If you’re lucky enough to earn over $90,000 per year and qualify for the Medicare Levy Surcharge, you will be paying up to 1.5% extra tax on your total income every year. That doesn’t sound good, does it?
To avoid this tax surcharge, all you need to do is take out the minimum level of Private Health Insurance. Not only is this level of health insurance usually less than what you’d get pinged with the MLS, but your health will also be looked after better. Sounds like a Win-Win to us!
It’s important to take out Private Health Insurance before you’re 31 to avoid paying more for the insurance in the form of Lifetime Health Cover Loading. (LHC)
While it’s never too late to sign up for private health insurance, unfortunately, if you’re over 31, the fees are slightly higher (more on that a little later…)
So, let’s unpack this a little more…
What does Private Health Insurance give me?
Private Health Insurance gives you and your family the peace of mind that you have choice of care, without the stress. Whether this is a pre-planned visit to a hospital or an emergency run, it gives you choice and removes the financial burden you may otherwise incur.
There are different levels of Private Health Insurance, but the minimum you need to sign up for to reap the rewards of this hack, is Hospital cover.
Speak to a specialist to see what Private Health Insurance is right for you.
When do I have to pay the Medicare Levy Surcharge?
If you earn over $90,000 a year and do not have private health insurance, you will be charged an extra tax called Medicare Levy Surcharge (MLS).
This is calculated differently depending on whether you are single, in a couple or have a family.
Here’s the numbers:
For Singles if your income is
- $90,001 to $105,000, the MLS rate is 1.0% ($900 – $1050)
- $105,001 to $140,000, the rate is 1.25% ($1312 – $1750)
- $140,001 or more, the rate is 1.5%. ($2100+)
For Couples/Families if your income is
- $180,001 to $210,000 (see Note 1), the MLS rate is 1.0% ($1800 – $2100)
- $210,001 to $280,000 (see Note 1), the MLS rate is 1.25% ($2625 – $3500)
- $280,001 (see Note 1) or more, the rate is 1.5%. ($4200+)
The family income threshold is increased by $1,500 for each dependent child after the first child.
So, if you’re in the lower income level listed above, at least $900 has been taken out of your Tax Return every year that you don’t have private health insurance! And you basically got NOTHING for it.
What is Lifetime Health Cover Loading?
Lifetime Health Cover loading is an extra fee that is applied to your hospital cover if you sign up after you turn 31.
Every year that you don’t have cover, the Lifetime Health Cover Loading goes up by 2%!
If you don’t get hospital cover until you’re 35, that’s an extra 10% in fees for the rest of your life – OUCH!
To Sum it up:
If you earn over $90,000 as a single or $180,000 combined as a couple and don’t have Private Health Insurance, you will pay the Medicare Levy Surcharge. (Remember, usually basic private health insurance is cheaper than the MLS!)
If you are over 31 and don’t have private health insurance, you will pay an extra fee called the Lifetime Health Cover loading, which increases by 2% per year every year you’re not insured!
Why spend money and get nothing in return? Avoid these extra fees & sign up for Private Health Insurance today! To obtain a quote on Private Health Insurance click here to speak to a specialist about the right cover for you.