At 67.5* per cent, levels of private health insurance cover may be highest amongst those aged 55-65 years of age, but that means there are still many older Australians not covered. Private Health insurance cover not only gives you peace of mind when it comes to health issues, holding private hospital cover for the full financial year could also reduce your tax burden by limiting the amount of Medicare Levy Surcharge (MLS) you pay.
Singles with a taxable income of over $90,000 ($180,000 for couples) will pay the MLS which amounts to one per cent extra tax. And the more you earn, the more you pay. The table below is an indication of how much extra you will be charged for not having private hospital cover:
|
Family situation |
Taxable income over |
Extra tax payable |
|
Single |
$90,000 $105,000 $140,000 |
1 per cent 1.25 per cent 1.5 per cent |
|
Couple |
$180,000 $210,000 $280,000 |
1 per cent 1.25 per cent 1.5 per cent |
If you take out hospital cover part-way through the financial year, you will only avoid the surcharge for the period you held suitable hospital cover.
So, as the end of the tax year approaches, it may be worthwhile finding out whether paying a private health insurance premium for hospital cover is actually less than the extra tax you’ll pay.
And the sooner you take out private hospital cover the better, as every year over 30 years of age (or 1 July 2000, which ever is the latter) you don’t have it, you will be subject to an increasing Lifetime Health Cover (LHC). For example, a 55-year-old who takes out private hospital cover before 30 June 2016 will pay an additional two per cent loading on top of their premium for each year after 1 July 2000. So a monthly premium of $150 will become $198 – an extra 32 per cent. And if you wait until 1 July 2016 to take out private health insurance, your loading will increase to 34 per cent or and extra $51 per month.
The good news is that after you’ve held continuous cover for 10 years, your LHC can be removed.
Acting sooner rather than later may help you not only secure peace of mind when it comes to your health but also save you money.
If you’re looking to review your current health insurance, now’s the perfect time to get a quote from Apia, with insurance cover designed for over 50s.
To get a quote, call Apia on 13 50 50 or visit www.apia.com.au/health for more information.
Apia health insurance is issued by nib health funds limited ABN 83 000 124 381 (nib) a registered private health insurer and is arranged by Australian Pensioners Insurance Agency Pty Ltd (Apia) ABN 14 099 650 996 as authorised agent of nib.
