Private health insurance in Australia: LHC loading and what you need to know
How does private health insurance differ from Medicare?
Medicare is Australia’s universal public health system — it covers GP visits (often bulk billed at no cost), public hospital treatment, and a portion of specialist and pathology fees. It is funded through the 2% Medicare Levy included in your income tax.
Private health insurance is an optional supplement that provides:
- Hospital cover: treatment in a private hospital with your choice of doctor, a private room, and reduced waiting times for elective procedures.
- Extras (ancillary) cover: services not covered by Medicare — dental, optical (glasses/contact lenses), physiotherapy, psychology (beyond Better Access), chiropractic, and more.
Should you get private health insurance?
| Situation | Consideration |
|---|---|
| Under 30, low income, healthy | Medicare is usually sufficient; a basic hospital policy prevents LHC loading |
| Over 31, income above $93,000 | Hospital cover avoids the Medicare Levy Surcharge |
| Family with children, regular dental/optical needs | Extras cover is often cost-effective |
| Need elective surgery without a long public wait | Hospital cover provides shorter queues |
Lifetime Health Cover (LHC) loading
LHC is a financial incentive designed to encourage people to take out hospital cover early in life:
- If you do not have hospital cover on the 1 July after your 31st birthday, you pay a 2% loading on top of your hospital premium for every year you were uninsured after age 31.
- The maximum loading is 70% (35 years without cover).
- The loading is removed after you hold hospital cover continuously for 10 years.
Example: If you first take out hospital cover at age 41 (10 years after the cut-off), your premium is 20% higher than the base rate. On a $1,200/year base premium, you pay $1,440/year.
New permanent residents/citizens: if you immigrate to Australia, you have 365 days from the date you become a PR or citizen to take out hospital cover without any LHC loading. Missing this window means loading accrues retrospectively from age 31.
Medicare Levy Surcharge (MLS)
If you do not hold qualifying hospital cover and your income exceeds the threshold, you pay an additional surcharge on top of the standard 2% Medicare Levy:
| Income (single) | MLS rate |
|---|---|
| $93,000–$108,000 | +1.0% |
| $108,001–$144,000 | +1.25% |
| Above $144,000 | +1.5% |
Higher thresholds apply for families. In many cases, the cost of a basic hospital policy is lower than the MLS you would otherwise pay.
Comparing and choosing a policy
The government-run comparison website privatehealth.gov.au is the most reliable starting point — impartial, with all registered funds listed.
Key things to compare:
- Premium (monthly or annual cost).
- Excess (the amount you pay per hospital admission, typically $250–$750 — choosing a higher excess lowers your premium).
- Waiting periods: new policies have waiting periods (2–12 months) before certain benefits are payable. Transferring between funds at the same level of cover typically carries over your waiting-period history.
- What is and isn’t covered: hospital tier (basic, bronze, silver, gold) determines which procedures are included.
All private health funds are regulated by APRA (Australian Prudential Regulation Authority), so there is no risk of a fund simply folding.