How to Avoid the Lifetime Health Cover Loading

Russell Cain Updated: 19 June 2023

If you’re turning 31 this year, then you’ve probably received a letter from the ATO informing you that you’ll soon be liable for the Lifetime Health Cover (LHC) loading if you do not purchase appropriate hospital coverage before the 1st of July following your 31st birthday. When you’re young and healthy, you might wonder if taking out Hospital cover simply to avoid the Lifetime Health Cover loading is worthwhile.

Purchasing private health insurance early in life can be a good idea, but you should generally take your requirements into consideration. If you don’t think you’ll be able to afford the 2% yearly loading later on in life, you may want to purchase an eligible policy while you’re still young.

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 an appropriate hospital policy in place 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 plan 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%. Which generally means that 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 Medicare eligibility, age, and time spent overseas. It does not take your income into account. Your base date is typically the 1st of July following your 31st birthday.

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

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Which health insurance policy will help you avoid the loading?

To avoid paying for the LHC loading, you must purchase a private hospital policy before 1 July following your 31st birthday. Hospital cover benefits treatments and services received inside the hospital, including accommodation. On the other hand, 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. Typically, a Basic policy will help you avoid the LHC loading and costs less than other policies with a wider range of benefits.

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

Does everybody have to pay the LHC loading?

No, 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.

Frequently asked questions and answers

  • What is the purpose of LHC loading?

    The aim of the Lifetime Health Cover Loading is to encourage young Australians to buy and maintain health cover from an early age. The loading is an additional fee introduced by the government. It’s added to your health insurance premium if you buy hospital cover after the age of 30. If you purchase coverage early and maintain it, there will be no loading at all on future premiums.
  • How long must lifetime health cover loading be paid?

    Generally, the LHC loading will be added to your private health insurance premiums for ten years after you purchase your policy. So for instance, if you purchased health cover when you turned 40, you’ll generally need to pay an additional 18% loading fee on top of your normal premiums until you turn 50 years old.
  • What is the maximum lifetime health cover loading?

    The most you’ll generally be required to pay for this loading fee is 70%. To reach the maximum loading amount, you would have had to have gone without private health insurance for 35 years after your 31st birthday. To avoid having to pay the loading altogether, you may want to purchase an eligible Hospital policy and maintain it. If you stop paying for private health cover, the loading can be applied to your premiums again when you buy a new policy.

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