I heard someone saying that if you don't have health insurance (33 yo professional 65k salary), then you need to pay more in taxes. So, it's better to have the insurance as you can use the benefits too. Do you think it's true?
I have never had private health insurance and always paid in full for optics, dental, pharmacies. I have only been to GPs, compensated by medicare.
Great thanks.. Lingering problem in my mind solved. The good thing with private insurance is that you get the benefits and sing-up bonuses too!
you income is not $95k though, you say $65k so you would not be paying the surcharge.
you still need to pay the 1.5% no matter whether you have private health or not.
ask your tax guy about it and i bet he would say you wont save on tax.
May be also switching every year out so for more bonuses
As someone that works in PHI, that can be a bit risky - only because a lot of "errors" occur when you transfer between funds & if the clearance isn't done correctly, then you can actually get charged more and it's a real issue to get it fixed.
Long story short - Most places are understaffed and make a lot of mistakes.
I agree with this. even through a broker it can go pear shape. Old fund doesn't supply the correct transfer paper. New fund does not give a crap.
The medicare levy is 2%.
It increased from 1.5% to 2% to partially pay for the NDIS. Look forward to several more increases in coming years.
Agree!
People hate paying taxes because they feel that their taxes are being used to fund the crack addict next door who have 6 kids from different partners. But they feel that the Bupa executive is entitled to get their 3rd yatch and fly their entire family to Maldives first class, because they are hardworking and derserve every single dollar you give them. Guess what, they don't!! They are simply taking the money which could have benefited more people thru services funded by taxes.
not correct:
"If you have appropriate private heath cover with hospital cover, you won't have to pay the surcharge. This is where you save on tax."
this DEPENDS on your income. there is threshold on the taxable income where you have to pay surcharge or not.
The Medicare levy surcharge (MLS) is levied on Australian taxpayers who do not have an appropriate level of private hospital insurance and who earn above a certain income. … The base income threshold (under which you are not liable to pay the MLS) is $90,000 for singles and $180,000 for families.
Medicare levy surcharge | Australian Taxation Office
https://www.ato.gov.au/individuals/medicare-levy/medicare-le…
https://www.ato.gov.au/individuals/medicare-levy/medicare-le…
remember they are taxable income so if your salary is $200k but you have ALOT deduction and bring your taxable income down to say $88k then you dont need to pay the surcharge even if you dont have priv health insurance with hospital.
am i correct?
Yes you are correct.
However they add fringe benefits on top of that to complicate things.
If my before tax income is 65k the is no way private health insurance will save you tax.
yeah but some doggy salespersons will not disclose/explain properly, so some of my chinese friends still believe they MUST have hospital cover otherwise they need to pay more to ATO. some pay $150+ a month. crazy.
People who could afford to pay $150+ per month on private health insurance would presumably earn way above the threshold for MLS
I do so for family cover. Single cover for $150+ is abit expensive.
now the question:
if you have income less than threshold, but your age is over 30. if you dont take hospital then each year you will get charged with "loading" or "penalty" when you join at later age. but which one is better off, pay the hospital cover or just dont, until say age of 50 when you really need it?
Department of Health | Changes to Lifetime Health Cover
www.health.gov.au › Home › Public and private healthcare › Private health insurance
Lifetime Health Cover (LHC) was introduced in July 2000 and involves a penalty for people aged over 30 who do not hold private health insurance hospital cover.
Oops… that's bad. It means now I have to pay for the past couple of years as well. I probably go for insurance anyway as it seems that there won't be much savings any way you look at it (waiting times in hospital, surcharge in future years with increase in salary/marriage to a reach wife, loadings and fines.
"Your LHC loading can be removed after you have completed 10 years of continuous cover." - so if you stick with PHI for 10 years you'll eventually get rid of that small extra loading charge.
Lots of good info here: http://www.privatehealth.gov.au/healthinsurance/incentivessu…
That's not "small"!
@jaybmate: I don't know, age 30 sounds like a time point when your body starts to slowly deteriorate compared to your young & healthy 20s, which renders private health insurance more necessary. I would start buying hospital cover from age 30 anyways even if there's no LHC.
because (any) insurance is never about how much you use personally
That defeats the purpose of universal healthcare.
Would you like to pay your entire medical bill if you had a debilitating disease? Don't think so.
Not sure if anyone has mentioned it, but this is important:
If you are under 31, take out hospital cover before 1 July following your 31st birthday and maintain your cover from that point onward. After you take out cover, your LHC loading won't be affected if there are short gaps in your cover - for example, if you switch health insurers - but make sure those gaps don't add up to more than 1,094 days (3 years less a day) or the loading will apply. These are known as 'permitted days without hospital cover'.
