Introduction
For residents with private health insurance in Australia, understanding the policy suspension rules is crucial, especially when planning long-term overseas travel or facing financial hardship. Suspending your health insurance can help you save on premiums during specific periods while avoiding unnecessary waiting periods or Lifetime Health Cover (LHC) loading. This article will detail various aspects of Australia’s private health insurance suspension policy, which is generally applicable across private health funds, including suspension duration, eligibility requirements, application process, and important considerations.
What is Health Insurance Suspension?
Health insurance suspension refers to temporarily stopping premium payments for a specific period, during which your insurance benefits are also paused. This means that during the suspension period, you will not be covered for any medical services or treatments. Suspension policies typically apply to situations where you need to temporarily stop your insurance due to travel, overseas work, or financial difficulties.
Suspension Duration
The duration for which you can suspend your health insurance varies depending on the health fund and specific circumstances. Below is a summary of common suspension durations:
For Domestic Health Insurance Customers
•Minimum Suspension Period: Typically two months.
•Maximum Single Suspension Period: Typically two years.
•Re-suspension: If you re-suspend a two-year policy, you can do this for a maximum of six years.
•Suspensions Per Calendar Year: A maximum of two suspensions per calendar year.
•Active Policy Requirement: At least one month of active, paid cover must occur between each suspension period.
For Overseas Visitor Health Insurance Customers
•Minimum Suspension Period: Typically one month.
•Maximum Single Suspension Period: Typically nine months.
•Suspensions Per Calendar Year: A maximum of two suspensions per calendar year.
•Active Policy Requirement: At least six months of active, paid cover must occur between each suspension period.
Eligibility for Suspension
To be eligible for health insurance suspension, you generally need to meet the following conditions:
•Policy Holding Period: You typically need to have held your cover for at least twelve months (for domestic health insurance customers). Overseas visitor health insurance customers may only need to have held their cover for at least two months.
•Payment Status: You must be up to date with all premium payments at the time you wish to suspend your policy.
•Advance Application: You must apply for a suspension before the suspension period begins; it usually cannot be retrospective.
•Notify Your Health Fund: You need to notify your health fund via phone, email, letter, or by completing an application form.
•Return to Australia Notification: After returning to Australia, you typically need to notify your health fund within 30 days (overseas visitor health insurance customers may need to notify within 14 days).
Application Process
Applying for health insurance suspension is usually a relatively simple process. You need to:
1.Confirm Travel Dates or Reason for Suspension: Clearly define the start and end dates for which you wish to suspend your policy.
2.Contact Your Health Fund: You can contact them via phone, email, letter, or by visiting their nearest store.
3.Complete an Application Form: Some health funds may require you to fill out a suspension application form.
Direct Debit Arrangements
Direct debit arrangements during suspension depend on the suspension duration:
•Suspension Period Less Than Four Months: Your direct debit arrangement will continue when your policy resumes.
•Suspension Period More Than Four Months: You will need to notify your health fund if you wish to restart your direct debit arrangements upon return; otherwise, you may receive a renewal notice requesting premium payment.
Waiting Periods and Lifetime Health Cover (LHC) Loading
Waiting Periods
During the policy suspension period, your waiting periods are also paused. If you were still within a waiting period before the suspension, you will continue to serve the remainder of the waiting period once your policy resumes.
Lifetime Health Cover (LHC) Loading
If you return from suspension within two years and have made a payment on your membership, your new premium will not incur the Lifetime Health Cover (LHC) loading. After you resume your membership, any period for which it was not paid will be classified as “absent days,” so it’s important to keep your membership active.
Important Considerations
•Failure to Resume Policy on Time: If you do not resume your policy within 30 days of returning to Australia, and no premiums are received by the health fund, your policy may be reinstated and ultimately cancelled.
•Medicare Levy Surcharge (MLS): During your policy suspension, if you do not hold an appropriate level of hospital cover and your income exceeds the Medicare Levy Surcharge (MLS) thresholds, you may need to pay an additional Medicare Levy Surcharge for the period of your suspension. It is advisable to consult your tax advisor for more information.
•Policy Activity: Even during suspension, it is crucial to maintain communication with your health fund and understand your policy status to ensure a smooth suspension and resumption when needed.
Conclusion
Understanding Australia’s private health insurance suspension policy can help you better manage your health insurance, especially when you need to leave Australia for an extended period or face financial challenges. Please note that while this article provides general information, each health insurance provider may have its own specific policies, and these policies can change. Therefore, before taking any action, it is highly recommended to consult the official Product Disclosure Statement (PDS) on your health fund’s website or contact them directly for the most accurate and up-to-date information.
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Author Profile: Jeffrey Liu, JP, is the founder and principal adviser of Hippo Insurance (aka: Hippo Wealth), with a deep expertise in wealth protection. His extensive experience includes roles in the wealth management divisions of Westpac, ANZ, and a local multi-family office. As the host of “Riches Talk,” a podcast dedicated to cultivating personal and business growth, Jeffrey has established himself as a thought leader in developing life riches. His insights have been featured on SBS, The Australian, and Channel 7. Notably, he was a semi-finalist on Australia’s Got Talent in 2010. Learn more at http://www.hippoinsurance.com.au
