Jargon-busting the most common private health insurance terms
Health cover terms can be confusing so let's break them down
You know it’s tax time when you start Googling the definition of ‘negative gearing’ while scrounging through old bags for dry cleaning receipts to hand over to the only guy who makes more deductions than Sherlock Holmes (your accountant).
But, did you know you could be paying an extra 1-1.5% of your taxable income to the ATO if you don’t have private hospital health insurance and you earn over a certain amount?
It’s called the Medicare Levy Surcharge and it’s an extra tax on top of the 2% Medicare levy that we all already have to pay.
Initiated by the Government, the Medicare levy surcharge aims to encourage Aussies to take out private hospital cover – therefore reducing the load on the public Medicare system.
Not everyone is required to pay the Medicare levy surcharge, but if you’re single and earning more than $90,000 or part of a family earning $180,000, you may be charged. We’ve put together a handy online table that lets you calculate exactly how much your surcharge will be, but to give you an idea, if your taxable income is $100,000, you might expect to pay an extra $1,000.
|Annual taxable income||Medicare levy surcharge|
|$90,000 or less||0.0% (no extra tax)|
|$140,001 or more||1.5%|
Above table: Thresholds for individuals for 2019/20 financial year1
|Combined annual taxable income||Medicare levy surcharge|
|$180,000 or less||0.0% (no extra tax)|
|$280,001 or more||1.5%|
Above table: Thresholds for couples, families and single parent families (based on your combined incomes)1
If you join any nib Hospital Cover by July 1 and keep it for the full financial year, you won’t have to pay the Medicare levy surcharge.
What if July 1 sails by and you still didn’t get cover? It’s not too late.
For every day you hold private hospital cover, you won’t have to pay the surcharge, even if you get covered part way through the year. So there’s no better time to sign up than the present.
With nib, you can get a quote online in just minutes.
No need to stress if you’re switching between private health funds. So long as you keep continual hospital cover, you won’t have to pay the Medicare levy surcharge.
When you switch to nib, we’ll make sure the process goes smoothly and we’ll even organise the cancellation and transfer of your cover with your previous health insurer on your behalf.
Got more questions?
1Source: Australian Tax Office. These thresholds apply for the 2019/20 financial year. For families and single parent families, the threshold increases by $1,500 for each dependent child after the first. There are specific rules for calculating income for Medicare levy surcharge purposes. For more information, visit the Australian Tax Office.