Australian Government Rebate on Private Health Insurance
If you're a member of a registered health fund, no matter what your level of cover, you may well be eligible for a rebate on your premium costs. The Government introduced an income test on 1 July 2012. Here is how it works:
Medicare Levy Surcharge
The Medicare Levy is a tax every Australian personal income tax payer pays regardless of whether they have private health insurance or not. It is 1.5% of your taxable income.
The Medicare Levy Surcharge is an additional tax. It’s applied to high income earners who do not have an appropriate level of private health insurance. It’s to encourage higher earning Australians to take out private health insurance so as to reduce the burden on the public health system.
It starts at 1% of your taxable income for singles earning more than $84,000 and for families with a combined income of more than $168,000. After that the surcharge is 1.25% if your income in income tier 2 and 1.5% for income tier 3. The same income tiers apply for the surcharge as for the rebate.
For more information about the MLS contact your taxation advisor, the Australian Taxation Office or see the website of the Department of Health and Ageing: www.health.gov.au.
Lifetime Health Cover (LHC)
Private health insurance is not 'risk-rated' like other forms of insurance and we cannot refuse insurance to anyone. We must charge everyone the same premium for the same level of cover, despite their risk profile or likelihood of claiming. And of course this means their age too.
Lifetime Health Cover (LHC) was instigated by the government to encourage people to take out hospital insurance earlier in life, and to maintain it. If you join before you turn 31 you will not be affected. If you join after 1 July following your 31st birthday then, for the following 10 years, you will pay an extra 2% on top of your normal premium for every year you are over 30.
For example: if you're 40 when you join the cost of your premiums will be 20% more. If you wait until you're 50, you will pay 40% more. And so on, up to a maximum of 70% more. After 10 years the premiums will revert to the normal rate.
More information
For more information on how the Australian Government Rebate on Private Health Insurance, Medicare Levy Surcharge and Lifetime Health Cover work please see the Department of Health and Ageing website: www.health.gov.au