The government wants the majority of taxpayers to have private health insurance to reduce the costs for the Medicare system.
The government aims to attract people towards holding private health insurance by giving a rebate for premiums paid by people below a certain income threshold and penalising you if your income is above a certain threshold and you don’t have health insurance.
This link outlines the thresholds and rates for the implications of either having private health insurance and receiving the rebate or not having private health insurance and paying the Medicare levy surcharge.
The amount of rebate you receive or penalty you pay depends on how much taxable income you or a combination of you and your spouse make for the year.
Purchasing private health insurance is a personal preference. However, if your income is above $140,000 for singles or $280,000 for couples then the surcharge is $2,100 or $4,200 respectively. It is likely that you could get some form of health insurance for less than this. The private health insurance needs to meet certain criteria to qualify, so make sure you specify with your health fund that the policy qualifies you for the rebate or for the avoidance of the surcharge.
Lifetime Health Cover (LHC): is designed to encourage people to purchase and maintain private hospital cover earlier in life. The amount of a person’s LHC is determined by the number of years they are over 30 years old at the time they take out hospital cover. Each year will attract a 2% hospital cover premium. The maximum LHC loading applied is 70%.
Author: Rhys Frewin