Is Lifetime Health Cover Loading a Legalised Theft?

vchar on 23/02/2025 - 20:15

Folks,

You can call me ignorant but I haven't been aware of LHC loading nor I could have missed out something. I had health insurance like OSHC and OVHC prior to medicare. I have had the blue medicare card since Dec 2020 then Green one in less than a year after I got my PR. When I had the blue one, I went to Bupa and Medibank for a private health insurance, they advised me that they don't have covers for me as I was on SC491 visa which was a new visa subclass at that time. So, I thought it should be ok to be with medicare even that meant I had to pay Medicare Levy Surcharge.

Now, I contacted both Bupa and Medibank with my Green Medicare and SC191 visa, I was then advised that I need to pay LHC loading 20% which pushes the lowest-tier cover without extra to roughly $2,500 a year. They said I was given 12 months period to get a private health cover to avoid LHC Loading but I wasn't sold a policy when I wanted one.

I feel like I have been legally robbed in the daylight and it is unfair. I hope I was wrong and not sure if everyone finds this is acceptable.

I have been working and paying Medicare Levy surcharge all these years. Whether people have paid MLS in the past or not, why are they forced to pay LHC loading to health insurers?

Is LHC Loading a legalised theft? Or am I missing something? Please share your thought.

Regards,

Financial Lifetime Health Cover

Comments

  • brendanm on 23/02/2025 - 20:23
    +25

    Ignorance is not a defence. My choice to not have private health grows more ingrained by the year due to LHC loading. I'll get it when I'm old and decrepit.

    • McMaferMur on 23/02/2025 - 20:52
      +10

      Same here. Im happy to pay the maximum loading later.
      For now, i save my money in my pocket not on their greedy account

    • netjock on 24/02/2025 - 13:11
      +1

      In certain circumstances you are correct not worthwhile having private health insurance.

      The funniest one I saw recently is someone a pty ltd company owned by a family trust and their accountant distributed them just enough money to have to pay MLS.

      • dankru on 25/02/2025 - 20:56

        My hero

    • skittlebrau on 26/02/2025 - 15:27

      My 'choice' of not having private health insurance is because I can't afford it currently and I'm fully aware the LHC is building up.

  • shadyscab on 23/02/2025 - 20:35
    +40

    It’s not legalised theft, it is a state sponsored scam.

    I wouldn’t necessarily have a problem with private health, if it wasn’t for the unrelenting effort to lobotomise the public system and extort aussies out of more money for worse care.

    • freefall101 on 23/02/2025 - 21:49
      +8

      We missed a massive opportunity during covid to just buy back the private healthcare system and return to a single system. Would have cost a fortune but just leave the PHI loadings in and increase the tax rate until it was paid back again. We paid them a fortune during the time to take public patients anyway.

      All it did was create a zillion middlemen who all take a cut, under the guise that corporations can do it better than the government. Which continually turns out to be a load of bollocks.

      • Nugs on 24/02/2025 - 05:46
        +4

        "All it did was create a zillion middlemen who all take a cut, under the guise that corporations can do it better than the government. Which continually turns out to be a load of bollocks"
        Yup, have any privatisation switches ever made anything cheaper?
        .

        • CaptainJack on 24/02/2025 - 09:54
          -8

          Given that almost everything run by the government is shit (infrastructure projects, hospitals, roads, schools, driver education), yes.

          • Jolakot on 24/02/2025 - 11:21
            +1

            @CaptainJack: They didn't ask for better, they asked for cheaper. Much easier to do something well with double the budget.

            • CaptainJack on 24/02/2025 - 12:16
              -2

              @Jolakot: Then it's a dumb question.

              • Jolakot on 24/02/2025 - 13:11
                +3

                @CaptainJack: No it isn't, privatization is always sold to us as making services cheaper, and it never does. Profit incentives do make services more efficient, but that gain is sent to shareholders not the public.

                For-profit companies have a fiduciary obligation to extract the most profit for the least investment, so their only incentive is to provide marginally better service than the public option, while charging as much as they possibly can.

                • CaptainJack on 24/02/2025 - 14:37
                  -2

                  @Jolakot: If the goal was to be as cheap as possible, then we wouldn't privatise, we would simply not provide the service at all (free). Hence its a dumb question.

                  What we actually care about is whether the private sector providing a better service (which can take into account, quality, cost etc).

                  • Randolph Duke on 25/02/2025 - 12:41
                    +1

                    @CaptainJack:

                    What we actually care about is whether the private sector providing a better service (which can take into account, quality, cost etc).

                    Which it rarely does.

