Suspending your health insurance policy
You can suspend health insurance for several reasons, which can save you money in a few ways.
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Without health insurance you may not be able to afford many ongoing medical bills that are not covered by medicare. However, sometimes the ongoing cost of maintaining your policy can seem like an added financial burden you just can't justify. You may have had a significant change in your financial situation or you may just be looking to make some savings on your bills but don't throw away your health insurance without first looking at your options.
You may be able to have your premiums suspended while you decide what to do with your policy. This guide takes you through some of the options you have when considering suspending your cover.
How long can you suspend my health insurance for?
Most health funds allow you to suspend your health insurance cover from between 2 months and 2 years. That said, the minimum and maximum times for which you can suspend cover varies between brands. The following limits commonly apply:
- You can suspend your membership for a minimum of two months
- You can suspend your membership for a maximum of two years
- The number of suspensions allowed per calendar year is usually limited to one or two
- A separate limit may apply to the maximum suspension allowed for financial hardship, for example three months
- There may also be a lifetime limit on the number of financial hardship suspensions permitted
Check the fine print with your health fund for full details of any limits that apply. Click the link below to see a table that compares suspension policies from most major health funds.
How long can I pause hospital cover without affecting the LHC loading?
If you're 31 years or older, you can go without hospital cover for a total 1,094 days of absence without affecting your Lifetime Health Cover Loading. However, once you've used up 1,094 days without cover, the loading will kick in again, adding 2% to your future premiums for each year you're not covered.
Why would I want to suspend my health insurance policy?
People suspend their health insurance for many different reasons. Financial hardship is a major reason people do this. If you've lost your job or are battling debt problems and struggling to meet your premium payments, your health fund may agree to let you suspend your membership for a temporary period.
Another common reason for suspending a policy is overseas travel. Australian private health funds are unable to provide any cover for medical expenses you incur overseas – you’ll need overseas travel insurance for that sort of protection – so if you’re going to be out of the country for a couple of months or more, suspending cover makes good financial sense.
Why not just cancel my policy?
When your health fund agrees to allow you to suspend your membership for a temporary period, you will not have to re-serve any waiting periods when you resume cover at a later date. You will also be able to maintain the level of cover that suits your needs and keep the current benefit limits that apply to your policy.
But if you opt to cancel your current cover and then take out a new policy sometime in the future, you will have to serve the full waiting periods set by the fund before you can claim any benefits. This could have a serious impact on your ability to access the health care you need, especially if you develop any health problems which will then be classed as pre-existing conditions by your new fund.
In addition, temporarily suspending your health insurance policy does not have any effect on your Lifetime Health Cover (LHC) loading. However, if you cancel cover this can have serious implications for the cost of cover when you take out a new policy.
Who is eligible to suspend cover?
Eligibility rules for temporarily suspending your health insurance policy vary between funds. However, to qualify for this option you will typically need to:
- Have been an active member of the health fund for at least 12 consecutive months
- Have all your premium payments up to date
If going overseas, you will also need to apply for a suspension prior to your departure date as you cannot retrospectively apply to suspend cover.
Are there any other conditions?
Individual health funds usually impose a range of other conditions on your eligibility to suspend cover temporarily.
- You will need to get permission from your fund to suspend cover, so you’ll need to have an acceptable reason to ask for this option. Financial hardship and overseas travel are the two most common reasons for taking a break from cover, but your health fund may also allow a suspension in other specific circumstances.
- There may also be a limit on how many times you can suspend your membership in a calendar year – either once or twice are the limits most commonly imposed. Check with your health fund to find out if there are any other special conditions you need to meet.
- If you’re a high-income earner and you suspend your policy, you may have to pay the Medicare Levy Surcharge in your tax return for that financial year.
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