Is it ever too late to get health insurance?

Updated 11/01/2023
Is it ever too late to get health insurance?

Avoid the loading penalty and get health insurance early.

Time to read : 4 Minutes

Is It Ever Too Late To Get Health Insurance?

If you’re young, fit and healthy, and you’ve never had private health cover before, you probably feel invincible.

But the cost of not having private health insurance can be eye-watering – especially if you suddenly fall ill or get injured and need an expensive procedure.

🤕 While more than half of Australians already have private health insurance, there are millions out there who will be staring down the barrel of expensive loading fees when they finally decide to take out hospital cover.

  • If you don’t get private patient cover before you turn 31, you’ll end up paying an extra 2% in loading every year on top of your premiums.

  • Waiting until you’re 40 to get private cover? Expect to pay 20% in LHC loading.

  • While LHC loading doesn’t affect extras-only cover, you’ll still be liable to pay it if you decide to take out hospital cover later in life.

  • Even if you are young and healthy, getting private health insurance today could save your future self a serious amount of money down the track.

What is lifetime health cover (LHC) loading?

The federal government introduced lifetime health cover way back in 2000 as a way to encourage Australians to take out – and maintain – private hospital cover from a young age.

It’s an incentive to get on top of your health insurance early so that you don’t pay the price (both physically and financially) when you are older.

Here’s the long and short of it:

👶 As long as you take out private hospital cover before you turn 31, you won’t be liable to pay LHC loading.

🎂 If you only take out private cover from the year you turn 31, you’ll have to pay 2% on top of your premiums for every year you are aged over 30.

🧮 Especially if you wait until middle age or older to get covered, that can really add up. If you get private patient cover aged 40, you’ll pay an extra 20% loading on top of your premiums!

🕰️ It’s not just a one-off payment either. You’ll have to pay LHC loading for 10 years before you can escape the penalty.

💰The longer you wait, the worse it gets – the maximum LHC loading that can be applied is a whopping 70%!

Be aware: The government will not pay the private health insurance rebate on the LHC loading component of your policy. So even though you may be eligible for a rebate on your regular premiums, you’ll always have to cover the cost of loading yourself.

How long does LHC loading apply?

The good news is that after a 10-year period of paying LHC loading, you won’t have to fork out the extra cash on top of your existing health premiums.

🤓 But remember this is only the case if you maintain your private cover for the entire decade.

  • The LHC loading only affects the premiums you pay on your hospital cover,

    not extras.

  • But just because you take out an extras-only policy, you’ll still have to pay loading

    if you decide to get hospital cover at a later stage – no one can escape it!

  • You might be able to save money by switching to a more cost-effective policy, but LHC loading will follow you for at least 10 years – even across different providers.

  • For couples and family cover, the amount of LHC loading you are required to pay is calculated as an average between the two adults on the policy. So if you have 40% loading and your partner only has 10%, the couples or family policy will have 25% loading.

Four reasons you should take out private hospital cover ASAP

1. Ambulance cover Ambulance call-out fees vary by state, but the amount is pretty high no matter where you live. In NSW, the maximum charge is almost $6,800! Getting private cover that includes an ambulance policy can save you big when you need it most.

2. Starting a family While the public system is always available, having private health insurance that includes pregnancy and obstetric services can give you greater peace of mind when starting a family – you can choose your obstetrician, stay at a private hospital and get cover for a wide range of relevant services. Check out what Gold-tier health insurance can provide.

3. Cover for exactly what you need Different cover will suit your needs at different life stages. So if you’re young, healthy and don’t need too much cover, you can get a Bronze or Basic policy to avoid paying LHC loading after you turn 31. Then you can upgrade to a higher policy when you need it.

4. Less loading If you wait too long to get private patient cover, you’ll end up paying through the nose in loading penalties. By spending just a few minutes comparing funds today you can find a cost-effective policy and pay less in loading than if you waited another 12 months. Even if you only get the bare-minimum policy, you’ll be protecting your future self!

The bottom line

Even though our public health system is robust and helps millions of Australians every year, it won’t cover you for everything.

Without private health cover, you could be left severely out of pocket – not just from a necessary procedure, but from the cost of LHC loading when you finally do decide to take out private health insurance.

🛒 So stop waiting around and start searching for your ideal health cover.

Read more:

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The information contained on this web page is of general nature only and has been prepared without taking into consideration your objectives, needs and financial situation. You should check with a financial professional before making any decisions. Any opinions expressed within an article are those of the author and do not specifically reflect the views of Compare Club Australia Pty Ltd.