^ there. another little secret that many not know. thanks to those sales people who never bother to mention this.
yes once you are 31, take hospital and use this "holiday" period. you have only once in your live to take it so obviously take it when you are still young not when you are 50 years old.
Just to confirm I'm reading that right.
So if you get phi at 31 but before end of that financial year you can then go to change providers and essentially not have any phi again for just shy of 3 years, still not getting the loading?
Nope, that 1094 days is lifetime.
Funds communicate these details when you leave via the transfer certificate.
So for example…
(If) I am 31. I take out Private Hospital Cover on June 30th 2017. I then cancel on July 2nd and take a '3 year minus 1 day' gap and sign back up to Hospital cover on July 1st 2020 at age 34 - I would avoid paying the LHC loading?
Also, if after doing this, I took another 10 day gap at age 35, would I then have to pay 10% (2% x 5years) LHC loading for a continuous 10 years? Would I have to be really careful to not have any gaps after July 1st 2020 to avoid the LHC loading?
edit: I think this answers my second question - it would only be 2% loading:
"If you use up your Days of Absence - that is, you have a total gap period of 1095 days - you will pay a loading on rejoining private hospital cover. The loading is an additional 2% on top of any previous loading, and will increase by 2% for every year after the 1094 days without cover."
Unless you make 90k+ as a single or 180k+ as a couple dont waste your time just get ambulance cover.
The public system will treat you if you are an emergency, i'd say it might be worth it for obstetrics if you plan on having kids but there is a 12 month waiting period.
Unless you are in Queensland…
Residents of QLD
Residents in Queensland have ambulance cover provided by the QLD government. The state-funded ambulance service offers coverage to their residents nation-wide.
Queensland taxpayers pay for the state-funded ambulance through their rates, if I remember correctly. Or maybe that's the fire brigade. The Police are self-funding through safety related fines.
Only if you're female…
WTF neggers? If you're male you don't need obstetrics but sure, go ahead and pay if you want to.
I had health insurance for a long while, but did the maths and found I wasn't getting anywhere near what I was putting into it, when factoring in the gaps and what I used it for. I worked out if I put the same amount of money into a separate bank account and treated that as my own personal health insurance fund, I was better off.
I think if you're over 90k a year that's the only time you're better off getting it.
exactly. unless over 90K$ (again that is TAXABLE income NOT salary).
not worth to get hospital. just extras.
even after you are 30yo still not worth.
Don't have you to have hospital cover, not extras, to not pay the levy surcharge?
All depends on your taxable income, Dom
@dragonindespair: oh right. Got confused by your full stop after the bracket. Tbh I'm going to ditch my extras soon and just keep hospital cover as it's cheaper for me than surcharge.
Extras are so tightly capped that unless you actually need to use most of your annual limit, it's a rip. I don't think they should even be allowed to call it insurance, as their risk is so limited by the tiny annual limits. Outside of dentist twice a year I don't really need any other health services regularly and I'd be better just saving the money than occasionally paying a bit less for a physio etc.
However, the taxable income for Medicare levy surcharge purposes is different to your normal taxable income. https://www.ato.gov.au/individuals/medicare-levy/medicare-le…
@FirstWizard: oh cool thanks.
well this is the only relevant for me
"total net investment losses "
so yeah for me its just taxable income after property deductions and losses..
I am doing that way - transferring $50-70 pm and now have $3K in account. It will help in any emergency. Public health system is still very good.
I have a haunch that later in life its hard to get by by this method… I mean things happen and even 30-40 k may not help that much unless I'm getting something wrong.
What medical expense in Australia would actually cost you that much out of pocket if uninsured?
This is the lucky country remember!
@Gunther: It's a matter of waiting times ultimately, you might need something done that costs 15k privately, or might have prolonged wait period publicly.
Wouldn't be an issue if private health cover was abolished, the money being spent on private cover could be transferred to Medicare through adjustment to the levy, Medicare then pays more to docs/surgeons, and they all do their procedures through Medicare so there is no shortage of willing docs and no more protracted wait times
Just one example:
Hip replacement can be done in the public system, but what about the median waiting times:
2011-12 99 days
2012-13 105 days
2013-14 119 days
The increased waiting times reflect decrease government funding of the public system, justified by the expectation that all the the poorest have private insurance. What will the waiting times for elective surgery in the public system be like when I'm old? I have no idea, but I'm not expecting them to improve.
Health insurance particularly hospital cover is not about making a profit. I hope I never have to make a claim.
