Lifetime health cover loading - Bupa

Lifetime Health Cover

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What is lifetime health cover (LHC)? 

Lifetime health cover (LHC) is a Federal Government initiative that came into effect on 1 July 2000 to encourage Australians to take out private hospital cover. To avoid the LHC loading, you need to take out Hospital cover by 30 June following your 31st birthday. Otherwise, your health insurance premiums will increase by a 2% loading each year you delay joining to a maximum of 70%.

In order to benefit from LHC, you will need to take out Hospital cover as soon as possible to stop the loading from increasing. It will be frozen at the rate that matches your age on 1 July prior to the date you join (known as the Certified Age at Entry (CAE)). As long as you maintain your Hospital cover, your loading won't increase each year and after 10 years of continuous private hospital cover your lifetime health cover loading will be removed altogether.

Examples:

  1. Paul turned 31 on 7 June 2004. He purchased Hospital cover for the first time on 20 June 2004. On 1 July 2003, Paul's CAE was 30, so he does not pay a loading on his health fund premium.
  2. Kate turned 39 on 6 March 2004. She purchased Hospital cover for the first time on 10 June 2004. On 1 July 2003, Kate's CAE was 38. Her loading will be 16%, which is a 2% loading for each year she is aged over 30 before she purchased Hospital cover.

Here's how it works 

Under Lifetime Health Cover, any loading is based on your age on 1 July prior to taking out private hospital cover for the first time (this is referred to as your Lifetime Health Cover Age). If you take out cover after 1 July following your 31st birthday, you will pay a 2% loading on top of the standard premium for every year you delay taking out private health insurance over 30. The loading increases each year until it reaches 70% and once attracted will apply for 10 consecutive years. Check out the table below to see how you would be affected.

Your age on 1 July
prior to joining		 Lifetime Health Cover loading
30 0%
31 2%
32 4%
33 6%
34 8%
35 10%
36 12%
37 14%
38 16%
39 18%
40 20%
41 22%
42 24%
43 26%
44 28%
45 30%
46 32%
47 34%
48 36%
49 38%
50 40%
51 42%
52 44%
53 46%
54 48%
55 50%
56 52%
57 54%
58 56%
59 58%
60 60%
61 62%
62 64%
63 66%
64 68%
65 70% maximum

How is the loading applied? 

If you have a loading, you will be required to pay this on top of the 'base rate' premium, or standard premium payable for your hospital cover. The Lifetime Health Cover loading does not apply to Extras cover premiums.

How long will I have to pay the loading for? 

Any loading you pay due to Lifetime Health Cover ceases after 10 years of continuous hospital cover.

How to minimise the loading 

  1. If you are under 31, take out hospital cover before 1 July following your 31st birthday and maintain your cover from that point onward. Don’t worry if there are short "gaps" in your cover – for example, if you switch health funds – but make sure those gaps don’t add up to 1,094 days (3 years less a day) or else the loading will apply.
  2. Or, if you are over 31, take out hospital cover as soon as possible to minimise the loading you will pay. Each year you delay, your loading will increase by 2%, up to a maximum of 70%.

Where the loading doesn't apply 

There are some situations where you won't have to pay the loading. These include if you:

  • Had Hospital cover on 1 July 2000 and have maintained it since then; or
  • Were born on or before 1 July 1934.

Lifetime Health Cover does not apply to Overseas visitors cover or to Extras cover.

Also, once you've had private hospital cover with the loading for 10 consecutive years, the loading will be removed and you won't have to pay the loading any longer as long as you maintain your cover.

Why Lifetime Health Cover? 

The Lifetime Health Cover initiative was introduced by the Government on 1 July 2000.

Lifetime Health Cover is designed to encourage people to take out private health insurance earlier in life, and to maintain their cover. People who join early in life will pay lower health insurance premiums relative to people who join later. For example, someone joining before the age of 30 will pay lower health insurance premiums throughout their years of membership, because they will not have a loading applied, compared with someone who joins for the first time at 50 years of age who will incur a loading.

Can I change my level of health cover under Lifetime Health Cover? 

