Delaying LHC Loading by Going Overseas for 2 Days

mrjames on 22/05/2025 - 20:09
Last edited 22/05/2025 - 20:09

I'm 31, so as of the 1st of July, I will need to have private hospital cover, or else, I get hit with a 2% per year loading (if I decide to take out insurance down the track).

Reading the fine print here:

https://privatehealth.gov.au/health_insurance/surcharges_inc…

Special circumstances
Overseas on the 1 July following your 31st birthday
If you are

-an Australian citizen or permanent resident, and
-you were overseas on the 1 July following your 31st birthday, and
-your 31st birthday falls after 1 July 2000, and
-you return to Australia, and
-you purchase hospital cover by the first anniversary of the day of your return to Australia,
then you will not pay a Lifetime Health Cover loading.
You can return to Australia for periods of up to 90 consecutive days, per visit, and are still considered to be overseas. So your 'return' is your first period of 90 days or more in Australia.

If you purchase hospital cover after the end of the first anniversary of the date of your return to Australia, LHC loading will be applied based on your age at the date of joining.*

If I'm overseas on the 1/7/25, I can delay having LHC loading applied for a year providing a sign up to PHI by 30/6/26.

Does this mean I can fly to NZ on the 30/6/25, return to Australia on the 2/7/25 and avoid PHI for a year without penalty?

Financial Lifetime Health Cover

Comments

  • MS Paint on 22/05/2025 - 20:30

    What's the value delta between the LHC and the very very short holiday?

    What's the cheapest junk PHI policy you could find?

    • mrjames on 22/05/2025 - 20:41

      Cheapest policy is $954 PA. The 2 day jaunt would cost between $300 - $500.

      I'm unlikely to earn above the threshold next FY so won't need to pay the surcharge. Benefit would be in the following years when I'm earning above the threshold, it's only then that the surcharge is close to the price of the cheapest policy and therefore makes sense to take out the policy.

  • surfingedge on 23/05/2025 - 10:29

    The exemption from LHC is intended for people who were actually living overseas when they were 31, however as typical of Aus governments, they make up so many complicated rules which end up having unintended consequences.

    You would need to request your international movement record https://immi.homeaffairs.gov.au/help-support/departmental-fo… and send it to the health fund.

    I was genuinely living overseas when I was 31, so I requested my travel record starting on the relevant 1st of July, which showed I was not in Australia. The health fund did not ask where I was on 30th June or any time before that, as they are only interested in the relevant 1st July until 1 year before the insurance start date. So your idea may work.

    It only remains to see whether it's worth doing. If you start taking out PHI next year 2% on $954 is $19 x 10 = $190, so you are spending $300+ now to save $190 over 10 years (ignoring inflation)?

    If you really want to save money you would also be sleeping on an airport bench in Auckland for two nights (assuming you are in the eastern states, take a 6pm flight on the 30th, arrive around 1am on the 1st, wait until public transport starts at 6am, back to airport by midnight and get 6am flight back to Aus arriving in time to go to work on the 2nd…)

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