Uhhh… I don't know who you have health insurance with, but it sure is about making a profit to most insurers.
http://www.news.com.au/finance/business/other-industries/med…
http://www.news.com.au/finance/money/costs/nib-unveils-71-mi…
I meant making a profit for yourself.
Private health insurance IS about making a profit for yourself on Australia. It's not 'insurance' in its standard sense. All of us have medical insurance in the form of Medicare. Private health cover is just to cover your off your want to go private, which is entirely optional.
@Deridas: I think jackofspade means if you've decided to get PHI (whether for tax reasons or for general peace of mind) it's not about trying to make as many claims as possible. Ie: it's better to keep paying premiums & never use it vs being chronically sick & have to use it going in & out of hospitals all the time.
HCF has not for profit status. Not sure about any others.
What jackofspade meant is precisely what I disagree with. Getting PHI is definitely about obtaining a profit for yourself. Many people confuse PHI and the fact that there is universal public Healthcare in Medicare. If I pay for it and don't plan to use it, why pay for it in the first place? The 'insurance' bit really is covered by Medicare (eg if you get run over by a car, you go through the public system, you still don't get to use/need PHI).
Extra's insurance you can evaluate whether it was worthwhile or not and not really what most people consider insurance. The best reason for private health insurance is to insure against languishing on an elective surgery wait list and improving your quality of life, my father in law had 4 heart surgeries at about 50K a pop and only had minor out of pocket expenses. It markedly improved his quality of life but doubt the procedure is even done or covered in public hospitals. Yes, for emergencies medicare is good and I would go to a public hospital in these situations, but my private cover is for non-emergency health issues that hopefully never arise.
For me, the point of Private Health cover isn't the benefits you get but rather to avoid the Medicare Surcharge.
Since this is OZBargain, I'd be interested to know if someone has found the absolute cheapest Hospital Cover PHI policy, that satisfies the ATO and will let you avoid the Medicary surcharge and Loading increase.
Surely one of the insurers has thought to cash in on offering practically pointless cover that provides a tax benefit to people earning >$90,000
there are like less than 10 private healths in australia you sure can google each of them your self? there is no bargaining as far as i know so what you see in the website is fixed price. all hospital will satisfies ATO for sure.
Yep, what @dragonindispair said, if you want the cheapest just get the "public" option and the $500+ excess.
You mean the $500 max excess. Otherwise it doesn't satisfy the tax offset. PHI is an absolute waste of money as you'll be out of pocket far greater than no PHI. This is obvious as they make so much profit. The only exception to this is if you have their top tier covers and pay $4000/month, only then will you find that your surgery is even covered if it happens.
Otherwise you'll be out of pocket like no tomorrow compared to public care. The other benefit is less waiting time for non-emergencies. The bottom line is that in terms of cost, you won't win with PHI, it's purely for benefits. It's not like third party and property car insurance.
When you pay for the junk policy you are gambling that you won't have a non-emergency incident so that you can save on tax. If you do have an incident you will be carted off to a private hospital and you will likely undergo a surgery not covered by your PHI and be out of pocket tens of thousands. Beware.
Someone indicated [here] (https://www.ozbargain.com.au/comment/1849493/redir) that there are otherwise worthless insurances that are good for avoiding MLS and will save you $$$ depending on your income.
Funds like NIB specialise in junk policies that look reasonable but are fairly useless.
Remember you get what you pay for.
More and more I have upset people in my rooms who now need their policy and find that its junk with multiple exclusions.
often its been the mans responsibility and you can tell he's going to get an ear bashing later
I found it for around $600/year. PM for details :)
If you are earning enough to pay the Medicare surcharge, the difference between insurance price and the surcharge is small enough you'd may as well just get the insurance.
constant topic here at Ozbargain
feel free to do some light reading….
https://www.ozbargain.com.au/node/198278
https://www.ozbargain.com.au/node/134133
https://www.ozbargain.com.au/node/272304
https://www.ozbargain.com.au/node/266914
https://www.ozbargain.com.au/node/274889
thanks, never seen this site before.
Looks like I dont need insurance(I dont have it anyway)
In my opinion you'd have to be pretty silly not to have private health insurance. Possibly unless you earned a decent salary and had no dependants. My ex girlfriend didn't have private health insurance. No idea why. Long story short she had to have about $4000 worth of dental work done. She couldn't afford it.
At the very least if you are in Vic, get ambo cover. There was a thread on here a few years back, person was complaining about paying the ambo bill. Not sure if they actually couldn't afford it or were being a cheap arse.
Long story short she had to have about $4000 worth of dental work done. She couldn't afford it.
How much of that $4000 would've been covered by the insurance she could've had? Firstly, any major dental work generally has a 12 month waiting period so she would've been paying a whole year's premium to start off with. And then you'll find that the dental cover is so small.
