EOFY health insurance check up

MANY Australians are confused about health insurance, including what lifetime health cover is and the impact it can have.

Those who have entered their 30s have been warned to pay extra attention before June 30 because they could end up getting slugged with hefty costs later in life.

An independent survey commissioned from financial comparison website comparethemarket.com.au revealed almost half of all respondents don’t know what LHC means. About 19 per cent of people think it’s tied to income and 16 per cent believe it is linked to extras cover – both of which it is not.

Lifetime Health Cover (LHC) – the government initiative designed to encourage people to take out hospital cover earlier in life – will hit those who fail to have hospital cover from July 1 after their 31st birthday.

Not having hospital cover can end up costing hundreds or even thousands of dollars if a person decides to take out hospital cover at a later stage, hitting them with a 2 per cent charge for each year they have failed to have it.

For example if you take out hospital cover at 40, you will pay 20 per cent more than a person who took out hospital cover at 30. The maximum loading is 70 per cent.

Comparethemarket spokeswoman Abigail Koch said it could be a costly decision down the track.

“The average price of health insurance (for a family of four) is about $4500 or $5000, if you are going to take out hospital insurance in your 60s you’re looking at an extra 70 per cent on top of that,’’ she said.

But the Medicare Levy Surcharge can also hit hard — this is a cost on Australian taxpayers who do not have an appropriate level of private hospital insurance and who earn above a certain income threshold: for singles, $90,000 per year, and couples $180,000.