Why should you get health insurance before July 1?

If you turned 30 in the past year, the date July 1 should be circled in red on your calendar.

Signing up for health insurance before this date could save you money as you avoid paying the Lifetime Health Cover loading on top of your premiums.

What is lifetime health cover loading?

Essentially, this is a government initiative designed to encourage more people to take out hospital insurance earlier in life.

Hospital cover will enable you to be treated as a private patient in either a private or public hospital. You will be able to choose your own doctor and have more choice about when you want to be admitted to hospital for elective surgery. 

If you do not have hospital cover loaded onto your health insurance by the time you are 30, it will cost you an extra 2 per cent loading on top of your policy for every year you are aged over 30.

However, you have until July 1 after your 31st birthday to organise this cover without being penalised, so if you have had a birthday recently, now is the perfect time to get this organised!

Why is it worth getting coverage early?

Simple maths will explain just why it is essential to get covered early to avoid extra expenses.

For example, leaving this until your 40th birthday will result in you paying an additional 20 per cent more than you would have if you took this cover on at the age of 30.

While the maximum loading is 70 per cent, it is still best to avoid this extra cost if possible. 

Health insurance will also provide you with peace of mind that you have more choices and control over any medical procedures that may be required. 

Are there any exceptions?

Within your lifetime you are permitted to have some gaps in cover without being penalised.

For instance, small gaps that may occur when you switch from one fund to another are allowed.

In order to still be eligible for the exemption, you can have up to 1,094 days without cover within your lifetime. 

However, if you use up this days of absence and have a total gap period that exceeds 1,095 days then you will need to pay an additional 2 per cent loading fee when you rejoin. This will increase by a further 2 per cent for every subsequent year you are without cover. 

If you go overseas for at least one continuous year and cancel your coverage, this will not count towards the 1,094 days. 

A suspension of membership will not affect your LHC loading if you have applied for it and your fund has agreed. In essence, it will be considered as maintaining your cover.

Posted by Richard West.