                    • CaptainJack on 25/02/2025 - 16:33

                      @Randolph Duke: There's a reason people complain about roads, schools, and hospitals, and not about pizzas, phones, and coffee.

                      • Randolph Duke on 25/02/2025 - 18:44
                        +1

                        @CaptainJack: Core infrastructure and services against a coffee shop. Great comparison. And the one comparable one you picked, phone, has been run into the ground until NBN came along.

                        Any reason you didn’t pick gas, water or electricity?

                        Hospitals is a bad comparison too, public hospitals deal with all the emergencies and complex surgeries private won’t touch, with the added benefit federal government actively punishes those who won’t sign up for the private system.

                        • CaptainJack on 25/02/2025 - 19:47

                          @Randolph Duke: Ah yes, the old 'everything that shows I'm wrong is just a bad example' argument.

                          Ok, let's go with electricity to keep you happy. If you had a clue, you'd know that consumers in states that privatised networks are much better off than those that didn't. And that introducing competition in the wholesale market is/was a success until/despite government policy (profanity) ups.

                          with the added benefit federal government actively punishes those who won’t sign up for the private system.

                          The same government you think should be in charge of more of our infrastructure and services?

                          • Randolph Duke on 26/02/2025 - 08:46

                            @CaptainJack: Skimmed through it, read to me the biggest factor in NSW and QLD expansion costs was actually due to 2.2.3 due to reliability and redundancy guidelines introduced which required significant investment to implement.

                            Secondly, if overbuild is now but utilised in the future, that’s acceptable - government should be taking a long term for infrastructure investment.

                            The same government you think should be in charge of more of our infrastructure and services?

                            I’d trust one side to be more responsible than the other.

                            • CaptainJack on 26/02/2025 - 09:31

                              @Randolph Duke: The overbuild began at least 15 years ago (maybe longer, I wasn't in the industry), and we're still waiting for it to be utilised. Well not me, I'm not in those states thankfully.

                              Yes reliability guidelines are a factor - government knows that electricity outages - even if relatively short and minor - make them look bad at the next election so tend to over-spend relative to what the private sector would do (who perform a cost benefit calculation, and if the costs of more reliability exceed the value, won't invest.

                              There's a few other factors you missed - e.g., governments see infrastructure spending as a way to boost employment. Good for winning elections, not good for consumer outcomes.

                    • boirganz on 26/02/2025 - 08:45

                      @Randolph Duke: Correct. Despite the chronic underfunding over years, Medicare delivers better outcomes per dollar than most systems.

                      It’s been a couple of years since I’ve seen the stats but I think it was about #2 in the world in efficiency when defined by health outcomes per dollar.

                • Yorkshire-Man on 25/02/2025 - 21:36

                  @Jolakot: There are plenty of not for profits (not that I'm defending them)

        • abuch47 on 26/02/2025 - 19:17

          They aren't supposed to, privatisation is purely to line the pockets of a few by taking from the many.

  • tenpercent on 23/02/2025 - 20:37
    +3

    If you just want the cheapest cover to be exempt from the Medicare Levy Surcharge (hospital cover for accidents only) it shouldn't be costing you more than $1200 per annum including a 20% loading. Look at Frank or Bupa or even HCF. They're all around $78/month without loading.
    It's only worth it if your / your family earn over a certain threshold though (and it's not the thresholds at which the MLS kicks in, it's a bit higher when it becomes cheaper to just pay for the basic hospital cover direct to the insurer).

    • eltito on 24/02/2025 - 11:57

      "(and it's not the thresholds at which the MLS kicks in, it's a bit higher when it becomes cheaper to just pay for the basic hospital cover direct to the insurer)."

      Do you know the threshold (or is there a table of which you are aware of) that shows when you would be better of paying PHI as opposed to MLS?

      • tenpercent on 24/02/2025 - 12:25

        I'm not aware of any tables but it's not hard to calculate. Just work out the MLS for you or your family's income. Then compare that number with the annual insurance quote. If the MLS is higher then you save by paying for insurance.

  • jma97 on 23/02/2025 - 20:39
    +15

    Ok so here goes….

    Typically, most Australians get a letter when they turn 30 warning them to take up PHI or else they will be hit with LHC. For people who come to Australia and get access to 'green' Medicare, the moment you do (and if you're past the LHC age) you have 1 year to take up PHI or else you're subject to LHC depending on your age.

    As to why there's LHC, basically it comes down to community rating for PHI. Community rating is where regardless of the person's characteristics (age, gender, health status, etc) the premium is charged the same. This was instituted a long time ago (back before Medicare - so that people could actually afford PHI to go to the hospital). This makes it great for older/sicker people but not so much for younger/healthier people - as the former find great value in holding PHI but the younger see no need. But if younger/healthier people drop PHI, it means less people to spread the risk, and you have to raise premiums - a vicious cycle. Hence LHC to basically 'incentivise' people to take up PHI.

