Private Health Rebate Changes

posted Jun 5, 2012, 7:36 PM by LASP Team

Physiotherapy is often one of the many services covered by Private Health Insurance.

Most Australians with Private Health Insurance currently receive a 30% rebate from the Australian Government to help cover the cost of their premiums.

However, from 1 July 2012, the access to the rebate is changing. The Private Health Insurance rebate will be income tested. This
might cause some confusion amongst those who currently have health insurance and are on higher incomes.

If you expect to earn more than $84,000 as a single, or more than $168,000 as a family in the 2012-13 financial year, your rebate will be affected.

Using the table below, work out your tier to see how the changes will affect you. To avoid a potential tax liability, contact your private health insurer and tell them which tier you are in. They will adjust your rebate for you.

Private health insurance rebate for the 2012-13 financial year

No change

Tier 1

Tier 2

Tier 3

Singles

$84,000 or less

$84,001 - 97,000

$97,001 - 130,000

$130,001 +

Families

$168,000 or less

$168,001 - 194,000

$194,001 - 260,000

$260,001 +

Under 65

30%       

20%

10%

0%

65 - 69

35%

25%

15%

0%

70+

40%

30%

20%

0%

Note: Single parents and couples (including de facto couples) are subject to the family tiers. For families with children, the thresholds are increased by $1,500 for each child after the first.

 

Also, from 1 July 2012, the Medicare levy surcharge (MLS) income test will change.

If you are single, earn more than $84,000 and don’t have private health insurance hospital cover you will pay the MLS.

If you are a family, have a combined income of more than $168,000 and don’t have hospital cover for you, your partner, or your children – you will pay the MLS.

The MLS will also apply if you cancel your existing hospital cover. If you do not have hospital cover, use the table below to see how the changes affect you.

Medicare levy surcharge for the 2012-13 financial year

No change

Tier 1

Tier 2

Tier 3

Singles

$84,000 or less

$84,001 - 97,000

$97,001 - 130,000

$130,001 +

Families

$168,000 or less

$168,001 - 194,000

$194,001 - 260,000

$260,001 +

All ages

0.0%

1.0%

1.25%

1.5%

Note: Single parents and couples (including de facto couples) are subject to the family tiers. For families with children, the thresholds are increased by $1,500 for each child after the first.

Interestingly, a recent CHOICE study has found that consumers affected by the upcoming means test who are thinking of dumping private health insurance will probably save money by holding on to their hospital cover! They found most people, including higher income earners, will save money if they keep their hospital cover because the alternative means paying 1% -1.5% of their income on the higher Medicare Levy Surcharge (MLS).
 

But here is a tip: If you are likely to earn above the threshold, pay your Private Health Insurance premiums for July 2012 – June 2013 before the 30th June 2012. This will ensure you still get the 30% rebate before the changes start!

 

For more information visit the Choice Website or the Department of Health and Ageing.

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