DaveandLinda

Is anyone able to explain please in simple terms what the Medicare age loading is all about? I understand that when you arrive in Australia you have 12 months to take out private health insurance and that if you don't there is an 'age loading' so that if you are over 60 this can be considerable.

What I don't understand is where this loading applies. Is it applied to the 1.5% Medicare levy so that you end up paying more tax. Or is it applied to the premium for private health insurance if you then decide to take it out at a later date?

I also understand that if you take out private health insurance you can get a tax rebate, but what I really need to know is, if you don't take it out are you penalised heavily? I am thinking that as retirees on a pension we won't be liable to pay much tax anyway, so the 'increase' might be negligible and not worth the cost of private health care.

bcworld

http://www.privatehealth.gov.au/heal...ealthcover.htm

The medicare levy surcharge is an additional 1% (on top of the 1.5% medicare levy); you are highly unlikely to be liable to pay it anyway as you must have an income in excess of $140k for a couple.

NickyC

The age loading is nothing to do with Medicare. It applies to private health insurance and is added to the private fund premium. It's designed to encourage people to take out health insurance when they're younger - rather than them waiting till they're old and sick.

KJCherokee

I got a letter from Medibank Private the other day saying that now I had reached 65 my premium had decreased, so I'm not sure what age loading' you are talking about.

AlliF

As per BCWorlds's link it may well be that you are exempt from the loading if you took out PHI within one year of emmigrating here.

We had to get a letter from medicare to take to the insurer then they removed it.

NickyC

I'm talking about the age loading that applies to private health insurance premiums if you take them out after the age of 30 (or after a year of first arriving in Australia if you are new here). The link that bcworld gave explains it all:
http://www.privatehealth.gov.au/heal...ealthcover.htm

...but if you don't want to click it, I can tell you that it says

"If you do not have hospital cover on the 1st of July following your 31st birthday and then decide to take out hospital cover later in life, you will pay a 2% loading on top of your premium for every year you are aged over 30."

It is nothing to do with Medicare and it is nothing to do with reduction of premiums once you reach 65. It is to discourage people from taking out private insurance (for the first time) when they get old and sick.

DaveandLinda

Many thanks for all your replies, that's a bit clearer now.

Red_V_Roger

You have one year to take out private health insurance (if you want to) after qualifying for full Medicare, otherwise you pay an additional percentage for each year you are over 30 years old when and if you do eventually apply.

Note that being on a 457 or other temp visa doesnt count, it is one year from getting PR and therefore full medicare.

The main reason for it is that when you take out private health insurance, they are not allowed by law to base the premium on your current or previous health history...i.e. when you take out private helath insurance, there are no medical questions to answer.

The age loading is to help the insurance company cover teh cost of people taking out insurance later in life when they are more likely to claim.

AlliF

It does have something to do with Medicare though as although the actual loading is not applied to your medicare levy, the letter we got to give to Medibank for the purposes of Lifetime health cover loading exemption came directly from medicare and quoted our medicare number on it. Still got the letter.

DownUnderPaddy

LHC loading
If someone first takes out hospital cover after their LHC base day, a loading of 2% on top of their hospital cover premium will apply for each year their LHC age is above 30.
This is called a LHC loading. For example, someone taking out hospital cover at the age of 30 is entitled to pay the base rate premium, provided they maintain their cover. Someone who first takes out cover at age 40 will pay an additional 20% on top of the base rate premium, and someone who waits until age 50 to join will pay an additional 40% on top of the base rate premium.

Maximum loading
The maximum LHC loading allowed is 70%.
i.e. @2.5% p.a. from age 30 to age 65

Loading removal after 10 years (of continuous private health cover)
Any LHC loading that a person is required to pay will be removed from their private health insurance premium after 10 years of continuous hospital cover.

DownUnderPaddy

Indirectly, yes.

Lifetime Health Cover is a Government initiative that started on 1 July 2000. It was designed to encourage people to take out hospital insurance earlier in life, and to maintain their cover.

Prior to this being in place, people were putting off getting private cover until as late as possible in life, putting more strain on the public system, which was the main driver for the private healthcare LHC loading being introduced.

fish.01

Just because they needed proof from medicare that you were a temp resident when you entered the country so were not immediately covered by full Medicare?

AlliF

Yup, but they (medibank) wanted confirmation from medicare of the date that we had full medicare cover (as PR) before removing the loading off our PHI premium. Hence a link (albeit indirect as downunderpaddy said).

fish.01

Yes, also a similar link to dept of veteran affairs, immigration, defense force and a few others:

http://www.medibank.com.au/Client/Do...ption_Form.pdf

JAJ

If you are on a 457 and apply for PR you become eligible for full Medicare at that point.