… you'd have to be pretty silly not to have private health insurance.
I've been paying $200/month for hospital and extras for more than 10 years.
All the times that I've needed to go to a doctors, it's covered by medicare.
The doctors have referred me to a specialists that costs $200 each time. Private Health insurance covers none of that! (I've never understood why that is). I've gone to the dentist once each year for checkups etc and I claim about $200 worth.
I'e found that the only time that private health insurance is worth the premiums is if you actually need a large range of health services regularly.
Question, dental is not covered by Medicare right?
One of the main reasons for me joining up private health insurance is for my family to have dental access.
You're right - dental is not covered by Medicare.
Dental cover is part of the "Extras" cover so it won't affect your taxes or anything.
I'm not sure what the value of the cover is for a family policy.
Do some research to make sure the cover amounts and limits (especially the lifetime limits) suit yours and your family's needs.
(As a single, the cover and limits are not worth it for me).
@bobbified: I ( and family) are already with nib family coverage. Medium hospital cover with dental and optical.
Perks for me is unlimited cleaning when going to a nib dental centre which is fortunately nearby my work place and new specs for both myself and missus.
Funny story to add, I got a call from iselect asking if they can offer a better coverage than what I have now, I gave my details and said I was on the best price and couldn't offer anything better. 😀
If I remember correctly, iSelect doesn't compare all the available insurers. They only compare the ones willing to sign up on their website and pay them a commission for each policy sold.
I had CBHS cover and the other health insurers came in for a promotional day - they asked me who I was with and they told me not to bother looking because they can't beat it.
Now, hmm… we can't booooth have the best cover haha!
Really depends on your situation. Private hospital cover is only tax efficient if you earn more than 90K a year otherwise you won't pay the Medicare levy surcharge anyway. The extras insurances are very restricted and have rather small limits for each treatment especially within the first year. Your girlfriend may have received $400 back from the insurance, but would have had to pay a ridiculous premium a year…
I'm just about to give up my private health cover - it's almost $80.00 per month for a bupa active saver which is basically a barebones policy. pretty bullshit.
www.privatehealth.gov.au/dynamic/search ~ Is where you see ALL the policys.
Unless you get sick its EXTRAS that saves you money ~ checkout my fav's https://goo.gl/N2h00h for value.
1) you dont need to have hospital and extras with the same company for most offers, splitting them up often gives you a better mix'n'match deal
2) you can have more than one lot of extras and extras dont have a loading, unlike hospital (2% for every year >30 for max 10 years, then it drops off loading)
3) if you DO sign up for hospital and extras with the same company, then you should ask to have the waiting periods for extras to be waived. AHM are offering this ATM
4) If you have HOSPITAL loading, then for 10 years get cheap insurance and then upgrade when the loading drops off for better insurance
5) AU health Insurance is cheap! USA its $700-900 a month with a 5k excess! Obamacare might drop the cost down to around $300 a month and thats US$!
Add SMILE card for additional discount for dental on top of your extras too www.smile.com.au
Re the US situation, a) isn't it usually taken care of by the employer and b) I'd presume the price there includes the medicare equivalent component (which is taken care of by the 1.5% pa medicare levy and the govt here in Australia) and their equivalence of Australian private health cover.
They do but it's a cost of employment that doesn't equal 'wages'.
But there's subsidies and sticker prices and…it's a shemozzle.
Awesome didn't know such a thingy existed. Thx mate.
I think I sort it out. I don't get private health insurance. After 20 years (if still alive) I'll start paying for insurance. My premium will be up by almost 50% for 10 years. So during those 10 years I'll pay the equivalent of 15 years insurance. That's $5000 of today money extra. But, by that time I have saved 25*$1000= $25,000.
So the net saving will be $20000 today money. I assumed I won't need special hospital benefits apart from public hospitals and I won't have a taxable salary of more than the threshold (currently 90k).
thanks for confirming. i didnt do any calculation but looking at how expensive the cheapest hospital cover are, i have convinced myself long time ago to just delay taking hospital as long as possible.
Definitely cheaper if you earn less than 90k otherwise it might be a better idea to take out private insurance rather than paying 1% or more MLS. My calculations above is incorrect. For the scenario that was described, my saving would be $15,000 (today money) as I would not have paid insurance for 20 years (not 25 years).
I wonder how much the government saves in health costs by forcing people to purchase private cover.
I was just thinking that I've been to hospital twice in the past 10 years or so. Both times on the way out I've walked up to the window asking where to pay - the nurse has laughed at me both times and told me that it's a public hospital and there's no payment required.