    As you mention OSHC and OVHC - those premiums are basically for the insurer to keep (i.e. they don't contribute to risk equalisation, where high cost and older people's claims are shared across all insurers to prevent cherry picking of younger insurers) - so they do not count to avoiding LHC.

    Noting you have MLS - you can think about just taking out the very cheapest Basic hospitals policy so at least you avoid the MLS (especially if it is more expensive to pay for MLS rather than PHI). Once you serve your 10 years the LHC will be removed. That's just a numbers calculation - you may have different needs so that's just one suggestion.

    Edit - to find the cheapest just use privatehealth.gov.au instead of the comparator websites.

    • vchar on 23/02/2025 - 20:58

      Thanks @jma97, and appreciated your clear and straight to the point explanation. so does that mean older people don't pay a higher premium? if so, it seems fair to me.

      They didn't sell me the insurance when I got my blue medicare card due to my visa was too new to them; otherwise, I would have PHI since then.

      However, I don't get it why we need PHI while Medicare exists. Australian pays 2% Medicare Levy still not enough to get rid PHI?

      • ihbh on 23/02/2025 - 21:17
        -1

        Australian pays 2% Medicare Levy still not enough to get rid PHI

        Healthcare cost ~10% of GDP.

        Labour share of GDP < 50%. Say it's 50% then healthcare cost ~20% of income.

        So no. Medicare, PHI, government funding (from taxes).

      • mskeggs on 23/02/2025 - 21:23
        +1

        You don't need private cover, but you will need to wait for public health for non-critical care.
        This includes things like if you required knee surgery and were in pain. You might have to wait months for the surgery.
        You also are allocated the doctor on duty. For some people it is is essential they choose who cares for them, so they can't accept just Medicare

        It is generally possible to just pay your way if you want a private doctor but don't have private insurance, but can cost thousands for a hospital stay.

        Like most healthy people, I didn't have private cover when younger, then started paying for it when I needed to pay the surcharge. I'm old enough now that I don't need to pay the loading anymore.

        • nned2say on 25/02/2025 - 15:44

          But people have to pay LHC loading for 10 years before it can be removed. If you purchase private health insurance later, the LHC is actually higher. I may get it wrong, but do you mean you never pay the loading?

          • mskeggs on 25/02/2025 - 17:25

            @nned2say: You pay it for the 10 years, but you don't pay anything when you are younger.

      • jma97 on 23/02/2025 - 22:52
        +1

        For your first question - yes, in a way. For a given policy that an insurer offers, they must charge the same price to whoever buys it. Insurers do things though to try manage this slightly, e.g. marketing certain products geared towards younger/older insurers, strategic discounting (particularly with extras) etc.

        As for your other question - it's a very broad thing whether we have a completely public v completely private system. Honestly, having either completely public/private system probably isn't the best, so the question has always been how to draw the line. To note PHI exists for many reasons, mostly because there will always be those that want to go private and want 'the best'. Question has always been if, and how, government should support PHI (lots of history there that I won't wade into…) To note, healthcare is very expensive and the Medicare Levy really is more for decoration (it hardly covers the cost of Medicare).

        • Ponsonby on 25/02/2025 - 20:55

          Community rating is fundamental to the availability of PHI. If insurers could charge more to people who are more likely to be sick or engage in riskier lives or more likely to be pregnant those groups would tend to be shut out. The whole idea of insurance is about pooling risk.

  • MS Paint on 23/02/2025 - 20:41

    🎻

  • Wiadro on 23/02/2025 - 22:35

    its a scam and what you gunna do?

  • Ave Maria on 24/02/2025 - 01:02

    I came to Australia in 2001 when I was 38 and took Private Hospital & Extras straight away. I was still penalised and had to pay the 2% loading for each year over 31 for a long time until legislation changed to recognise that you cannot penalise someone for something that they could not possibly comply to retrospectively. When I married, I added my partner then 39 on my policy that had no previous cover as a low earner and did not have to take it or afford it. So I then had to pay 18% loading for the next 10 years for my partner. Was it fair? No but the only thing you can do is not to take Private Cover if you are on low income and/or pay the surcharge if you are on higher income. Is it daylight robbery, yes it is. If you realy do not need the Private Care cover (treated straight away in private or public hospital) stay on just the Medicare cover and be on a waiting list for anything not urgent or life threatening until you can be admitted to a public hospital (or die waiting). It all depends on your needs and medical situation.

