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MenuLifetime Health Cover is a Federal Government initiative that commenced on 1 July 2000 and is designed to encourage people to take out hospital cover early in life and maintain it into later years. A loading or penalty is applied to premiums if you delay joining hospital until after your 31st birthday. The loading is then removed once you have held 10 continuous years of hospital cover.
One of the stated aims of the Lifetime Health Cover initiative is to slow the rate of premium increase by discouraging "hit and run" behaviour (where someone joins a health fund just before requiring treatment and then leaves soon after) and by reducing the average age (and thereby improving the overall health) of private health insurance fund members so that the rate of claiming is reduced.
If you were born on or before 1 July 1934, you will always have 0% Lifetime Health Cover Loading.
If you have had private hospital cover every year since your 31st birthday, you have 0% Lifetime Health Cover Loading.
If you did not have private hospital cover by the 1st July following your 31st birthday, you have 2% Lifetime Health Cover Loading for every July 1st that passed between your 31st birthday and the date you join hospital cover.
Simply calculate the Lifetime Health Cover Loading for each individual who will be covered by the plan and average them. For example if you have 10% loading and your spouse has 0% loading, your combined loading will be 5%.
To lock in the lowest premiums for life under Lifetime Health Cover, a person needs to take out hospital cover with a registered health fund before the 1st July following their 31st birthday and maintain that cover.
If a person does not have hospital cover by the 1st July following their 31st birthday and decides to take out hospital cover later in life, they will pay a 2% loading on top of the base premium for every 1st July that has occurred between their 31st birthday and the time they join. For example, someone who first takes out hospital cover at age 40 may pay 20% more than someone who first took out hospital cover at age 30.
People who were born on or before 1 July 1934 are exempt from Lifetime Health Cover and are able to join a health fund at any time in the future and pay the same premium as someone who takes out cover at age 30.
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.