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Australians are known for their love of travel and many of us are always thinking about our next trip. Of course, one of the biggest deciding factors in what kind of holiday you’re going to have is the budget, so anything that helps your dollar stretch a little further always helps. 

Appropriate travel insurance will cover you while you’re on holiday, and your health insurance is likely to only cover you while you’re at home, so it makes sense to pause your policy – if you can. Many health insurers will offer this option, and it could save you several hundred dollars, but there are some things you should know before you decide to pause. 

Why should you consider pausing health insurance?

Pausing your health insurance, also known as suspending your policy, can be a smart financial decision if you're planning to be out of the country for a long time. Taking out an appropriate travel insurance policy* will cover any medical emergencies during this time. It can potentially save you hundreds of dollars in health insurance premiums for cover you can’t use during this period.

The benefits of pausing your health insurance include:

Cost savings

By suspending your policy, you won't have to pay your regular premiums while you're not in the country. This can amount to significant savings, especially if you're planning to be away for several months.

Maintaining your waiting periods

When you pause your policy, your membership status is effectively frozen. This means that any waiting periods you've served will likely not be reset when you reactivate your policy. 

This is particularly important if you've completed waiting periods for services like major dental or certain surgeries. 

Avoiding additional Lifetime Health Cover (LHC) loading

If you pause your health cover rather than cancelling it, you won’t incur additional LHC loading if you go without hospital cover for more than 1,094 days. (The LHC loading increases your premiums if you take out health insurance after the age of 31).

If you currently have a loading and you pause your health insurance, the 10 years you're required to hold hospital cover to remove loading will also be paused. It will resume once the policy is reactivated.

No changes in your policy

The cover you currently have will be tailored to your situation. By pausing it, rather than cancelling it, you save yourself the hassle of having to find another insurer or secure another policy. It protects you from having to reserve waiting periods for services you had prior to leaving the country.  

Are there any special considerations before pausing health insurance?

It’s important to note that once you pause your insurance, you will not be covered. This may seem like an obvious point, but it means you need to ensure your travel insurance and your health insurance are timed correctly. 

Be aware: if you arrive home and your travel insurance lapses before your health insurance begins again, you will not be covered for this period. 

If you’re currently serving a waiting period – and you pause your health insurance – your wait time will also be paused. The remaining wait period will continue once you resume your policy. 

Note: if you currently have Overseas Student, Visitor or Work Health Insurance, the rules may be different and you’ll need to check the terms and conditions of your policy.

Important tip: each insurer will have different policies, some only allow you to pause your cover a certain number of times a year, and some only for a certain amount of time. Make sure you know what your options are before you commit.

A suspended policy also doesn’t meet the requirements for the Medicare Levy Surcharge. If your income puts you above the threshold, you will be required to pay the surcharge while your policy is suspended. The thresholds from 1 July 2024 are $97,000 for singles and $194,000 for families or couples (increasing by $1,500 for each dependent child after the first).

You should consider this cost when working out how much you can save by suspending your health insurance. 

How do you pause health insurance?

Pausing your health insurance is generally a straightforward process, but always take into consideration the specific terms and conditions of your policy:

Check eligibility: typically, you must have held your policy for a certain period (eg 12 months) before you can suspend it and your insurer may have specific requirements you have to meet before you can suspend.

Determine the suspension period: most insurers will allow you to suspend your policy for a minimum of two months and a maximum of 24 months, though this can vary. Plan your suspension period according to your travel plans and your insurer's rules to make sure you are covered at all times. 

Notify your insurer: contact your health insurance provider to inform them of your intention to suspend your policy. They may require proof of travel, such as a copy of your flight itinerary or visa, and a copy of your passport. 

Upfront payment: you will need to be up-to-date with your payments. Most insurers will require you to make an upfront payment of one month before pausing the policy. 

Understand the reinstatement process: when you're ready to reinstate your policy, you'll need to notify your insurer before your return to Australia. Your cover will usually resume immediately, but it's best to confirm the details with your insurer before you leave. 

Bottom line

Pausing your health insurance while you’re on a long trip can be a clever way to save money and keep your cover intact for when you return to Australia. However, it's crucial to fully understand the terms of your suspension and ensure you have adequate cover via travel insurance for your time abroad.

With a bit of planning, you can enjoy your travels without the worry of unnecessary expenses or loss of benefits.

Safe travels!

Go deeper:

• Insider’s guide: how to get the most value back from your health insurance extras

• What does good travel insurance look like and why do you need it?

* Not all travel insurance policies cover all emergencies. You may need to pay additional costs if you wish to have any pre-existing conditions covered while overseas.

Disclaimer: 

Any health or financial advice is general in nature and does not take into consideration your circumstances. Always check with a financial or health professional before making any decisions.