    I know a lot of people that prefer to pay the medicare surcharge (not a big deal) as then all the money goes to the medicare system to benefit everyone that needs it and not the Private Health Care providers that mostly care for their investors. Your decision to make on what you think is best for you and your family.

    • vchar on 24/02/2025 - 10:57

      That was suck. I wouldn't have a problem if the LHC loading is paid to Medicare but it is not, I guess. It appears to me that PHI needs to make a lot more money to survive and let's make PHI richer again.

      I also prefer to pay MLS instead of PHI and I have been doing so for years until I got hit hard recently by the inflation like everyone else. So, I was trying to save where possible but considering the 20% LHC loading, it doesn't make much different so I won't get a private cover.

      It doesn't make sense to have a PHI anyway if you don't have serious health problems which cost a lot of money as the excess amount you need to pay is very likely cover the cost of general health issues. Saving PHI premium until I will need it in the future probably is the way to go even it means I need to pay MLS.

  • RiseAndRuin on 24/02/2025 - 11:00
    +3

    Don't worry, things will get worse…

    • vchar on 24/02/2025 - 11:03

      ah ok, let's work hard to make them richer :D

      • OzzyOzbourne on 25/02/2025 - 16:26

        If only we had more people paying for PHI…. ah there we go

  • Poor Ass on 25/02/2025 - 13:19
    -1

    don't need it

    Aus gov has good healthcare… get ya taxpayers money's worth

    • Bidet Mate on 25/02/2025 - 16:34
      +1

      If we don't get it we still get stung by the surcharge. If I buy a useless $1.2k cover it saves me from paying the $4k surcharge as tax. The cover does absolutely nothing for me even if I actually needed it.

      You can't tell me that is anything other than a $1.2k robbery at gun point that goes directly into health insurance company profits since the product is literally useless.

      • Poor Ass on 25/02/2025 - 20:26

        You can always salary sacrifice into benefits that don't attract fringe benefits tax or do tax deductions that ultimately can legally make into a benefit that you can make use of to reduce your overall income so you or / family don't exceed the MLS

        • greatlamp on 25/02/2025 - 21:51
          +1

          MLS bill of $4k implies a salary of around $266,000. They would have to reduce their income by $150,000.
          Considering MLS kicks in at $93,000, and the median full time salary is also around that amount, it does seem like a well designed scam that only benefits health insurance companies. It would be far better if that money actually went into the health system, maybe we would still be able to see a GP for free and they wouldn't be pushed to do 5 min consults.

          • Poor Ass on 26/02/2025 - 08:18
            +1

            @greatlamp: It's actually $194k + extra if there are children

            Notice they said "we"

        • Bidet Mate on 26/02/2025 - 11:07

          Hey that's not my downvote, but like lamp says, I don't have access to anything that could give me $150k write offs to avoid surcharge as I don't own a house and work for a salary so have no business expenses.

          You could argue that exceeding the MLS threshold is a luxury, but the thing is, I'm already paying $5400 for Medicare tax (fair enough), so the additional $4000 Medicare surcharge is literally just to force me to buy in to a useless health insurance, which is a private company.

          • Poor Ass on 26/02/2025 - 11:23

            @Bidet Mate: so you are single?

            • Bidet Mate on 26/02/2025 - 11:30

              @Poor Ass: Defacto I guess but she breaks the threshold also. I actually need to work out if the defacto laws apply since I spend 70% of my time living out of state.

  • Cyphar on 25/02/2025 - 14:46

    Yes.

    You get penalized 2% for every year over 31 or you pay a medicare levy surcharge so either way you get (profanity) over.

    But I'm not going to give PHI companies a single cent so I pay the MLS, but I deduct absolutely every thing I can to reduce what I owe to ZERO.

    • ar7ist on 25/02/2025 - 21:18

      deduct in what?

  • Drakesy on 25/02/2025 - 17:45
    +3

    Mandatory Private health belongs in the bin.
    it's a lobbyist joke used as another wealth transfer from the working class to the asset rich 60+ year olds.

  • R4 on 25/02/2025 - 19:00
    +3

    I migrated to Australia.
    I knew about this requirement before I arrived.
    The government does not make it a secret.
    I got insurance within 12 months.
    You should have done the same.
    You didn't but there it is.
    Just move on.

  • ChampofAus on 25/02/2025 - 19:49

    Blessing in disguise.
    Stop v-char

  • [Deactivated] on 25/02/2025 - 20:33
    +2

    Wow new migrant expects a free ride? What a shock.

    • Bidet Mate on 26/02/2025 - 16:48
      +1

      I'm pretty anti mass migration but this person is clearly working hard enough to be triggering MLS, so hardly a free rider.

