Tax Savings

By taking out eligible levels of Private Health Insurance you have the potential to save on tax. If you are single and earning up to $70,000* per annum or a family/couple earning up to $140,000* combined income and don’t have qualifying Private Health Insurance, you may pay be forced to pay an extra 1% Medicare Surcharge (known as the Medicare Levy Surcharge) which equates to a lot more per year. Money that is wasted and that could be used to help purchase health cover. On top of the tax savings, the Federal Government rebates 30% (and even more for people aged 65 years or more) of your health insurance premiums. So not having Health Insurance could turn out to be a false economy for some people.

If you wish to take out private hospital insurance to avoid paying the Medicare Levy Surcharge you need to be aware that some policies with a high excess (over $700 for singles and $1,400 for families/couples) are exempt, which means that you may still pay the additional levy despite the fact that you’ve paid for health insurance. It’s important to check with the health fund before you take out a policy.

Over the last few years government legislation has applied incentives (punitive and motivational) that make Private Health Insurance more affordable and desirable. These incentives include:

Lifetime Health Cover — This penalises most people who take out health insurance later in life by charging higher premiums. If joining after your 31st birthday, it is likely you will pay a 2% surcharge per year up to a maximum surcharge of 70%. Joining at age 45 means could be forced to pay 30% more than someone that joins at age 30.

Medicare Levy Surcharge — Singles earning above $70,000* and couples/families earning above $140,000* (plus $1,500 for each child after the first) without qualifying private health insurance may be forced to pay an extra 1% Medicare surcharge (in addition to the 1.5% Medicare Levy). This can be avoided by taking out qualifying hospital insurance.

* Based on Medicare Levy Surcharge threshold amendments proposed in the Australian Federal Budget of May 2008. Please speak with an iSelect consultant for further information and to clarify your qualification.