What is Lifetime Health Cover Loading (LHC)?
Lifetime Health Cover Loading (also known as LHC or LHC Loading) is an age-based penalty system, introduced by the Australian government, to encourage people to take out and keep hospital cover. It works like this: for every year you don’t have hospital cover after 1 July following your, you’ll cop a 2% loading on your hospital premiums (when you eventually get them). The longer you wait, the more you pay (capped at 70%, or 65 years of age). Hectic!
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How does LHC work?
If you’ve already taken out hospital or hospital and extras cover before turning 31, and plan to keep your hospital cover forever, you can stop reading now. LHC won’t apply to you. For everyone else, here’s how it works.
For every year you don’t have hospital cover after 1 July following your 31st birthday, you’ll pay a loading on your hospital premiums. This loading is 2% for every year you’re over 30, and the amount is capped at 70% (or 65 years old). Check out this handy calculator for more information.
Taking out hospital cover for the first time
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On 1 July prior to taking out hospital cover if you were:
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You’ll pay an LHC loading on your hospital premiums of:
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< 31 years old
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No loading applies
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31 years old
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2%
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32 years old
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4%
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33 years old
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6%
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34 years old
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8%
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35 years old
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10%
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36 years old
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12%
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37 years old
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14%
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38 years old
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16%
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39 - 65 years old
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Continues to increase by 2% for each year. Loading is capped at 70%
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Your LHC loading is based on your certified age of entry (CAE). The CAE is the age a person was on the 1st of July prior to purchasing hospital cover. This determines your base amount of LHC should you drop hospital cover in the future for longer then your allowable absence days.
Once you’re over 31 and hold hospital cover, you can be without hospital cover for a total of 1094 days, almost 3 years, over your lifetime. However, if you cancel your hospital cover for more than 1094 days, when you take it out again, you’ll have to pay LHC loading.
To learn more about CAE and absence day visit privatehealth.gov.au.
A few notes on LHC
- Only your age matters. Your taxable income doesn’t have any effect on your LHC
- Extras-only insurance won’t help you avoid LHC. You will need an appropriate level of hospital cover. You also don’t pay LHC loading on your extras premium, only your hospital premium receives the loading
- If you’re over 31 and haven’t held private health insurance hospital cover, when you’re shopping around for health insurance, remember to factor in LHC. Some online quote tools don’t include Lifetime Health Cover Loading
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Why do we have Lifetime Health Cover Loading?
Lifetime Health Cover Loading isn’t fun, but it’s meant to incentivise people to get hospital cover as early as possible (and keep it!), reducing the burden on the public health system. More private cover, less crowded public hospitals. That’s the idea. But there are other upsides too: LHC encourages young people to prepare for and consider their health, now and in the future.
How long do I have to pay LHC?
You’ll be happy to learn that LHC loading doesn't last forever. If you’ve paid the Lifetime Health Cover Loading for 10 continuous years, without a break in cover for longer than 1094 days or more, it no longer applies.
Are there any expemptions to the Lifetime Health Cover Loading?
Not many, but yes, there are a few exemptions to LHC. For example, some veterans and members of the Australian Defence Force can be excused from the loading penalty. Other exemptions include:
- Living overseas: if you turn 31 while living overseas, you have 12 months from the day you arrive back in Australia to take out hospital cover and avoid LHC
- Age: if you were born on or before 1 July 1934, you’re exempt from LHC
- Veterans: holding a DVA Gold card is considered as having eligible hospital cover for the purposes of LHC
You can check out the full list of exemptions here. If you believe you’re entitled to skip LHC, just let our team know – we can have your loading assessed.
Lifetime Health Cover Loading with Frank
There’s nothing we can do about Lifetime Health Cover Loading – other than encourage you to get hospital cover before 1 July after you turn 31 – but we can make hospital cover as affordable as possible.
Aged-based discount if you're under 30
If you’re aged 18-29, you could receive a discount on your hospital cover with Frank with an age-based discount.
The age-based discount is a premium reduction of between 2%-10%, with the percentage amount based on your age when you first purchased hospital cover. The maximum amount of 10% is only for people aged 18-25, the discount reduces by 2% each year until you reach 0 at age 30. The percentage discount is locked in when you join and will hang around until you’re 41, provided you stay on an eligible hospital cover. Then each year after turning 41, the discount reduces by 2% each year until it reaches 0. The age-based discount only applies to hospital cover and not extras.
