Health insurance explained

The Lifetime Health Cover (LHC) loading is an extra cost applied to the price of hospital insurance for anyone who chooses to take out hospital cover later in life. The loading was designed by the Australian Government to encourage people to take out insurance earlier in life and maintain their cover.

The loading only applies if you choose to take out hospital insurance after your 31st birthday. Basically, for every year that you don’t have hospital insurance following your 31st birthday, an additional 2% loading will apply if you take out hospital cover later down the track (capped at 70%). For example, if you choose to take out hospital cover at 36 years old, a 10% loading will be applied to your hospital insurance premiums. The loading will only be removed once you’ve held hospital insurance for 10 continuous years.

To avoid LHC, you just need to take out hospital cover on or before 1 July following your 31st birthday.

Learn more about the Lifetime Health Cover loading.

If you pay the lifetime health cover (LHC) loading, you're still eligible for the rebate. However, you'll only get a rebate on the base premium of your hospital insurance and not the LHC loading component.

For couples and families, the Lifetime Health Cover loading is calculated as an average between the two adults. For example, if one person has a 40% loading and the other person has a 10% loading, the loading applied to the couple's policy is 25%.

If you're 31 or older and don't have hospital insurance, it's still a good idea to buy it as soon as possible. This is because the Lifetime Health Cover loading (LHC) goes up by 2% every year that you don't have hospital cover, up to a maximum of 70%. For example, if you get hospital insurance at 41, you'll pay an extra 22% on top of the base cost of your premium, so long as you maintain your cover.

The good news is that the LHC loading doesn't last forever — once you've held hospital insurance for a continuous 10 years, the loading is removed.

Just remember, the LHC loading only applies to hospital cover; it does not apply to extras, urgent ambulance or overseas visitors' insurance. For example, if you buy hospital insurance in addition to extras or urgent ambulance insurance, you'll only pay the LHC loading on the hospital insurance portion of your premium.

Say your 31st birthday is on the 21st April 2021 - you have until the 1st July 2021 to buy hospital insurance and avoid the loading.