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Why do I need to get health insurance if I'm 31?

3 minute read

If you've hit your 31st birthday, you may be wondering why everyone from your mum to your accountant might be speaking to you about taking out private health insurance. Well, it's all to do with the Federal Government's Lifetime Health Cover (LHC) loading. The LHC loading was put in place to encourage Australians to take out private hospital cover earlier in life and maintain their cover.

How does the Lifetime Health Cover loading work?

Although private health insurance is optional, if you don't have an appropriate level of Hospital cover by July 1 after you turn 31, and decide to take out Hospital cover later, you'll pay an extra 2% on top of your private hospital premium for each year you put it off. 2% doesn't sound like much but, doing the math, if you wait until you're 40 to get hospital cover, you'll have to pay 20% more than someone on the same cover who first joined when they were 31.

And what makes it worse is that you'll be stuck with your loading for 10 years, even if you change health insurers.

Credit: nib health insurance

Special circumstances or exemptions may apply in some cases and you should check this carefully. For example, if you've recently turned 31 while travelling overseas, you may have a little extra time up your sleeve to take out private Hospital cover without incurring the LHC loading; 12 months from the day you landed back home is the general rule.

Read up on more Lifetime Health Cover loading information or visit the government's privatehealth.gov.au website.

Do I need Hospital cover, Extras cover or both?

Before you decide whether you need Hospital, Extras or a combined cover, it’s important to know the difference.

Hospital cover provides benefits for your hospital stay as an inpatient, covering accommodation and patient meals, surgery fees, prostheses, nursing care, medical supplies, and prescription medication during your hospital stay1. All nib hospital covers include nib Emergency Ambulance Cover2 which means you’ll be covered for emergency ambulance transportation in most circumstances. Keen to find out more? Head to our page What’s covered by hospital insurance?

If you’re purchasing health insurance to avoid the LHC, you’ll need to take out a policy that includes Hospital cover.

You also have the option of choosing an Extras cover that can provide you with benefits for things that help keep you feeling your best, whether it’s dental, optical, occupational therapy, physio, chiro, or osteo. For more information, check out our article Taking the confusion out of Extras cover.

A combined cover simply means a cover that includes both Hospital and Extras.

Related: Why do I need private health insurance?

Do I get any discounts for taking out health cover while I’m young?

If you’re under 30, the answer is yes. As part of the Government-initiated reforms in 2019, nib members aged between 18-29 receive discounts of up to 10% off their private hospital insurance premium. This is called an age-based discount.

This reform means that eligible members receive a 2% discount for every year they’re aged less than 30 up to a maximum of 10% for those aged 18-25. And the best part is, if they remain on an age-based discount policy, they’ll retain that discounted rate until they turn 41, where it will then be gradually phased out at a rate of 2% per year.

For more information on the age-based discount, head to our page Discounts for people under 30.

I earn over $90k. How does my income affect my decision to get health insurance?

If you earn more than $90k or part of a family earning more than $180k, you could be paying an extra 1-1.5% of your taxable income to the ATO if you don’t have private Hospital insurance for the full financial year. That’s because of the government’s Medicare Levy Surcharge (MLS). This surcharge aims to encourage Aussies to take out private Hospital cover, therefore reducing the load on the public Medicare system.

Visit the Australian Tax Office website for specific rules for calculating income for MLS purposes.

So, if you are under 31 and have a higher income, there’s even more reason to sign up for private hospital cover. For more information on the MLS, check out our article, Do I have to pay the Medicare Levy Surcharge at tax time?

1Subject to your chosen level of cover. Policy exclusions, waiting periods and other T&Cs apply. 2Not available to: (i) QLD residents who have ambulance services provided by their State ambulance schemes; (ii) TAS residents who are covered under state ambulance schemes in TAS and when travelling in mainland Australia except NSW, SA or QLD; or (iii) pension and health care card holders who have ambulance services provided by State ambulance schemes (check entitlements with Centrelink if unsure).

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