Cheap Health Insurance
At Frank, we do everything possible to lower premiums. As a not-for-profit health insurer, our premiums go to benefit members – not shareholders.
Great service on standby
You can chat to a Frank team member, Monday - Friday, or manage everything through our app or member area.
Member Perks
With just hospital cover you’ll have access to AHSA Gap Cover. But if you opt for combined cover (hospital and extras), you can also receive smile.com.au dental benefits, optical discounts and telehealth.
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Frank is a part of GMHBA, a not-for-profit health fund celebrating over 90 years of supporting its members.
Browse our hospital cover
Any level of Frank hospital cover will exempt you from Lifetime Health Cover Loading if you take it out and keep it from aged 31 onwards.
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Lifetime Health Cover loading for couples and families
For couples and families LHC is calculated as an average between the individual loading of the two adults.
For example
Cindy (37) and Chris (41) take out a new couples hospital policy with Frank. Chris has never held hospital cover before, but Cindy has been covered since she was 29. Chris’s LHC will be 22% (that’s 2% per year for 11 years over 30). Cindy’s LHC is zero. The loading on their new couples policy will be 11%: the average of 22% and 0%.
Lifetime Health Cover Loading FAQ
What is Lifetime Health Cover Loading?
Lifetime Health Cover Loading (or LHC) is an age-based government penalty on your hospital cover premiums. It’s designed to encourage young people to take out and keep hospital cover before they turn 31.
Where did LHC come from?
Lifetime Health Cover Loading was introduced by the Australian government in July 2000. It applies to all Medicare card holders and private health funds in Australia (minus a few exemptions, learn more).
Do I have to pay LHC?
If you don’t take out hospital cover before 1 July following your 31st birthday, you will have to pay LHC on any subsequent hospital cover. This loading is 2% for every year over 30 you don’t have hospital cover or if you have hospital cover and cancel it for more than 1094 days (and you’re over 30). So if you’re 37 and just getting hospital cover for the first time, you’ll pay 14% more on your premiums.
How can I avoid Lifetime Health Cover Loading?
Simply take out any level of hospital cover before 1 July following your 31st birthday and keep it. The idea is that you keep your hospital cover forever to avoid LHC, but you can actually have a break in cover of no more than a total of 1094 days – over the course of your lifetime.
Frank’s cheapest eligible cover is Accident Boost (Basic). Just be aware, extras-only private insurance cover won’t exempt you from LHC. You need either hospital cover or a combination of hospital and extras.
What is my LHC base day?
Your LHC ‘base day’ is the day you become eligible to incur Lifetime Health Cover loading. For most people, this will be 1 July following their 31st birthday. It’s important to know your base day, as that’s when eligibility is officially calculated. Example: say you turn 31 in January, and you already have hospital cover. But then you cancel it before 1 July. In this scenario, you will still incur LHC, since you weren’t actually covered on your base day.
Do I have to pay LHC forever?
No. LHC loading lasts 10 years. If you’ve paid LHC for 10 continuous years, it no longer applies. Note you might still have to pay LHC in the future, if you have a period without hospital cover, even if you’ve already paid it for 10 years. It all comes back to how long you didn’t have cover for and when you get hospital cover again.
You’ll still need to keep your hospital cover to avoid LHC again in the future.
What happens if there’s a gap in my cover after 31?
Don’t worry! We get that you might need to drop your hospital cover for a period of time. LHC loading allows for a total of 1094 days of absence before your LHC loading is affected.
What if I suspend my membership?
Periods of suspension, approved by the health fund, will not affect your LHC. If you need to suspend your Frank membership, contact us to discuss your options.
How is LHC calculated for couples and families?
In the case of couples health cover and family health cover, LHC is simply averaged between you and your partner if you share a policy. So, for example, if you have to pay 14% LHC, but your partner pays 0%, the total loading on your couples policy will be 7%.
Does Lifetime Health Cover Loading apply to extras, too?
Nope, only to hospital cover. Extras aren’t affected by LHC.
Where can I get more info on LHC?
We get that this stuff can be a little intimidating. The good news is, there are plenty of great resources online. You can start with the Government’s LHC information page, or this fact sheet from the Ombudsman. There’s also a detailed Lifetime Health Cover Loading calculator that can help you work out your liabilities.
