Lifetime Health Cover

What is it?

Lifetime Health Cover is a Government initiative that recognizes the length of time a person has had hospital cover with a registered health fund. People who take out hospital cover earlier in life and maintain their hospital cover will pay lower premiums throughout their life compared to someone who joins when they're older. Lifetime Health Cover commenced on 1 July 2000.

What does it mean for me?

Under Lifetime Health Cover, Health Funds are required to charge people who were not members of a hospital cover prior to 1 July 2000, 2% extra on top of the normal premiums for every year they are aged over 30 when they first take out hospital cover.

This means that a person who first joins hospital cover at 35 will pay 10% extra for their health insurance than they would have had they joined before they turned 31. This higher premium will always apply.

All members who join hospital cover by 1 July following their 31st birthday will not incur a loading on their premium. Any members who join after the 1 July following their 31st birthday will pay the loading.

Examples:

  1. Paul turns 31 on 7 June 2004. Paul purchases hospital cover for the first time on 20 June 2004. On the 1 July before Paul first purchased hospital cover he was aged 30. Paul's Lifetime Health Cover age is 30, so he does not pay a loading on his premium.

  2. Kate turns 39 on 6 March 2004, and purchases hospital insurance for the first time on 10 June 2004. On the 1 July before Kate first purchased hospital insurance she was aged 38, so her Lifetime Health Cover age is 38. Her loading will be 16%, which is a 2% loading for each year she is aged over 30 before she purchases hospital insurance.

How do I avoid the penalties?

To lock in the lowest premiums for life under Lifetime Health Cover, a person needs to take out hospital cover with a registered fund before the 1 July following their 31st birthday. After 31, the younger you join, the lower your premiums will be. Provided you maintain your cover, the loading does not increase each year. The loading is capped at 70%.

Who is not affected?

Anyone who already had hospital cover with a registered health fund when Lifetime Health Cover was introduced on 1/7/2000 - you were automatically given a certified age of 30 years (regardless of actual age). No loading applies to your premiums provided you maintain your hospital cover.

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.

Periods of Absence

Members can lapse their cover for a cumulative period of 24 months over their lifetime without affecting their premium. After a total of 24 months absence, a 2% loading will be applied to their premium for each additional 365 days of absence. Members are only allowed one cumulative total of 24 months lapse of membership during their lifetime.

If, on agreement with the Fund, you have a period of suspension, this period of time will not count towards the Lifetime Health Cover periods of absence.

For more information on Lifetime Health Cover, please contact us or refer to the government website www.health.gov.au