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 if you are not covered. The Medicare Levy is assessed depending upon your income (either your individual income or family income if you are married or in a de facto marriage.)  This <a href=”/medicare-levy-surcharge-calculator/”>calculator</a> helps you to determine how much your Medicare levy  will be if your income is above $90,000 as a single person or $180,000 as a couple.

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, you could be in the future if you don’t have coverage. By waiting to buy hospital insurance, you could end up not only being subject to the Medicare levy for not having insurance, 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 coverage. Whether this is obstetrics coverage as your family expands or coverage 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.

Disclaimer: The above information is correct and current at the time of publication.

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