      The MLS system is an undeniable rort and even as a local it's confused me at times interpreting Medicare tax charge vs the Medicare Surcharge.

    • vchar on 26/02/2025 - 20:56

      @CommuterPolluter, lol, are you a comedian?

      I came here on a student visa and have worked my ass off for years. I just thought LHC loading is a legal mean to let PHIs take bloody money from people without benefiting Medicare nor them in anyway, thus I posted my question to try to understand what Aussie thought about it. Not sure whether you like to be scammed or you really don’t get what I mean. If the latter, I’m sorry for being ignorant. I feel sorry for you if you don’t even know they are scamming you.

      If my post shocked you in anyway, what would you feel if you hear another version of truth. I used to talk with a guy migrated from the UK, but not a white guy, on a permanent resident visa. He complained to me that he didn’t get any helps at all when he arrived Melbourne. I then asked him did he get Medicare for his family? Yes, he replied. Did he pay for his children to go to school? No, he replied.

      As for me, during my study, I paid around $10k a year for my son to go to a public school, and a similar about for my daughter. I paid over $40k a year to the university of Melbourne for three years. I started my career in my third year and still work in my field until now. More or less, I have contributed something.

      What do I mean by writing all these? Yes, some migrants want free rides, some are not grateful, and some are being idiotic. But what? That doesn’t apply to only migrants. I see and know many non-migrants fall in those categories too.

      So, don’t generalize. If you wanted to call me a freeloader, please call me so but don’t judge all migrants are the same. There is always an idiot in a crowd but not everyone is an idiot.

      Thanks for taking your time commenting on my post.

      • [Deactivated] on 26/02/2025 - 21:15
        +1

        It’s always about money…

        LHC has been around for 25 years at this point. It ensures that costs in the healthcare system are spread more fairly. Without a system like LHC people young people are disincentivised from getting health insurance. If you’re getting pinged 20% then you must have waited until your 40s to get health insurance and if you’re whinging about it you must feel entitled to get subsidised by fund members in their 20s and 30s.

        • vchar on 26/02/2025 - 22:22

          You are joking again.

          You are right that young people are disincentivized from getting health insurance but why lhc is paid to PHI instead of Medicare? Don’t you find it ridiculous more so your judgement is. Im not whining about it but I should have the right to decide not to be scammed. Again, I feel sorry that you don’t even know where your money goes. It is sad, tbh.

          • [Deactivated] on 27/02/2025 - 07:47
            +1

            @vchar: Of course the money is paid to the fund - that’s the whole point of the scheme. Thanks to this scheme I was able to get PHI in my youth at a reasonable price and have never paid any loading.

          • jma97 on 01/03/2025 - 07:46
            +1

            @vchar: Hi vchar,

            I'll try to explain - to recap the purpose behind LHC is to incentivise people to join the PHI funding system early, and if they don't they will be hit with a LHC penalty. This is all to prevent people joining PHI only when they actually need to use PHI, which is a big problem in a community rated system.

            The two reasons I can think of as to why LHC revenues go to the insurers is :

            • because when it goes to them, it increases the total stock of funds available to industry to (because remember, due to risk equalisation, a lot of the costs incurred by older and/or high-cost claimants are shared between funds).
            • because the funds collected through LHC by an older person joining go some way to covering the cost of their healthcare (because there is a relationship between age and healthcare needs) that is paid by the PHI.

            It is better to think of the public health system as a totally separate entity. In 'on the ground' healthcare, there are many integration challenges when a patient is transferred between the two sectors. Arguably, the same also happens in policymaking and government thinking too, where there is a lot of thinking about either Medicare, or private health care, but not how both can work together to improve health outcomes for all Australians.

            And finally I just wanted to acknowledge that there are ways to improve how new migrants who become eligible for Medicare are told that they should strongly consider PHI (if they wish to avoid the LHC loading and/or to avoid the MLS). I understand that the communication around that is a bit meagre…

            • vchar on 01/03/2025 - 11:11

              @jma97: thanks for your great explanation, I was trying to get one but PHI people didn't even know if they could sell me one at the time that I contacted them due to the fact that my visa subclass was relatively new.

              however, PHI increases their premium fee annually, adding LHC to their income instead of Medicare's is ridiculous because non-PHI is covered by Medicare. I can't wrap my head around the logic behind it, tbh.

              • YesPleaseThankYou on 01/03/2025 - 11:53

                @vchar:

                I can't wrap my head around the logic behind it, tbh

                We get it, you don't want to pay.

                You are not required to purchase PHI.

                Perhaps time for you to move on.

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