Yes. You can still upgrade or downgrade your Hospital and Extras covers under Lifetime Health Cover. The usual waiting periods and applicable pre-existing condition rules will still apply.

However, because Lifetime Health Cover only applies to Hospital cover, if you decide to drop your Hospital cover and only maintain your Extras cover, your Lifetime Health Cover Age may be affected.

What happens to the Federal Government Rebate on private health insurance under Lifetime Health Cover? 

If you are eligible for the Government Rebate, this will apply to the whole private insurance premium, including any applicable Lifetime Health Cover loadings on top of the base rate premium.

What circumstances can affect continuous cover? 

Under Lifetime Health Cover you are entitled to a total of 1,094 days without holding hospital cover before you have to pay any additional loading, these are known as "permitted days without hospital cover". For every 365 days without hospital cover after that, your loading will increase by 2%. Permitted days without Hospital cover do not count towards your days with continuous cover and at the same time they do not interrupt the continuous period of 10 years.

Does Lifetime Health Cover affect premiums for Extras cover and Ambulance cover? 

Lifetime Health Cover does not apply to Extras cover and Ambulance Only cover. It only applies to Hospital cover.

What happens if someone is unemployed, goes overseas or simply chooses to drop out for a while? 

The Government recognises that there are going to be times when people need to drop their Hospital cover. For example, if you are travelling overseas for extended periods of time, or in the case of unemployment. To cater for this, people can drop their Hospital cover for up to 1,094 days in total throughout their lifetime, without having to pay an additional Lifetime Health Cover loading when they are ready to take out Hospital cover again. You should note that certain days do not get included in the calculation of these permitted days, such as days spent overseas provided they are part of a continuous period spent overseas for more than one year.

How does Lifetime Health Cover affect people if they wish to switch between private health funds? 

Under Lifetime Health Cover, people are still able to transfer their private health insurance cover between health funds as they always have. All health funds are obliged to recognise the Lifetime Health Cover Age of any new contributor transferring from another fund. Any days that have been accumulated as permitted days without Hospital cover will also transfer across to your new insurer. Remember if you have a break between switching from your old fund to your new these may be permitted days without Hospital cover and will be included in your total of 1,094 days allowed before an additional loading is added to your private health cover.

What Bupa hospital cover options allow me to lock in my Certified Age of Entry (CAE)? 

All Bupa Hospital cover options, except any Overseas visitors cover will enable you to lock in your CAE.

Can I lock in my Certified Age of Entry if I only take out Bupa Extras cover? 

No. To lock in your Certified Age of Entry you need to hold Hospital cover.

What if my Hospital cover lapses? 

If you've locked in your CAE (certified age of entry), you can have a lifetime total of 1,094 cumulative days (less than three years) without Hospital cover before the loading will be applied or increased.

Days without Hospital cover that don't count towards your 1,094 days include when you:

  • validly suspended your membership in accordance with Fund rules, or
  • are overseas (including Norfolk Island) for a continuous period of more than one year and have not returned to Australia for a period of more than 90 days.

Can I suspend my health fund membership to avoid LHC loading? 

Yes. Under certain circumstances you can suspend your health fund membership before travelling overseas without affecting your LHC loading. Call Bupa on 134 135 to check your situation.

Is anyone exempt from the LHC loading? 

Yes. Anyone born on or before 1 July 1934 has no LHC loading, except where their partner is born after 1 July 1934.

Other people may have different rules. For further details, visit the Australian Government Department of Health and Ageing.

Lifetime Health Cover Terms Explained 

Term Explanation
Lifetime Health Cover Age Your age on the 1 July before the day on which you take out private hospital cover.
Base rate The 'base rate' for private hospital cover is the standard premium payable for the cover if no loading applies.
Loading The 'loading' will be 2% per year, representing the adjustment to the base rate for each year by which the Lifetime Health Cover Age is above 30. For example, if you join at age 40, you will pay up to an additional 20% on the base rate premium.
Maximum loading The maximum loading allowed on top of the base rate is 70%. This translates to the maximum loading for a Lifetime Health Cover Age of 65 and above. However, once you have held private health insurance hospital cover for a continuous period of 10 years your loading will be removed.