The Two Pressure Points
1. Lifetime Health Cover Loading (Age 31+)
If you don't have hospital cover by 1 July after your 31st birthday, you'll pay a 2% loading on your premiums for every year you're uninsured past age 30. This loading stays for 10 continuous years of cover.
| Get Cover At | Loading | Extra Cost (on $1,500/yr policy) |
|---|---|---|
| Age 31 | 0% | $0 |
| Age 35 | 8% | $120/yr |
| Age 40 | 18% | $270/yr |
| Age 45 | 28% | $420/yr |
| Age 50 | 38% | $570/yr |
| Age 55+ | 48% | $720/yr |
At age 40, you'd pay 18% more for the same policy for the next 10 years. That loading never gets refunded — it just eventually comes off after you've held cover for a decade.
2. Medicare Levy Surcharge (Income $93,000+)
If you earn over $93,000 (singles) or $186,000 (families) and don't have hospital cover, you pay an extra 1–1.5% tax. At $100,000 income, the surcharge is $1,000/year. Basic hospital cover typically costs $1,200–1,800/year — so the net cost of having insurance is only $200–800, and you get actual hospital coverage in return.
The Decision Framework
| Your Situation | Recommendation |
|---|---|
| Under 31, earning under $93k | You probably don't need hospital cover yet. Consider extras if you use dental/optical. |
| Approaching 31 | Get basic hospital cover before 1 July after your 31st birthday to avoid LHC loading forever. |
| Over 31, no cover | Get cover now — every year you wait adds 2% to your premiums for the next decade. |
| Earning over $93k | Get basic hospital cover. It's cheaper than the Medicare Levy Surcharge. |
| Over $93k AND over 31 | You're hit from both sides. Get cover immediately. |
Hospital vs Extras
Hospital cover is what matters for LHC loading and MLS. It covers private hospital treatment. Extras cover covers dental, optical, physio, etc. — useful but doesn't affect LHC loading or MLS. You can get hospital-only if you want to tick the boxes cheaply.
When Premiums Go Up
Health insurance premiums increase on 1 April every year. The government approves the average increase. In recent years, increases have been 2.7–3.9%. Shopping around or switching funds annually can save hundreds.
Frequently Asked Questions
What's the cheapest way to avoid the MLS?
Basic hospital cover with an excess of $750 (singles) or $1,500 (families). Look for a policy with the minimum required hospital cover — sometimes called 'Basic' or 'Bronze'. Extras aren't required.
Does my partner's income count?
For MLS purposes, family thresholds apply if you have a spouse (including de facto). The family threshold is $186,000 combined, plus $1,500 per dependent child after the first.
Can I drop my health insurance later?
Yes, but if you're over 31, dropping cover restarts your LHC loading clock. If you re-join later, your loading will be recalculated based on your total years without cover.
When should I get health insurance by?
Before 1 July after your 31st birthday to avoid LHC loading. If you're already past 31, sooner is always cheaper than later — every year adds 2%.