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Removal of the rebate on Lifetime Health Cover

Removal of the rebate on Lifetime Health Cover from 1 July 2013

Lifetime Health Cover (LHC) is a financial loading applied on top of your hospital premium at a rate of 2% for every year you are aged over 30 when you take out hospital cover, up to a maximum of 70%. The LHC loading is removed once you have held hospital cover and paid the loading for 10 continuous years.

If you currently pay a LHC loading, as of 1 July 2013, the Rebate will no longer apply to the LHC component of your hospital cover premiums. You will still receive the Rebate on the standard component of your hospital cover.

 

What will be the effect of this change on my private hospital cover contributions?

The changes will only affect you if you have a lifetime health cover loading and will only affect your hospital cover contributions.

The effect of the legislation change 1 July 2013 on your hospital cover contribution will vary depending on your specific:

  • Lifetime Health Cover Loading percentage; and

  • Your Private Health Insurance rebate entitlement

The table below shows the percentage increase in hospital cover contributions a member will incur as a result of these changes depending on their Lifetime Health Cover Loading (LHLC) and Private Health Insurance Rebate entitlement.

To use the table, follow the Health Insurance Rebate column that applies to you down to the Lifetime health cover loading percentage row that applies to you.   Where the two intercept, is the Percentage increase

Table 1:  The effective increase in private hospital contributions as a result of the removal of Rebate from the LHC component of hospital premiums.




