Filling in the knowledge gaps
Nearly three million Australians aged 30-65 have just weeks to go before the implementation of the Federal Government's Lifetime Health Cover arrangements on July 1. According to research from Medibank Private - Australia's largest private health insurance - while community awareness of the looming deadline is high, the detail is less well understood.
Medibank Private has provided the most frequently asked question regarding Lifetime Health Insurance - indicating where the knowledge gaps still exist.
**What is Lifetime Health Cover?**Lifetime Health Cover is NOT a new private hospital cover. It is a Federal Government initiative designed to restore the balance in our health care system by helping to ease the burden on Medicare.
Lifetime Health Cover recognises the length of time a person has had hospital cover. People who join a health fund earlier in life and maintain their hospital cover will pay the current base premium (that is premium without penalties) throughout their lives.
To lock in to the current base premium for life, a person needs to take out hospital cover before July 1st 2000.
**What will happen to over 30 who miss the 1 July deadline?**They will be subject to a 2 per cent loading (in addition to the base rate premium) for each year over the age of 30. For example, someone joining a fund for the first time at 40 will pay the base rate plus 20 per cent
(2 per cent a year x 10 years = 20 per cent)
or someone joining at 60 will pay the base rate plus 60 per cent
(2 per cent a year x 30 years = 60 per cent)
**I am currently a private health insurance holder, will Lifetime Health Cover affect me?**People who have hospital cover by the 1st July 2000 - no matter what their age - will be treated as though they had joined a fund by the age of 30 and will be charged the base rate and will not incur penalties.
If you joined private hospital insurance between 1st July 1999 and 30th June 2000, you must keep your hospital cover for at least 12 months to "lock" you into paying the current base premium.
**What happens to people over the age of 65?**The 2 per cent loading does not apply to them and they will pay at the base rate. Basically, those born on or before 1 July 1934, will only ever pay the base rate.
**My "family member" (mother, father, son or daughter etc) is currently overseas, do they have to join private hospital cover when they return from overseas, which will be after 1st July?**If your family member has been overseas between 1st January 2000 and 1st July 2000 (provided they are Australian citizens or permanent residents), they will have one year from the date they return to Australia to join private hospital cover in order to enjoy the current base rate.
If they fail to join private hospital cover during this period and are over the age of 30, they will be penalised 2 per cent for each year they are above the age of 30.
**If I have public hospital cover, am I exempt from the Lifetime Health Cover penalties?**All hospital cover, including public hospital cover (except overseas visitors and overseas student cover), is sufficient to avoid Lifetime Health Cover penalties after 1 July 2000.
**I have "extras cover. Does this cover me for Lifetime Health Cover?**No, Lifetime Health Cover applies only to hospital cover and does NOT apply to extras cover. To avoid Lifetime Health Cover penalties you must take out a hospital cover.
**Does a person under the age of 30 need to take out hospital cover before 1 July 2000?**If you are under the age of 30 on or after the 1st July 2000 you will NOT incur the Lifetime Health Cover penalties when you take out hospital cover. However, you must take out private hospital cover before you are over 30 so as not to incur penalties.
**I am under the age of 30 but my husband is 34. Do we get penalised if we join private hospital cover after the 1st July 2000?**Although you will have a combined premium rate, you and your husband will retain your individual 'certified age of entry' (that is age at which you joined private health insurance).
For example, if one adult is 30 or under they will pay half of the full premium at the current base rate. The adult who is 34 will pay their half of the premium at the lowest rate available plus 2 per cent for each year they are above the age of 30 - therefore, their rate will be at the current "base rate" plus 8 per cent. A family cover where the base rate is $100 (eg two adults joining at the age of 30 or under) would in the above instance be $104 ($50 for the 30-year-old and $54 for the 34-year-old).
**Will I be able to vary my private health insurance once Lifetime Health Cover is introduced?**Yes, you will be able to upgrade or downgrade your hospital cover without adversely affecting your base rate. You will also be able to transfer from one fund to another without penalty.
**Can I drop my hospital cover temporarily, and take it up again later at the same base rate?**Yes, you will be able to drop your membership for 1,094 days but this must not occur between 1 July 2000 to 1 July 2001 or in your first year of fund membership. In addition, should your circumstances change - you become unemployed, have financial difficulties or live overseas - health funds will use their discretion in increasing that grace period.
For information about joining Medibank Private, call its toll-free information line 1300 986 774 or contact www.medibank.com.au.