Age Of Dependents For Health Insurance
Learn about the age rules for dependents for private health insurance right here with Savvy.
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The days of children leaving home permanently at the age of 18 are now a distant memory in Australia, as more and more adult children remain living with their parents well into their 20s or even 30s. As a result of this societal change, the Australian Government amended the age up to which dependents can remain on their parents' health insurance policies in 2021.
Find out about how new regulations for the age of dependents may affect you with Savvy. Learn about what happens if you don't have health insurance once you pass the maximum dependent age in our handy guide.
What are the limits on the age of dependents for health insurance?
In 2021, the Australian Government raised the allowable age limit for dependents to be included on their parents' health insurance to 31. Prior to this occurring, the maximum allowable age was 25. A number of health funds started implementing this change in 2022 and into 2023.
However, the increase in allowable age is voluntary for health insurers, so while some health funds have made the change, others haven’t. It’s up to each health fund to decide what cover they’ll offer to different categories of dependent, up to what age. Dependents are generally classified as:
- students (who are studying full-time)
- non-students (who may be working or studying part-time)
- dependents with disabilities
Because these new age limits are voluntary for health funds, it's worth comparing different policies if you have adult dependent children still living at home or are an adult dependent who is still on your parents’ policy.
New rules on age for disabled dependents
At the same time as the age of cover for dependents was raised to 31, the rules were also changed for parents who have dependents with a disability. The age limit for disabled dependents to be included on their parents' health cover was scrapped altogether, meaning parents can have their eligible children share their health insurance indefinitely.
What options do my dependent children have when they're no longer covered by my health insurance policy?
There will come a time when your children can no longer be included on your family health insurance policy. Once this happens, there are several options available for you as a family and your adult children:
- Switch to a health fund with a higher age limit – if your current health fund only allows adult dependents to remain on your family policy up to the age of 25, for instance, you may choose to find a new health fund which has increased its allowable age up to 31. These policies are often known as extended family cover and could potentially give your adult child an additional five or more years cover on the family private health insurance policy. However, you should always check with your insurer to make sure your child fits their criteria for dependents.
- Choose to buy a singles policy – your adult children may decide it’s time for them to buy their own health insurance. They have the option of buying hospital cover and extras cover separately or as a package, while they can also choose the level of cover they wish to take out.
- Choose to buy a couples policy – alternatively, you may have a child who needs to leave the family health insurance policy because they’ve married and no longer count as a dependent as a result. If your adult child does have a partner, they may choose to buy a couples health insurance policy
- Choose no private health cover – your adult children may decide they can’t afford private health insurance and choose to remain uninsured. However, there are long-term financial implications of this decision, which are outlined below.
What happens if my child doesn’t have private health insurance once they’re no longer a dependent?
There are advantages and disadvantages to having private health insurance. The main disadvantage, of course, is the cost of monthly premiums. However, if your child chooses to remain uninsured in their 20s, not only could they face having to pay high out-of-pocket health care if something does go wrong, but they could also end up paying more tax.
The Australian Government has adopted a ‘carrot and stick’ approach to encourage Aussies to take out private health insurance. On the one hand, there are financial incentives and assistance for many who have health insurance, while on the other, there are penalties that may apply for those who don’t.
Financial assistance with the cost of private health insurance
- Private health insurance rebate – Aussies who have adequate hospital and/or extras cover may be entitled to assistance from the Australian Government in the form of the private health insurance rebate. This can either be claimed once a year on your tax return or offered in the form of reduced monthly premiums from your health insurer. The amount you’re entitled to will depend on your income, ranging from 0% to 8.2% for high income-earners up to 24.6% for singles earning under $90,000 p.a. or couples/families earning under $180,000.*
- Medicare Levy reduction for low-income earners – those who are earning a low income may qualify for a reduction in the Medicare Levy or, in some cases, won’t have to pay it at all (for example, if your income is below $23,365 p.a. as a single, or $36,925 p.a. for seniors and pensioners entitled to the SAPTO offset*).
*Figures correct as of March 2023 but subject to change. The family threshold increases by $1,500 for each child after the first.
Penalties for those who don’t have private health insurance
The financial implications of not having private health insurance can last for ten years or more. They include:
- Medicare Levy Surcharge (MLS) – this is an additional tax you may have to pay if you don’t have adequate health insurance. This is defined by the government as a hospital cover policy which has an excess of a maximum of $750 for singles or $1,500 for couples. The surcharge is between 1% and 1.5% of your taxable income with the specific percentage which applies to you depending on your income. However, this tax only applies to singles earning over $90,000 and families/couples earning over $180,000.
- Lifetime Health Cover (LHC) loading – if you didn’t have basic private health insurance on July 1 after you turned 31, you may have to pay more for your health insurance if you decide to get insured later in life. The LHC loading is 2% extra on top of your premium for each year you are aged over 30 without cover, capped at 70%. Once you’ve paid the LHC loading for ten years, you’ll no longer have to pay it.
Frequently asked questions about age limits for health insurance
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