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As you may be aware, private health insurance is due to go up by 2.92% on average in April, with some people copping an increase of up to 5.58%! When everything else in life seems to be going up in price, this is just another hit to your back pocket.
Whilst we don’t specialise in health insurance, it becomes a hot topic of conversation twice a year – firstly when the premiums go up in April and then again in July, when the tax year is over.
What some of you may not know is that it’s not just the features and benefits of the cover, or the premiums that affect you – there could also be detrimental tax consequences.
So, here is a brief run down.
The Medicare Levy surcharge (MLS)
Put simply, the MLS is an additional tax for those who do not have private health insurance. As shown by the example below, if you are classified as a ‘higher income earner’ (singles who earn over $90,000 or couples who earn over $180,000 combined) the MLS ranges from 1-1.5% per annum.
Just to reiterate, you will pay extra tax if you earn above the thresholds below and don’t have private health.
Another thing that is important to remember is that if you don’t take out health cover prior to your 31st birthday but decide to take it out later, you will be required to pay an additional 2% premium for the duration of your policy for every year after 30 you didn’t take the cover out.
In short, if you earn over $90,000 as a single, or $180,000 as a couple combined, it’s a really good idea to speak to a business that specialises in health insurance comparisons. Balance out the extra tax you won’t have to pay by taking out cover, versus the premiums you’ll pay and additional benefits you get from the cover.
If you choose to take out private health insurance, do your research. Ask the provider about the rebates available for your situation and make sure the features of the policy suit your particular situation now and also into the future (like if you are planning a family and want to do it in the private system, there are often waiting periods for things like pregnancy and IVF).
As always, feel free to touch base with us beforehand, and we can guide you through the process!