1.Minimize tax liabilities for individuals earning over $97,000 annually: To avoid the Medicare Levy Surcharge (MLS) if your income exceeds the relevant threshold, obtain an eligible private hospital insurance policy for the full tax year.
Although private health insurance isn’t tax deductible, it can still influence your tax situation.
Firstly, the private health insurance rebate is accessible to those with an eligible Medicare card who meet specific income thresholds and have a hospital, extras, or combined health insurance policy. This rebate can be claimed annually through your tax return, or you can opt to receive it as a premium discount.
Moreover, if you earn over $97,000 as an individual or $194,000 as a couple or family and lack adequate private hospital insurance, you might face the Medicare Levy Surcharge (MLS). The MLS is an extra charge imposed on the taxable income of high earners without private hospital coverage. It is calculated as a percentage of your annual income (e.g., 1-1.5%) and applies for the days in the financial year that you and your family did not have appropriate hospital cover.
2. Get rewarded by obtaining hospital insurance before turning 30: The longer you wait to obtain private hospital insurance for the first time, the more expensive it may become.
Your premiums will also be affected by your eligibility for an age-based discount, the Australian Government’s rebate, and Lifetime Health Cover (LHC) loading.
(a) Age-based discount. Some insurers provide an age-based discount of up to 10% if you obtain a policy before turning 26. This discount decreases by 2% for every year after age 25 that you do not have a policy. By maintaining continuous hospital cover with a policy that allows you to keep your age-based discount, you can benefit from it until age 41. After 41, the discount decreases by 2% annually until it is completely phased out.
(b) Government rebate. If eligible, the Australian Government’s private health insurance rebate can help lower your premiums based on your age and income. For instance, if you qualify for the highest rebate tier, you could receive a refund of up to 32.812% on your premium.
(c) LHC loading. If you do not acquire hospital insurance before July 1 following your 31st birthday, you might face higher premiums due to LHC loading. This measure encourages Australians to purchase hospital insurance earlier to alleviate pressure on the public healthcare system.
3.Avoid public waiting lists: Having private hospital insurance allows you to bypass possibly long public waiting lists and select your preferred available hospital and doctors.
When you’re treated through the private system, you’re able to avoid often lengthy public hospital waiting lists by being treated in a private hospital. Once you’ve served your waiting periods, you could receive treatment in a matter of days or weeks. The waiting period will depend on the procedure, as well as the availability of the treating doctor and hospital.
4. Reduce your costs for services Medicare doesn’t cover: Extras cover can help lower out-of-pocket expenses for healthcare services that Medicare does not cover, like dental, physiotherapy, and optical care.
The public and private healthcare systems complement each other. When you have hospital cover and are treated in a private hospital, both Medicare and your health fund can contribute to the cost. When you have extras cover, your health fund helps you pay for out-of-hospital services that aren’t covered by Medicare such as dental, optical and physio.If you’re admitted to a private hospital as a private patient, Medicare will pay 75% of the Medicare Benefits Schedule (MBS) fee for your procedure. Your private health insurance pays the other 25%, as well as contributing towards accommodation costs and theatre fees. There may be a ‘gap’ between the MBS fee and the total cost of your procedure. You may have to pay this gap, or your health fund may cover some or all of it.Medicare does not pay for ambulance services. You can get cover for ambulances from some private health insurers. People in Queensland and Tasmania have ambulances covered by their state governments. If you are a Department of Veteran’s Affairs (cardholder) you are covered throughout Australia. Some ambulance services offer memberships to cover the costs of transport and treatment. Many health funds offer ambulance cover that you can buy on its own, or there may be some ambulance cover included on your health insurance policy.
5. Choose from two types of cover : You have two options for health insurance: private hospital cover and extras cover. You can select the one that fits your needs best, or opt for both.
Extras cover helps you pay for services that aren’t covered by Medicare, like dental treatment and physiotherapy. In some areas, such as optical treatment, Medicare and private health insurance work together. Medicare can pay for your eye check and consultation with the optometrist, while your private health insurance helps you pay for your prescription glasses or contact lenses.
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Author Profile: Jeffrey Liu, JP, is the founder and principal adviser of Hippo Insurance (aka: Hippo Wealth), with a deep expertise in wealth protection. His extensive experience includes roles in the wealth management divisions of Westpac, ANZ, and a local multi-family office. As the host of “Riches Talk,” a podcast dedicated to cultivating personal and business growth, Jeffrey has established himself as a thought leader in developing life riches. His insights have been featured on SBS, The Australian, and Channel 7. Notably, he was a semi-finalist on Australia’s Got Talent in 2010. Learn more at http://www.hippoinsurance.com.au
