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Lifetime Health Cover loading looms for the newly 31


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If you've turned 31 in the last year and don't have health insurance, you need to read this.

Have you turned 31 in the last year? If you have or will before 1 July and are considering getting health insurance in the future, you might want to do so sooner rather than later. If you wait until after 1 July following your 31st birthday you'll end up paying 2% more for hospital insurance for every year you don't have cover thanks to a pesky little "incentive" called the lifetime health cover (LHC) loading.

If you've never heard of the LHC before here's a quick summary.

To encourage Aussies into taking out private health insurance, the Howard Government introduced the LHC, which levies a 2% penalty on the health insurance premiums if you don't have a compliant hospital insurance policy by 1 July following your 31st birthday. And this penalty increases each year you don't have hospital insurance, up to a maximum of 70% of your annual premium.

For example, if you waited until you were 40 to take out private health insurance you'd be paying an LHC penalty of 20%, which remains in effect for 10 years.

If you took out a hospital policy now at a cost of $2,000 and factored in the average annual premium increase since 2010 of 5.2%, you'd end up paying $67,547 for cover over the next 20 years. Now, if you waited until you were 40 to take out that same policy, you'd be looking at paying $54,731 for just 10 years worth of hospital cover thanks to the loading.

While you'll come out ahead in regards to total spend if you take out cover later, you end up paying far more on a per year basis. In this example, those taking out cover early pay an average of $3,377 per year for cover over 20 years, whereas those choosing to defer taking out cover pay on average $5,473 per year over the 10 years. Even if we just look at the 10 year period where both hypothetical people have cover, those who chose to take out cover later pay an average of $1,258 more for cover per year.

lhc cost comparison 2019

Health insurance no LHCHealth insurance with LHC
Years of cover2010
Premiums paid$67,547$54,731
Average annual premium$3,377$5,473
Total LHC payments$0$12,816

The worst part of this loading is that those additional premiums you're paying don't go to the government or into the public health system, they go straight to the insurer.

The good news is that if you are considering health insurance and want to avoid the LHC, you can find cover that won't break the bank. A basic policy costs $79.86 on average if you're after just the bare bones. Not sure what you want or need some help? Use the engine below to compare your options.

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