When is the cheapest time to get private health insurance?

There are two key periods when most Australians buy their health insurance. They are:

  • March (the lead-up to price increases on 1 April)
  • June (lifetime health cover loading month and end of finanical year)

* The price shown is per week and applies to a {LIFESTAGE} living in VIC with a $500 excess. It excludes LHC loading and includes a Base Tier Government Rebate

March – The Price Rise Month

The Australian health insurance sector is heavily regulated, with all health funds needing government approval to increase their prices. Due to this government regulation, in March all health funds are required to notify their members that of policy price increases from April 1.

The price increases that occur in March often lead existing policy holders to shop around for cheaper options, and some health funds encourage this by offering their most competitive deal of the year. While offers may come during other months, March is normally the cheapest time to get private health insurance.

June - Lifetime Health Cover Loading

June 30 is the cut-off date for those turning 31 to avoid being penalised by the Lifetime Health Cover Loading (LHC). LHC increases premiums for those over the age of 31 that have never held the hospital component of private health insurance. Therefore, if you maintain the hospital component of health insurance from the age of 30 you are rewarded with lower premiums compared to those that take out their first policy after this age.

Lifetime health cover loading is applicable only to hospital cover and does not apply to extras and visitors cover. In order to avoid paying Lifetime Health cover loading, an individual needs to purchase hospital cover by 1 July following their 31st birthday. If hospital cover is not purchased by this date, the individual is liable to pay LHC loading by an extra 2% for every additional year they are not covered.

For example, if you purchase health cover after you turn 40, you could be paying 20% extra on the cost of your hospital cover. If you purchase a hospital cover when you turn 50, you could be paying 40% more, continuing to a maximum of 70% extra.

For couples and families, LHC is calculated depending upon the dates of birth and then halved. For instance, a couple aged 33 and 36 years would incur a combined loading of 18% initially which is around 6% and 12% individually. The final loading applicable to their combined health insurance cover would be 9%.

For those who are turning 31 or are older and do not have hospital cover this is the cheapest time to get health insurance to avoid future LHC penalties when they get older.

Exemptions from the LHC policy

There are a few exemptions from the LHC policy, including if the individual:

  • Was born on or before 1 July 1934.
  • Had a hospital cover on 1 July 2000 which is still maintained

Once you decide to take out health cover, you will incur a loading which is payable on top of the base premium of your private insurance hospital cover for a period of 10 continuous years.

June – Tax Time

June is considered the ‘super month’ for health funds because not only do many individual purchase health insurance due to the LHC policy, but they also join to avoid the Medicare Surcharge.

The Medicare surcharge is the extra tax you need to pay if you do not have private health insurance and earn over $90,000 as an individual based on:

  • your taxable income
  • your total reportable fringe benefits, and
  • any amount on which family trust distribution tax has been paid.

The amount you have to pay ranges from 1% to 1.5% of your income. For example, someone that earns $100K per year will have to pay an extra 1.25% which amounts to $1,250. If you expect to earn above the thresholds set by the federal government it will often be cheaper to have hospital cover than pay the surcharge and of course you get the added benefit of being covered.

It is to ensure you’re covered for the next financial year that many individuals join a health fund in June.

Get 1 month free + skip 2 & 6 month waits on extras* when you join on combined cover by March 31.

*For new members (if you have been a Frank Health Insurance member in the last 12 months, sorry you don’t qualify). Must pay first month to receive second month free. 12 month waits, annual and sub limits apply. Offer ends 31 March, 2018.