How to Avoid the Lifetime Health Cover Loading

Russell Cain
Russell Cain Updated: 10 March 2020

If you’re turning 31 this year, then you probably received a letter from the ATO informing you that you’ll soon be liable for the LHC loading if you do not purchase appropriate hospital coverage.

When you’re young and healthy, you might be wondering if it’s worthwhile taking out Hospital cover simply to avoid the Lifetime Health Cover loading.

Whether purchasing private health insurance when 30 a good idea depends on your personal requirements. For example, consider if you’ll be able to afford the 2% yearly loading when purchasing health insurance later in life.

What is the Lifetime Health Cover loading?

The Lifetime Health Cover loading is a 2% fee that’s added to your health insurance premium for every year you do not have appropriate hospital insurance before 1 July after your 31st birthday. The LHC loading can go up to a maximum of 70%. Once applied, the loading can only be removed when you’ve held an eligible hospital policy for 10 consecutive years.

For example, if you buy health insurance for the first time when you’re 35, then your Lifetime Health Cover loading will likely equal 8%. Meaning, you’ll pay an additional 8% on top of your premium for 10 years.

How to calculate your LHC loading

The Lifetime Health Cover loading is calculated on your base date, which is determined by your eligibility for Medicare, your age, and time spent overseas. It does not take your income into account.

Visit and use their Lifetime Health Cover loading calculator to determine how much more you’ll have to pay for health insurance.

Which health insurance policy will help you avoid the loading?

To avoid paying the LHC loading, you need to purchase a private hospital policy before 1 July following your 31st birthday. Hospital cover provides a benefit for treatments and services received inside the hospital, including accommodation. An Extras policy that pays for benefits like dental and optical does not protect you from the 2% yearly loading.

Where can you buy an eligible Hospital policy?

You can purchase a private hospital policy from any profit or not-for-profit health fund in Australia. Be sure to read the policy’s Standard Information Statement (SIS) to determine if it exempts you from paying the 2% loading fee.

Although you might be tempted to buy the cheapest policy to avoid the LHC loading, make sure that the benefits suit your stage of life, medical history and current health.

Does everybody have to pay the LHC loading?

There are certain exemptions to the loading. People born on or before 1 July 1934 or is a member of the Australian Defence Force or has a Veterans’ Affair Gold card, typically do not have to pay the 2% loading fee.

Take note

If you’re an immigrant and over 30 years old when registering for Medicare, then you generally have 12 months after your registration date before the LHC loading kicks in. This also applies to Australian citizens that lived overseas when turning 31.

Does your LHC loading continue if you suspend your health insurance?

Generally, private health insurance companies will allow you to suspend your health insurance and Lifetime Health Cover loading for up to 1094 days (known as ‘Days of Absence’). A suspension is usually available when switching health funds, experiencing budget constraints or taking a long trip overseas – for a minimum of 1 year, with no more than 90 days visiting Australia.

However, because you won’t pay health insurance premiums, you can’t claim any private health insurance benefits when the cover is suspended.

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