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Private Health Changes – What impact does this have on you? Posted on October 9, 2018
Higher income earners will receive less private health insurance rebate or, if they do not have the appropriate level of private patient hospital cover, the Medicare levy surcharge may increase. Therefore, the impact of not having private health cover should be carefully considered before the 1st July 2012.
The Medicare levy is based on a taxpayer’s taxable income. It used to be calculated at a base rate of 1.5% and added to the net tax payable. Low income earners are entitled to reduced rates, depending on family income and the number of children in the family. The Medicare levy surcharge is an additional amount which needs to be paid to the ATO for high income earners who do not have Private Health Insurance.
The Private Health Insurance rebate is a percentage of the premium paid to a registered health insurer, which you are entitled to either claim as a deduction through the health insurer or as a tax offset at the end of the year.
Will I be effected?
The following table shows how the legislation taking effect from 1 July 2012 will adjust your Medicare Levy Surcharge or your Private Health Rebate.
How will this impact you?
Those earning a higher income may wish to review the cost effectiveness of private health insurance cover as they may pay higher premiums from 1 July 2012. However, this may result in higher tax under the Medicare levy surcharge if appropriate hospital cover is not held.
The decision on whether or not to hold private health insurance should not be based primarily on tax benefits versus the cost of premiums. However, if this is one of the primary causes for your private health cover and would like to know more about the changes, click here to contact our team for further information.