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If you’re a 20-something then private health insurance is probably at the bottom of your life admin list but once you turn 30 it’s something to seriously consider because not having it can cost you money.
If you don’t have an appropriate level of hospital cover by July 1 after you turn 31, and decide to take it out later, you’ll be subject to Lifetime Health Cover loading (LHC) – a government penalty that means you have to pay an extra 2 per cent on top of your premium for every year you don’t hold a policy.
In other words, the longer you leave investing in private health insurance, the more it will cost you as Jessie Petterd, spokesperon at comparison site iSelect, explains.
“If you wait until you’re 35 to take out private hospital cover, you could pay an extra 10 per cent on top of your premium. If you wait until you’re 40, you could face paying up to 20 per cent more, if you wait until you’re 45, it’s an additional 30 per cent and so on up to a maximum loading of 70 per cent,” she says.
Seem like a long time away? With Australians’ basic needs covered by Medicare, the urgency to pay for something we don’t necessarily need sometimes just isn’t there — however — have you seen current hospital waiting times?
More than 95,000 people are currently on the public elective surgery waiting list in New South Wales, 20,000 are on the list in South Australia and Victoria’s backlog is expected to take up to two years to resolve.
According to Bupa’s Managing Director of Health Insurance, Ms Emily Amos, the wait time for elective surgery in the private system is minimal by comparison.
“We are seeing private hospitals working hard to clear elective surgery backlogs with wait periods now at pre-COVID levels,” she said.
“Exact wait periods vary between states and hospitals and depend on availability of the doctor, but generally speaking a private patient will have immediate access to treatment or wait only a matter of weeks at most.”
If you decide not to purchase private health insurance and an unexpected health crisis does arise, not only will you have to wait it out in the public system, you’ll also miss out on handy perks like private hospital rooms, cheaper optometrist visits, remedial massages and even money to cover dentist appointments.
FAQS: Lifetime Health Cover loading
What happens if I don’t get health insurance when I turn 31?
If you don’t hold private health insurance hospital cover by July 1 after you turn 31, and decide to take out hospital cover later, you’ll pay an extra 2 per cent on top of your private hospital premium for each year you don’t have it (up to a maximum of 70 per cent).
What is Lifetime Health Cover loading?
Lifetime Health Cover loading (LHC) applies to anyone who doesn’t take out private health insurance with at least hospital cover after they turn 30. Once you turn 31, a 2 per cent LHC loading is added to your hospital cover premium for every year you’re without hospital cover.
How long do you have to pay lifetime health cover loading?
LHC loading applies for 10 years, after that time – as long as you maintain cover – premiums go back to normal.
What is the maximum lifetime health cover loading?
The maximum LHC loading that anyone can pay is 70 per cent, although loading does stop after 10 years of continuous hospital cover.
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