Do I Need Private Health Insurance When I Turn 30?

The Lifetime Health Cover initiative is designed to encourage citizens to take responsibility for their ongoing health by obtaining hospital insurance earlier in their lives and maintain it as they grow older.

While holding a private health insurance policy is still completely optional in Australia, individuals who decline to purchase hospital cover by the 1st of July following their 31st birthdays will incur a penalty known as loading if they seek out coverage later in life, which adds a 2 percent premium to the cost of cover for each year beyond 30 up to a maximum of 70 percent.

Loading

The loading system works to reward individuals who take out policies early in life by offering preferable rates. For example, someone who takes out health cover at age 30 as recommended will pay 20 percent less than someone who waits until age 40 to take advantage of the Lifetime Health Cover initiative. However, even if loading is incurred, it is removed from the premium after it has been paid for 10 consecutive years.

Family policies calculate loading slightly differently. Policies covering couples and families calculate any required loading by determining the average value of the two adults’ loading penalty. For instance, if a husband has 40 percent loading and his wife 0 percent because she met the suggested guidelines at age 30, the aggregate loading of the family’s Lifetime Health Cover loading will be set at 20 percent for the next 10 years.

Exclusions

While avoiding loading penalties requires that cover be maintained on a consistent basis, there are some exceptions to this rule. One of these is a gap in cover exclusion, which is a provision designed to exclude small intervals while changing providers. An individual can be without cover for non-consecutive periods totaling 1,094 days (2 years, 364 days) without affecting loading levels. These days are known as “Days of Absence,” and if this limit is exceeded, a 2 percent loading charge will be assessed to the applicant upon their next coverage period and again for each year the coverage is lapsed without merit.

Another exception to the rule involves voluntary suspension of membership. If a policyholder is able to agree with the insurance provider to enact a short suspension in coverage due to temporary inability to pay, this period of suspension is not reflected in loading calculations. Overseas travel is also excluded from the calculation of Days of Absence if the insurance coverage is canceled in order for the policyholder to travel abroad for at least one calendar year.

While private health coverage is not required by law, it is certainly encouraged by legislation. It’s always wise to compare your health insurance options, to find the best fit for your own situation. The Lifetime Health Cover initiative is designed to provide a network of care to every citizen, and making use of it early can prevent paying much more for it when needed.

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