Private Health Insurance Tax Rebate
Last updated on March 3rd, 2022
Can private health insurance assist you in getting that tax rebate you want?
Make 1.5% worth of savings in tax
If you don’t have hospital cover you can be hit with the Medicare Levy Surcharge (MLS), costing you an extra 1%, 1.25% or 1.5% depending on your annual income.
Stop the 2% premium increase.
If you didn’t get hospital cover before 1 July after you’ve turned 31, you’ll be stung with a 2% premium increase every year due to Lifetime Health Cover loading (LHC).
Claim your tax rebate that can be up to 33.88%
Taking out private health insurance is important because, depending on your income, you can earn up to 34% back on your premiums due to the private health insurance rebate.
Are you earning over $90,000?
How will the Medicare Levy Surcharge affect me?
If you’re without hospital cover you’ll have to pay:
- 1% if you’re single and earn over $90,000 (for families it’s over $180,000)
- 25% if you’re single and earn over $105,001 (for families it’s over $210,001)
- 5% if you’re single and earn over $140,000 (for families it’s over $280,001)
How can I avoid the MLS?
If you don’t want to be hit by the MLS you need to:
- Have a level of hospital cover that is appropriate
- Be under a Australian health fund that is registered.
- If you’re single you must have an excess of $500 or lower, $1000 or lower for any other policy.
How is the MLS calculated?
Factors that affect MLS are:
- Taxable income
- The total amount of reportable fringe benefits
- For any costs paid towards the family trust distribution tax.
Final pointers to be aware of
Don’t forget:
- MLS is not avoided through extras cover
- Increases of $1,500 per child after your firstborn can be applied to your income thresholds.
- The lower your premiums, the higher the excess
Have you recently turned 31?
How will the Lifetime Health Cover Loading affect me?
- A 2% penalty will be added to the cost of your premium for each year you are without private hospital cover after turning 31 years old.
- It maxes out at a 70% increase
- Until you have hospital cover for 10 years in a row the LHC will remain in effect.
How can I avoid the LHC?
- Have a level of hospital cover that is appropriate
- Be under an Australian health fund that is registered.
After I’ve turned 31, how long do I have to take out cover?
- 1 July of the next year is the Lifetime Health Cover base day, so any time before then.
Are special exemptions available?
- If you’re Australian and born before or on 1 July 1934
- If you are a current serving member of the Australian Defence Force (ADF)
- A Gold Card holder of the Department of Veterans’ Affairs (DVA)
Private health insurance rebate
Why was Private health insurance rebate brought in?
- To increase private health insurance accessibility for all Australians.
Is there an eligibility criterion you need to meet for the rebate?
- You need to be of age and fall under the income threshold
- You need to be a blue or green Medicare cardholder
- The rebate can still be claimed with extras only cover
How can I receive the rebate?
- When you fill out your annual return you can get it through tax.
- Can come in the form of a premium reduction on your health insurance when you make a claim.