HEALTH INSURANCE REBATE ENTITLEMENT %

LHCL %

0%

10%

15%

20%

25%

30%

35%

40%

1%

0.00%

0.11%

0.17%

0.25%

0.33%

0.42%

0.53%

0.66%

2%

0.00%

0.22%

0.35%

0.49%

0.65%

0.84%

1.06%

1.31%

3%

0.00%

0.32%

0.51%

0.73%

0.97%

1.25%

1.57%

1.94%

4%

0.00%

0.43%

0.68%

0.96%

1.28%

1.65%

2.07%

2.56%

5%

0.00%

0.53%

0.84%

1.19%

1.59%

2.04%

2.56%

3.17%

6%

0.00%

0.63%

1.00%

1.42%

1.89%

2.43%

3.05%

3.77%

7%

0.00%

0.73%

1.15%

1.64%

2.18%

2.80%

3.52%

4.36%

8%

0.00%

0.82%

1.31%

1.85%

2.47%

3.17%

3.99%

4.94%

9%

0.00%

0.92%

1.46%

2.06%

2.75%

3.54%

4.45%

5.50%

10%

0.00%

1.01%

1.60%

2.27%

3.03%

3.90%

4.90%

6.06%

11%

0.00%

1.10%

1.75%

2.48%

3.30%

4.25%

5.34%

6.61%

12%

0.00%

1.19%

1.89%

2.68%

3.57%

4.59%

5.77%

7.14%

13%

0.00%

1.28%

2.03%

2.88%

3.83%

4.93%

6.19%

7.67%

14%

0.00%

1.36%

2.17%

3.07%

4.09%

5.26%

6.61%

8.19%

15%

0.00%

1.45%

2.30%

3.26%

4.35%

5.59%

7.02%

8.70%

16%

0.00%

1.53%

2.43%

3.45%

4.60%

5.91%

7.43%

9.20%

17%

0.00%

1.61%

2.56%

3.63%

4.84%

6.23%

7.82%

9.69%

18%

0.00%

1.69%

2.69%

3.81%

5.08%

6.54%

8.21%

10.17%

19%

0.00%

1.77%

2.82%

3.99%

5.32%

6.84%

8.60%

10.64%

20%

0.00%

1.85%

2.94%

4.17%

5.56%

7.14%

8.97%

11.11%

21%

0.00%

1.93%

3.06%

4.34%

5.79%

7.44%

9.35%

11.57%

22%

0.00%

2.00%

3.18%

4.51%

6.01%

7.73%

9.71%

12.02%

23%

0.00%

2.08%

3.30%

4.67%

6.23%

8.01%

10.07%

12.47%

24%

0.00%

2.15%

3.42%

4.84%

6.45%

8.29%

10.42%

12.90%

25%

0.00%

2.22%

3.53%

5.00%

6.67%

8.57%

10.77%

13.33%

26%

0.00%

2.29%

3.64%

5.16%

6.88%

8.84%

11.11%

13.76%

27%

0.00%

2.36%

3.75%

5.31%

7.09%

9.11%

11.45%

14.17%

28%

0.00%

2.43%

3.86%

5.47%

7.29%

9.38%

11.78%

14.58%

29%

0.00%

2.50%

3.97%

5.62%

7.49%

9.63%

12.10%

14.99%

30%

0.00%

2.56%

4.07%

5.77%

7.69%

9.89%

12.43%

15.38%

31%

0.00%

2.63%

4.18%

5.92%

7.89%

10.14%

12.74%

15.78%

32%

0.00%

2.69%

4.28%

6.06%

8.08%

10.39%

13.05%

16.16%

33%

0.00%

2.76%

4.38%

6.20%

8.27%

10.63%

13.36%

16.54%

34%

0.00%

2.82%

4.48%

6.34%

8.46%

10.87%

13.66%

16.92%

35%

0.00%

2.88%

4.58%

6.48%

8.64%

11.11%

13.96%

17.28%

36%

0.00%

2.94%

4.67%

6.62%

8.82%

11.34%

14.25%

17.65%

37%

0.00%

3.00%

4.77%

6.75%

9.00%

11.57%

14.54%

18.00%

38%

0.00%

3.06%

4.86%

6.88%

9.18%

11.80%

14.83%

18.36%

39%

0.00%

3.12%

4.95%

7.01%

9.35%

12.02%

15.11%

18.71%

40%

0.00%

3.17%

5.04%

7.14%

9.52%

12.24%

15.38%

19.05%

41%

0.00%

3.23%

5.13%

7.27%

9.69%

12.46%

15.66%

19.39%

42%

0.00%

3.29%

5.22%

7.39%

9.86%

12.68%

15.93%

19.72%

43%

0.00%

3.34%

5.31%

7.52%

10.02%

12.89%

16.19%

20.05%

44%

0.00%

3.40%

5.39%

7.64%

10.19%

13.10%

16.45%

20.37%

45%

0.00%

3.45%

5.48%

7.76%

10.34%

13.30%

16.71%

20.69%

46%

0.00%

3.50%

5.56%

7.88%

10.50%

13.50%

16.97%

21.00%

47%

0.00%

3.55%

5.64%

7.99%

10.66%

13.70%

17.22%

21.32%

48%

0.00%

3.60%

5.72%

8.11%

10.81%

13.90%

17.46%

21.62%

49%

0.00%

3.65%

5.80%

8.22%

10.96%

14.09%

17.71%

21.92%

50%

0.00%

3.70%

5.88%

8.33%

11.11%

14.29%

17.95%

22.22%

51%

0.00%

3.75%

5.96%

8.44%

11.26%

14.47%

18.19%

22.52%

52%

0.00%

3.80%

6.04%

8.55%

11.40%

14.66%

18.42%

22.81%

53%

0.00%

3.85%

6.11%

8.66%

11.55%

14.85%

18.65%

23.09%

54%

0.00%

3.90%

6.19%

8.77%

11.69%

15.03%

18.88%

23.38%

55%

0.00%

3.94%

6.26%

8.87%

11.83%

15.21%

19.11%

23.66%

56%

0.00%

3.99%

6.33%

8.97%

11.97%

15.38%

19.33%

23.93%

57%

0.00%

4.03%

6.41%

9.08%

12.10%

15.56%

19.55%

24.20%

58%

0.00%

4.08%

6.48%

9.18%

12.24%

15.73%

19.77%

24.47%

59%

0.00%

4.12%

6.55%

9.28%

12.37%

15.90%

19.98%

24.74%

60%

0.00%

4.17%

6.62%

9.38%

12.50%

16.07%

20.19%

25.00%

61%

