What You Need To Be Doing In The Lead Up To Tax Time
It’s pretty common for Aussies to neglect thinking about private health cover until tax time creeps up in June. Then it’s all about finding out ways that you can get more money back on your tax return, or avoid having to pay out of pocket. So, what exactly do you need to be checking in the lead up to June 30? We spoke to iSelect experts to find out…
1. The Medicare Levy Surcharge (MLS)
The MLS was introduced to encourage higher income earners to take out an private health insurance, which would then reduce demand on the public Medicare system. The MLS is an additional fee to the regular Medicare Levy. If you’re earning over $90,000 individually or $180,000 as a family and don’t have the appropriate level of private health cover, you may be penalised at tax time. iSelect tell us that only hospital cover will help you avoid being charged the MLS, extras-only cover won’t. They also advise that for many higher income earners, a budget hospital policy will cost less than the extra tax they avoid. So, if you fall into the higher income earner category, consider reviewing your private health insurance before June 30, to avoid paying extra via the MLS next financial year!
2. Lifetime Health Cover Loading (LHC)
The LHC Loading specifically affects people over the age of 31 who are without private health insurance. It was introduced by the Howard government in 2000 as a scheme to encourage Aussies to get health insurance earlier in life. Under the LHC initiative, Australians who wait until they’re over the age of 31 to take out private hospital cover will be penalised with a loading on top of their premium for EVERY year they were without cover. So if you are 31 without hospital cover, make sure you understand how Lifetime Health Cover loading works before the end of the month. If you are 31 and don’t have hospital cover by June 30, you’ll have to pay between 2-70% more if you do decide to take it out down the track. If you’re nearing the age of 31 and don’t have private health insurance, then consider taking it out before your 31st birthday, to avoid the LHC loading!
3. iSelect tax time tips
There is a lot of hype around private health insurance in the lead up to June 30 so it’s important to find out how you might be affected by either the Medicare Levy Surcharge or Lifetime Health Cover loading. Private health insurance is really confusing, particularly if you are taking it out for the first time, and it’s difficult to understand how exactly it relates to tax and the end of financial year. So, the best thing to do is speak to a private health insurance expert who can explain whether you are liable for either the Medicare Levy Surcharge or Lifetime Health Cover loading, and help you to find the policy best suited to your needs. Plus, if you are already paying an additional loading on your policy, then finding a better value policy will help reduce the LHC burden.