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Don't be that one in five

One in Five

One in five young people don’t know that they could be heading for a 10-year government penalty!

Are you that one in five? Or do you know someone that may be in this boat?

Thankfully, this cost can be avoided …

So what’s it all about?

It’s all due to a system called Lifetime Health Cover (LHC) – a government loading that hits anyone over the age of 31 with a penalty for not having private hospital cover before the cut-off date (which is June 30 after a person’s 31st birthday). The loading increases annually, potentially adding up to thousands of extra dollars paid for private hospital cover. The government introduced LHC to encourage people to take out private hospital cover early in life, and keep it …

And that’s just the start of it!

By not taking out hospital cover by the cut off date, the loading increases a further 2 per cent for every year over 31 that a person doesn’t have private hospital cover. Scarily, more than one million Australians are paying a LHC loading today.

LHC can add up and up and up

‘Hospital insurance isn’t on the radar – or in the budget – of a lot of younger people. If they do think about it, they think they can wait until they’re ready to start a family or until they’re older and more likely to want private cover. But what many people don’t realise is that by then, the LHC loading has really added up,’ says rt health fund Chief Operating Officer, Simone Tregeagle.

‘If you leave it until you’re 40, you’ll be paying 20 per cent more for your health cover every year for 10 years until the loading drops off. And that easily adds up to thousands of dollars over a ten-year period!’

Read all about it!

Each year the government writes to everyone turning 31 who doesn’t have hospital cover to tell them about the looming LHC Large loading. But the statistics show that awareness of LHC is pretty low. And it’s not just the thirty-somethings that are affected.

One in Five

A lapse of judgment could cost you dear!

Simone Tregeagle adds, ‘There’s a fairly low level of awareness among older people who have private hospital cover that if they let their cover lapse for a period of time, they may face a substantial LHC loading when they choose to re-join. So getting hospital cover and staying with it really is worthwhile.’

New Australians

The government also wants people who have recently moved to Australia to take up hospital cover. So, if you – or someone you know – receives full Medicare benefits (i.e. holds either a green or blue Medicare card), LHC loading can be avoided by taking out private hospital cover. This needs to be taken out by 1 July following the person’s 31st birthday. If the person is over 31, hospital cover needs to be taken out before the first anniversary of the day they registered for full Medicare benefits in order to avoid the loading.

‘If full Medicare eligibility is kept for a year without taking out private hospital cover, the government will charge a 2 per cent loading for every year that person is over 31. Scarily, if that person is 45 years of age and hasn’t taken out private hospital cover one year after Medicare eligibility kicks in, the loading would be a huge 30 per cent!’ explains rt’s Simone Tregeagle.

So what can you do to avoid being slapped?

Read, read, read …

  • Read the information that’s sent to you by the government
  • Get hospital cover by June 30 following your 31st birthday
  • If you’re older than 31, get hospital cover as soon as you can to reduce your LHC loading
  • Be aware of the consequences if you have hospital cover and choose to drop it after the age of 31
  • If you’re new to Australia, or know someone who is, and they’re 31 or older, give them a heads up and get them to take out health cover to save excess payments
  • Call us – our team can explain the details in plain English. And you can relax and speak for as long as you need – you won’t be hurried off the phone. Rest assure that you can take as long as you need to make the right decisions for you.

To find out more, call us on 1300 56 46 46 or visit www.rthealthfund.com.au/lhc.

Simone Tregeagle
Simone Tregeagle, Chief Operating Officer at rt health fund.

This blog was posted in LHC and tagged in government, private hospital cover, rt health fund

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