Turning 31? What you need to know about private health insurance

ARTICLE

1 September 2024

4 min read

Can getting private health insurance when you’re young save you money when you’re older? We break down what you need to know about private health insurance if you’re turning 31.

If you’ve recently blown out 30 candles, you might have heard people welcoming you into the ‘tricenarian’ club. You might also have heard people telling you that it’s a great time to consider getting private health insurance.

But why?

Here, we lay out the 101 of what to know about private health insurance – and why everyone’s talking to you about it – as your 31st birthday approaches.

Why should I consider private health insurance at 31?

Basically, it boils down to a government initiative called the Lifetime Health Cover (LHC) loading¹.

The Australian Government introduced the LHC loading back in 2000 to encourage young people to get private hospital cover early in life and keep it as they age.

Here’s how it works.

Once you turn 31, you have until the following 1 July to get private hospital cover. If you do, you’ll avoid paying the LHC loading (plus, of course, you’ll be covered for treatment in private hospitals and avoid long wait times for surgery).

If you get cover after you’re 31, you’ll pay the LHC loading. This is an extra 2% on top of your insurance premium for every year you haven’t had hospital cover. For example, if you get hospital cover at 40, you’ll pay 20% more than someone who got hospital cover at 30. After that, if you keep your hospital cover for 10 years, the LHC loading will be removed.

Is the Lifetime Health Cover loading the only extra charge I need to consider?

No. There’s also the Medicare Levy Surcharge (MLS)². Just like the LHC loading, the MLS encourages all Australian taxpayers, regardless of age, to get and maintain private hospital cover.

If you don’t have private hospital cover and are a single person earning more than $97,000 (or a couple with a combined salary of more than $194,000), you will have to pay the MLS. This extra surcharge starts at 1% and is added to your taxable income at tax time, on top of the 2% Medicare Levy (which most taxpayers pay).

As you head into your 30s and establish your financial wellbeing, it’s worth knowing when the MLS will apply so you can reduce your tax bill by having appropriate hospital cover (and make sure you’re still covered for any injuries or accidental trips to emergency).

What if my circumstances change as I head through my 30s?

Life happens. The good news is that the LHC loading comes with some flexibility.

You’re allowed to have a gap of up to 1,094 days (nearly three years) before the LHC loading applies, and these days don’t have to be all in a row. You can use these days to be without cover if you’re facing an unexpected life change, switching providers or going through hardship. But these 1,094 days do apply across the lifetime of your cover, even if you switch providers. If you use them all up, you’ll start to pay the LHC loading.

You can also ask your provider to suspend your cover for a short time (say, for two months of travelling), and this gap won’t count towards your 1,094 days. Similarly, if a career change or family obligation means a move overseas for at least a year, you can cancel your cover and this gap won’t come out of your 1,094 days.

Do I need extras cover too?

Extras cover is separate from hospital cover. It helps cover the cost for treatments and services that don’t happen in a hospital and aren’t covered by Medicare, like visits to the dentist, physio appointments and eye tests.

The LHC loading doesn’t apply to extras cover, and you can get and remove extras cover at any point in your life. If you’re considering getting hospital cover at 31, it’s worth looking into extras cover to find the right cover for your health needs – right now, or ahead of any major life moments on the horizon.

Top tips to make the most of your health insurance

Private health insurance is an investment, so it’s important to make sure you’re getting your money’s worth. Here are some tips to get more value from your health cover.

Understand what you’re covered for. It’s important to understand the finer details of what your policy covers and ensure it suits your needs. You don’t want to be underinsured, but you also don’t want to be paying for benefits you don’t use.
Keep a lookout for joining offers. If you’re looking to switch providers, many private health insurers offer special deals for new members, like waived waiting periods for extras and a portion of refunded premiums.
Understand annual limits and when cover resets. Understanding your policy’s annual limits will help you stay within any capped amounts and ensure you’re claiming all the extras you’re eligible for each year.
Take advantage of extras. Schedule yearly reminders in your calendar to book any included benefits you’re entitled to, like an annual dentist check-up or eye exam.
Explore other benefits. Cover isn’t everything. Private health insurance through AIA Health comes with access to AIA Vitality (or the introductory program AIA Vitality Starter), a personalised, science-backed health and wellbeing program that supports you to make healthier lifestyle choices every day. You can earn rewards – like up to $500 in vouchers – each membership year and unlock even more health insurance benefits.

Want to know more? Watch this quick video and explore the chart below to find out how private health insurance through AIA Health works.

Footnotes

¹ https://www.privatehealth.gov.au/health_insurance/surcharges_incentives/lifetime_health_cover.htm

² https://www.privatehealth.gov.au/health_insurance/surcharges_incentives/medicare_levy.htm

Staff Writer

Staff writers come from a range of backgrounds including health, wellbeing, music, tech, culture and the arts. They spend their time researching the latest data and trends in the health market to deliver up-to-date information, helping everyday Australians live healthier lives. This is general information only and is not intended as medical, health, nutritional or other advice. You should obtain professional advice from a medical or health practitioner in relation to your own personal circumstances.

Disclaimer:
Copyright © 2024 AIA Australia Limited (ABN 79 004 837 861 AFSL 230043). This is general information only, without taking into account factors like the objectives, financial situation, needs or personal circumstances of any individual and is not intended to be financial, legal, tax, medical, nutritional, health, fitness or other advice. The source information of the articles is current as of the date of publication and may be subject to change. While the information contained herein is believed to be accurate, AIA Australia expressly disclaims any and all liability for representations or warranties, expressed or implied, contained in, or for omissions from, the information.

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