If you are earning above $90,000 (as an individual) or $180,000 (as a couple) you may have to pay the Medicare Levy Surcharge unless you have private hospital cover in place. Just having Private Extra's cover is not enough.
The surcharge is calculated at the rate of 1% to 1.5% of your income for Medicare Levy Surcharge purposes and is in addition to the Medicare Levy of 2%, which most Australian taxpayers pay. (This is subject to a few things including income thresholds)
I am nearly 30 years old...
If you are close to 30 but still under the age of 31, this is the good time for you to consider purchasing a private health insurance policy. This particular window is important because of Lifetime Health Cover Loading, otherwise referred to as LHC Loading.
What is the LHC Loading?
Way back on the 1st July 2000, the Australian government began an incentive programme called Lifetime Health Cover. The purpose of LHC is to encourage Australians to take out private hospital insurance, thereby easing the strain on public healthcare.
To ensure that younger people would buy private hospital insurance, the government introduced the concept of loading.
If you have private hospital insurance before turning 31 and as long as you maintain the cover for a full 10 years you don't need to worry about LHC Loading.
If however, you elect not to purchase private hospital insurance before you turn 31, and decide to buy it later, you will pay a surcharge of 2% loading on top of your hospital premium for every year you are aged over 30, based on your age the July 1st before joining. The maximum percentage you can pay is 70 per cent. If, however, you maintain your private hospital cover for ten years, the loading charge ends, and you pay only the premium.
How do I claim my Private health Insurance Rebate?
The rebate that Australians can get for purchasing private hospital insurance is a significant incentive to choose to buy private health insurance. The rebate depends on your income and adjusts according to the recipients’ age and can be received in one of two ways,
Having lower premium charges from your private health insurers is a popular choice for those who want to make smaller upfront payments.
The tax offset is the second way to take advantage of your payment. Contact the Australian Tax Office to make arrangements to receive your rebate this way.
Tax, Rebates & Offsets can be a complex topic and getting it right the first time can save you a whole lot of stress, and a surprise tax bill down the track.
If you want us to prepare your tax return please reach out and book a tax appointment today. It's Fast, it's Easy and it's incredibly time efficient.
This articles intention is to inform rather than advise and is based on legislation at the time. Each Taxpayer’s circumstances vary so we strongly recommend that you discuss this information with your Tax Agent, Accountant or Bas Agent before implementation. If you take, or do not take action as a result of reading this article, we accept no responsibility for any financial loss incurred. This is general advice only.
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