Lifetime Health Cover Loading Explained: How LHC Works

Lifetime Health Cover (LHC) loading is an extra charge of 2% on your hospital premium for every year you are over 30 when you first take out private hospital cover, up to a maximum of 70%. You avoid it completely by holding hospital cover by your LHC base day, which for most people is the 1 July after their 31st birthday, and keeping it. If you do pay a loading, it is removed after 10 continuous years of cover.

Those are the headline rules. The details that change the number are the date the loading is measured on, the 1,094 days you’re allowed without cover, the later base day for migrants and Australians overseas, and how the loading is shared on a couples policy. To see your own figure, use the Lifetime Health Cover loading calculator.

What LHC is for

LHC began on 1 July 2000. Australian health funds can’t set your premium by your age or health. That only works if younger, healthier people join and pay premiums while they claim relatively little. LHC gives them a reason to join early. It is one of three Government settings that point the same way, alongside the Medicare Levy Surcharge for higher earners without hospital cover and the private health insurance rebate.

LHC applies only to hospital cover from an Australian registered insurer. Extras (general treatment) cover carries no loading, and overseas visitors cover, overseas student cover and foreign insurance don’t count as hospital cover for LHC.

Your LHC base day

Your base day is the deadline for taking out hospital cover without a loading. For most people it is the later of:

• the 1 July following your 31st birthday, or
• 1 July 2000, when LHC began.

So if you turn 31 on 20 February 2027, your base day is 1 July 2027. You need hospital cover in place on that day. Holding it earlier and dropping it before the base day doesn’t help: in the Government’s example, Chloe turned 31 in January 2019 and had cover on her birthday, but cancelled it in March. When she took out a new policy that September, she paid a 2% loading, because she had no cover on her base day of 1 July 2019.

How the loading is calculated

If you take out hospital cover after your base day, the loading is:

2% × (your age on the 1 July before you join − 30), capped at 70%.

The age that counts is your age on the 1 July at the start of the financial year in which you join, not your age on the day. The Government’s example: Shona turned 40 in April 2019 and took out cover for the first time in May 2019. On 1 July 2018 she was 39, so her loading is 9 × 2% = 18%. Her friend Rajeev, the same age, had held cover since March 2009 and pays nothing.

Age on the 1 July before joining	Loading
31	2%
33	6%
35	10%
38	16%
40	20%
45	30%
50	40%
60	60%
65 or older	70% (maximum)

The practical consequence: every 1 July you wait adds another 2%. If you’re weighing up cover in May or June, joining before 1 July locks in the lower figure.

What the loading costs

The loading applies to the hospital part of your premium only. And since 1 July 2013, the private health insurance rebate isn’t paid on the loading component, so the loading is felt in full. On a couples or family policy the loading is the average of the adults’ loadings, which is covered below.

The 1,094-day rule: gaps in cover

Once you have held hospital cover on or after your base day, you can be without it for a total of 1,094 days over your lifetime (three years less a day) without your loading going up. The Government calls these “Days of Absence”. They are meant for things like switching insurers, a period out of work or a short break.

Two kinds of time don’t count towards the 1,094 days:

• An approved suspension. If your insurer agrees to suspend your hospital cover (for example, while you travel), that period isn’t counted. Each fund sets its own suspension rules.
• Living overseas. If you cancel your cover after your base day to go overseas for at least a year, the days you spend outside Australia aren’t counted. You can come home for visits of up to 90 consecutive days and still be treated as overseas; any stay of 90 days or more is deducted from your allowance.

Using up the allowance is what triggers a loading. With 1,095 or more days without cover, you pay 2% on top of any loading you already had, plus 2% for each further year (including a part year) without cover. Examples from the Government’s LHC page:

• Marit took out cover at 32 with a 4% loading, cancelled it, and rejoined after 1,069 days. She kept her 4%: she was still inside the 1,094 days.
• Wei held cover from 2001 with no loading, cancelled it to work in Canada, came back and rejoined after 1,114 Days of Absence. He paid 2%.
• Haruki was overseas on 1 July 2000 and aged over 31, so he was treated as holding cover on his base day. After returning permanently in 2012 he had until 6 September 2015 to take out cover. He joined in December 2018 and paid 8%: four years or part years beyond the allowance.

The 1,094 days are a lifetime limit. They don’t reset when you rejoin, and they only protect your loading. A break in cover can still mean re-serving waiting periods.