0.00%

4.21%

6.69%

9.47%

12.63%

16.24%

20.40%

25.26%

62%

0.00%

4.25%

6.75%

9.57%

12.76%

16.40%

20.61%

25.51%

63%

0.00%

4.29%

6.82%

9.66%

12.88%

16.56%

20.81%

25.77%

64%

0.00%

4.34%

6.89%

9.76%

13.01%

16.72%

21.01%

26.02%

65%

0.00%

4.38%

6.95%

9.85%

13.13%

16.88%

21.21%

26.26%

66%

0.00%

4.42%

7.02%

9.94%

13.25%

17.04%

21.41%

26.51%

67%

0.00%

4.46%

7.08%

10.03%

13.37%

17.19%

21.60%

26.75%

68%

0.00%

4.50%

7.14%

10.12%

13.49%

17.35%

21.79%

26.98%

69%

0.00%

4.54%

7.21%

10.21%

13.61%

17.50%

21.98%

27.22%

70%

0.00%

4.58%

7.27%

10.29%

13.73%

17.65%

22.17%

27.45%

 

Example  1: 

Dave and Jill have comprehensive hospital cover for a couple.  They have a 27% Lifetime Health Cover loading are entitled to a 30% Rebate which they claim as a reduced premium.

Prior to 1 July 2013 changes, their monthly health health insurance premium contributions were $311.15 as calculated below:

Hospital cover base rate:  $350 per month

PLUS LHC loading (27% of Hospital base rate premium): $94.50  = $444.50

LESS Rebate (30% of Hospital base rate PLUS LHC loading): $133.35  = $311.15

Monthly Health Cover Contributions before 1 July 2013 = $311.15

 

After 1 July 2013, their monthly health insurance premiums increased 9.11% to $339.50 as calculated below:

Hosptial cover base rate:  $350 per month

PLUS LHC loading (27% of Hospital base rate premium): $94.50  = $444.50

LESS Rebate (30% of Hospital base rate only): $105.00  = $339.50

Monthly Health Cover Contributionsafter 1 July 2013 = $339.50

This represents a increase in hospital cover premium contribution of $28.35 per month or 9.11%

 

 

Example  2: 

Sam has a combined hospital and extras cover for himself.  He has a 20% Lifetime Health Cover loading is entitled to a 35% Rebate which he claims as a reduced premium.

Prior to 1 July changes, his monthly health health insurance premium contributions were $176.80 as calculated below:

Hospital cover base rate:  $160 per month

PLUS LHC loading (20% of Hospital base rate premium): $32.00  = $192.00 per month

LESS Rebate (35% of hospital base rate and LHC loading premiums): $67.20  = $124.80 per month

General (Extras) base rate: $80 per month

LESS Rebate (35% of General base rate premiums): $28.00  = $52.00 per month

TOTAL Monthly Health Cover Contributions before 1 July 2013 = $176.80

 

After 1 July 2013, Sam's monthly hospital cover contribution increased 8.97% to $188.00 as calculated below:

Hospital cover base rate:  $160 per month

PLUS LHC loading (20% of Hospital base rate premium): $32.00  = $192.00 per month

LESS Rebate (35% of hospital base rate premiums): $56.00  = $136 per month

General (Extras) base rate: $80 per month

LESS Rebate (35% of General base rate premiums): $28.00  = $52.00 per month

TOTAL Monthly Health Cover Contributions after 1 July 2013 = $188.00

This represents a increase in hospital cover premium contribution of $11.20 per month.  This is an 8.97% increase in contribution for hospital cover, and a 6.33% increase on the on overall private health insurance premium contribution for both hospital and extras.

 

Concerned about the cost impact of this legislation?

If you have a lifetime health cover loading and are concerned about the cost impact of this legislation change on your cover contributions, we recommend that you call us for assistance to professionally review your cover options and help you to ensure that you maintain appropriate, affordable cover.  Call a HICA consultants on 1300 44 22 01 today.  There is no cost or obligation to you for reviewing your cover with HICA.

 

The information provided on this website does not constitute financial advice or tax advice.  If you require financial or tax advice about your specific situation, you should contact your financial advisor or a tax expert.