In Australia, there are a few government rules in place that are designed to encourage people to take out cover earlier in life. As a result, your age can have a big impact on how much you pay for private health insurance.
One of the most important government rules that affects your premiums is Lifetime Health Cover loading, but there are also discounts available for younger policyholders.
What is Lifetime Health Cover loading?
Lifetime Health Cover (LHC) is a government initiative that encourages people to take out hospital cover before they turn 31. If you wait until after your 31st birthday to take out hospital cover, you may have to pay a loading on your premium that can last up to ten years.
The loading adds 2% to your hospital premium for every year you delay, up to a maximum of 70%. For example, if you take out cover at age 35, you’ll pay 10% more than someone who started before 31.
This only applies to hospital cover, not extras, and it doesn’t apply if you were overseas on your 31st birthday or belong to certain eligible groups.
Are there benefits for younger members?
Yes. Many funds, including Members Health Funds, offer age-based discounts to people aged 18 to 29 who take out hospital cover. These discounts can be as high as 10% and can remain in place until the person turns 41, as long as they maintain their policy.
This system helps make private health insurance more affordable for young adults starting out in life.
Choosing cover at the right time
Taking out hospital cover before you turn 31 can help you avoid future costs. If you’re under 30, there are also savings to be made. It’s worth weighing up your current health needs with the long-term financial benefits of getting in early.
(Link to: Types of policies and how to choose the right one)