Removal after 10 years

The loading is removed once you have held hospital cover and paid the loading for 10 continuous years. After that it stays at 0% for as long as you keep your cover.

Permitted breaks within the 1,094 days pause the 10-year clock rather than restart it, but they don’t count towards the 10 years either. Kaia took out cover in November 2005 with a 6% loading. She cancelled it in January 2015 (after about nine years and two months) to live overseas, came back permanently in January 2017, and rejoined in March 2017. She paid the 6% for another 297 days, and it came off in January 2018.

If you use up your 1,094 days, the continuity is broken. When you rejoin you pay your old loading plus the extra that has accrued, and the 10 years start again from the day you rejoin. And if you cancel after your loading has been removed, a new loading can apply when you take out cover again.

Couples and families

On a couple or family policy, the loading is the average of the individual loadings of the adults on the policy. In the Government’s example, Lukas is 41 and has never held hospital cover, so his individual loading is 22%. Noor has held cover since she was 28, so hers is 0%. On a couples policy they pay 11%.

A dependant with a disability is subject to the normal rules and counts as one of the adults for the average. Lucy joined her parents’ family policy at 33 with an individual loading of 6%. Averaged across the three adults on the policy, the family pays 2%.

If you separate and each take out a single policy, each of you carries your own individual loading.

New migrants

If you have migrated to Australia, your base day is the later of:

• the 1 July following your 31st birthday, or
• the first anniversary of your full Medicare registration.

In practice, most migrants over 30 have 12 months from registering for Medicare to take out hospital cover without a loading. “Full Medicare registration” means registering for full or interim Medicare benefits (usually a green or blue card). Reciprocal Medicare under an agreement with another country doesn’t count.

Miss that deadline and the loading is calculated from your age in the usual way. That can be a large number for someone who arrives later in life: the loading for a migrant who is 45 on the 1 July before joining is 30%.

There is an extra rule for migrants who registered with Medicare on or after 1 July 2009 and were overseas on their base day: you avoid the loading if you take out hospital cover within 12 months of first returning to Australia for 90 days or more.

To establish your base day, your insurer will usually ask for a letter from Medicare (Services Australia) showing your registration date.

Australians who were overseas on their base day

If you are an Australian citizen or permanent resident, your 31st birthday falls after 1 July 2000, and you were overseas on the 1 July after it, you don’t pay a loading as long as you take out hospital cover by the first anniversary of your return. Your “return” is your first stay in Australia of 90 days or more; shorter visits don’t count.

Phuong, born in April 1983, left for Ecuador in June 2014, just before her base day, and came back permanently on 25 June 2016. Her new base day was 25 June 2017. She bought cover in October 2018, after that date, so she paid 10%: she was 35.

Proof of your travel usually means an international movement record from the Department of Home Affairs.

Other special cases

• Born on or before 1 July 1934: exempt from LHC.
• Australian Defence Force members on continuous full-time service whose medical services are provided through the ADF are treated as holding hospital cover (their adult dependants too, if their services are also provided through the ADF). If you discharge after your base day, you have 1,094 days to take out cover without a loading.
• DVA Gold Card holders are treated as holding hospital cover. If the card is withdrawn, the 1,094 days start from that date. White and orange cards don’t count.
• Norfolk Island: since 1 July 2016, time on Norfolk Island counts as time in Australia.

LHC and the age-based discount

Since 1 April 2019, insurers can offer people aged 18 to 29 a discount of up to 10% on hospital premiums: 10% for those who were 18 to 25 when they joined, then 8%, 6%, 4% and 2% for ages 26 to 29. You keep the discount until you turn 41, after which it falls by 2% a year until it reaches zero. It isn’t available to young adults covered as dependants on a family policy, and not every fund offers it.

Put the two together and joining at 25 rather than 35 is the difference between up to a 10% discount and a 10% loading.

Should you take out cover just to avoid LHC?

Not automatically. A 2% loading on a modest premium is a small cost, and it disappears after 10 years. The loading matters more when:

• you are close to 31 and plan to take out hospital cover in the next few years anyway
• your income is over the MLS threshold, so you would pay a surcharge without cover
• you expect to want pregnancy, joint or other planned treatment later, where waiting periods also start from the day you join.

If you’re buying a policy mainly to avoid LHC and the surcharge, a Basic or Bronze policy with an excess inside the MLS limits does the job, but read what it pays for. Our hospital cover guide explains the tiers, and our health fund directory lists every registered insurer with its official complaints and benefits data. When you’re ready, you can compare health insurance.