It's Almost Tax Time - Be Prepared With Your Health Insurance

We all know that death and taxes are the two things that are certain in life. And every year at 30 June it’s the government tax time. But did you know that Billy Explores help you with your taxes? Yes – we have read on dear reader!  The Australian Government has tax time support for citizens and residents when it comes to private health insurance in Australia, and it all helps when it comes to tax time! This includes the Private Health Insurance Rebate and Medicare Levy Surcharge. The majority of health insurance policies in Australia will have the below applied to them. So get reading then you can compare health insurance providers through Billy Explores!

Private Health Insurance – Australian Government

So why did the Australian government decide private health insurance was an issue? The Australian Government recognised that private health insurance should always be a priority and making it accessible to everyday Aussies. Consequently, the Australian government created the private health insurance rebate to help everyday Australians manage the costs of private health insurance and make it more affordable to them. They’ve also initiated the Medicare levy and Lifetime Health Cover loading to help even more at tax time.

What Actually Is The Private Health Insurance Rebate?

The private health insurance rebate is a subsidy available to the majority of Australians with private health cover and was introduced by the government to make private health cover more accessible. This can be received it in two different ways.

Firstly, you can directly receive the rebate from your health insurance provider. This means they will reduce your monthly premiums by the amount of the rebate, and you won’t have to do anything further.

Otherwise, you can pay the full premium throughout the year and then claim the rebate amount as part of your annual income tax return. The amount will be the same regardless of which option you choose.

Is My Private Health Insurance Rebate Affected By My Income?

Yes – just like any Government benefit, your eligibility is assessed according to your income. Your income does affect the amount of private health insurance rebate you can claim. This is sometimes called means testing or income testing.

Your income will put you into one of four tiers detailed below.

Private Health Insurance Rebate Income Thresholds

Income thresholds for the 2022-2023 financial year is shown in the table below.

Base tier Tier 1 Tier 2 Tier 3
Single $90,000 or less $90,001 – $105,000 $105,001 – $140,000 $140,001 or more
Family $180,000 or less $180,001 – $210,000 $210,001 – $280,000 $280,001 or more

We’ve done more research and go into more detail below, however the Base tier will entitle you to the highest private health insurance rebate amount. In contrast, if you’re in Tier 3, you won’t be entitled to any private health insurance rebate.

Government Rebate Amounts

The table below highlights the percentage of private health insurance rebate you can claim, due to your income tier. As you can see, your age also affects the amount of private health insurance rebate you can claim. To provides a fair system for all levels of health insurance cover, you can see a percentage is used instead of a fixed amount.

Percentages below were for the period from 1 April 2018 – 30 June 2018.

Base tier Tier 1 Tier 2 Tier 3
Under 65 yrs 25.415% 16.943% 8.471% 0%
65–69 yrs  29.651% 21.180% 12.707% 0%
70 yrs or over  33.887% 25.415% 16.943% 0%

Does Dependent Children Make The Private Health Insurance Rebate Different ?

Yep – it certainly is! If you have dependent children, it potentially can affect your income tier because the income tiers are raised by $1,500 for each child (this is after the first child). This applies to both singles and family thresholds.

The ATO website defines a dependent child as a ‘Medicare levy surcharge dependent child’. This usually means:

  • A child under 21 years of age
  • A child between 21-25 years of age who is a student full-time.

In addition to the above, it should be noted that dependent children who are covered by private health insurance are not income tested. They are not determined to share a cost of the health insurance policy, therefore any income they earned is not counted towards the income test for the family health insurance cover.

What About Extras Cover Health Insurance?

Unfortunately a private health insurance policy that is extras cover only isn’t included in any of rebates. This doesn’t mean you have to miss out on a great extra cover deal! Compare private health insurance providers with extras cover through Billy Explores!

Private Health Insurance – Are There Any Other Benefits?

Above all, it’s not just the private health insurance rebate that saves you money. Aside from the obvious benefits of having a private health insurance policy, there’s also lots of tax benefits too.

Lifetime Health Cover (LHC) Loading

It’s not really about tax, but the Lifetime Health Cover (LHC) loading can actually also cost you a lot of money down the track. If you haven’t taken out a health insurance policy that includes private hospital cover by the age of 31, you’ll be penalised when you finally do get a health insurance policy with hospital cover.

The initiative is designed to encourage Australians to take out hospital cover before the age of 30, which is meant to take pressure off the public hospital system. How it works is each year after your 31st birthday that you wait to get a private health insurance policy with hospital cover, it will cost you 2% more which is 2% for each year. So, if you turned 30 and waited 8 years to get hospital cover, your premiums will cost 16% more. Unfortunately the Lifetime Health Cover Loading will stays with you for another 10 years.

You’re exempt from the loading if you take out a private health insurance policy hospital cover before your 31st birthday. Because of this you’ll always be able to get the best price on offer by your health fund. This doesn’t include extras cover though, so it still makes sense to get comparing private health insurance in Australia through Billy Explores.

Medicare Levy Surcharge (MLS)

What’s this Medicare Levy Surcharge (MLS)? We know you would have heard about it. The Medicare Levy Surcharge basically helps support Medicare as Australia’s public health system. It works by if you earn over $90,000 (with the figure increasing to $180,000 for couples), you also have to pay the Medicare Levy Surcharge (MLS).

The amount you need to pay for the Medicare Levy Surcharge is between 1% and 1.5%, so it can be a lot. If you’re earning $90,000 a year, this means MLS would be around $900.

But if you want the good news… if you have held health insurance policy with private hospital cover for the whole financial year, you don’t have to pay the surcharge. Yippee!! That’s right, you’re exempt because you’re less reliant on public health system. So really, if you earn over $90,000 per year, there’s no reason you shouldn’t get hospital cover. Think of it like saving $900 each year, and even more importantly you get hospital cover as well! Don’t forget though that this doesn’t include extras cover, so you need to be aware of that – why not save money there too by comparing extras cover through Billy Explores?

How Do I Claim the Private Health Insurance Rebate?

There are two different ways you can easily claim the private health insurance rebate:

At tax time: If you don’t claim your private health insurance rebate from your health fund, include the details in your tax return. Likewise, the money will come back to you as part of your entire tax return.

Direct from health fund: You can let your insurer know what your income is, and they will simply apply the rebate for you. This means the private health insurance rebate will be deducted from your monthly premiums automatically and you won’t have to pay it.

Comparing Private Health Insurance In Australia

We all want to get a refund on our tax return, so hopefully the above is great information. Of course, why not get comparing private health insurance in Australia through Billy Explores! You can easily compare health insurance providers through Billy Explores! So why not get your current health insurance policy out an, see what extras cover you have then get comparing!

You can save both time and effort comparing health insurance providers through Billy Explores. Sure the private health insurance rebate is pretty great, but everyone can always save more! Billy Explores is your health insurance expert, and he wants to get the best value health insurance in Australia for your needs. So why not let Billy compare health insurance providers for you from our panel of providers, and see how much you can potentially save!