I would've assumed that I'd at least have to provide my health cover details so that they can charge it back. But no, they didn't even want that. So I pay this health insurance company each month and they don't have to fork any money out for my treatment. My taxes pay for my treatment instead. GPs take medicare and Specialists aren't covered.
Besides elective surgery (which I have heard about a few times but never had to do it), what am I really paying for?
(I currently have cover for tax purposes only).
I gave my details when my wife had to go to ER once. Hoped they placed it to good use. Didn't pay anything though.
Did they ask for it or did you give it voluntarily?
They actually asked for it. Mentioned something along the lines about helping keep public cost down. I don't know if it did or not but I hope it did.
@harkoliar: We have had this a couple of times now and happily filled out the forms, interestingly I hear that public hospitals asking if you have any private cover and then charging whatever they can on it is one of the main reasons for the big jumps in premiums, not sure if I would if I had my time again, it all seems like a nice idea until you realise you will be paying for it through increased premiums.
The government does save. For example, if you're 70 and would like a joint replacement, getting it done in private will mean the elective lists are more manageable, and Medicare doesn't need to pay much for your joint replacement. Private Hospitals are happy because they make a profit. Doctors are happy because there's slightly more money in private. Patient is happy because they get their replacement sooner rather than early a year, and they are sure it's done by an experienced consultant not a hospital trainee.
Still doesn't mean I agree with government "forcing" high income earners to get private health insurance though…
hey this is an interesting discussion. If you do things solely on taxation benefits you could eventually be stuffed. Things like Private Health Insurance, Income Protection Insurance, Negative gearing [not just housing] investing in growing trees [99% of these plans failed or later rule invalid for tax purposes}, investing in movies [apart from Crock Dundie}
You do these things for protection, Health costs and Income support, or wealth creation.
As for the former - shit happens, a friend came of her bike , council road fault but only limited support for costs. People get sick, cant work, short and long term. Say you are 30 and have a majour health event which stuffs you, then without Heath and income support you are at the mercy of hospital ques and Human Resource departments for pension support. OK, the tax benefit is a bonus but hopefully you will never need to use it. Like car insurance I still buy it even though I do not get a TAX deduction. Sadly my family and I have got many years of tax deductible costs back.
Are we better off, well I am here now and maynot be in other circumstances.
Hope this helps.
We're only talking private health insurance here.
The reason there's so many questions is because not many people really understand what it's for - and when they do understand, they realise there's very very limited circumstances where a real benefit is payable.
For eg, a $60 physio session - where the insurer pays $42 (70%) - I think most people look at these situations and think to themselves "it's $60! I can pay that without insurance!".
This is in direct contrast to income protection insurance or car insurance where the payouts are much more significant amounts that most people cannot afford to pay if the risk realises.
The benefits of PHI are much more for chronically sick patients. Imagine if you've had multiple heart attacks over many years. Each of them require an extended hospital stay followed by rehab (like physiotherapy rehab where you have to learn your body's new physical limitations, not like drug & alcohol rehab), with specialist appointments and specialised testing in between the surgeries.
Yes, this would have been able to be done in a public hospital, but there is a difference in the level of care. Even just the benefit of being able to see the same doctor each time, who gets personally invested & tries that much harder. I've seen this firsthand where a regular patient has had a heart attack overseas. The GP, specialist & overseas doctor have a daily teleconference with a translator to get a comprehensive history & have input on the patient care plan. This went on everyday for about 5months before the patient was well enough for a flight back to Australian (even then, they got special letters to get fast-tracked through customs/immigration and went straight from the airport to hospital). No way does this happen without PHI (and travel insurance).
As with all insurance, the larger payouts are only possible from the people who keep cover for peace of mind (or tax benefits in the case of PHI) but don't make claims/only make small claims.
I agree that it's useful for chronically sick patients.
The situation you've provided is not really the norm though and it'll be a very small percentage who'll fall into that situation. The overseas portion of this situation is definitely not covered by PHI - it'll be covered by travel insurance. The only thing that has come out of the PHI in this case the specialist being the same person throughout the months.
I don't have enough experience with doctors to say whether you might get the same doctor or not in the public system in that situation. The travel insurance may have some sort of input into all this with their own doctors since they try to repatriate a patient to minimise and control costs.
And given that it's someone who's had multiple heart attacks, it may well be a patient's "usual" doctor that they deal with.
As with all insurance, the larger payouts are only possible from the people who keep cover for peace of mind (or tax benefits in the case of PHI) but don't make claims/only make small claims.
PHI insurance is a little different because everyone's got the public health system to fall back on. And the amount of conditions on these policies is, IMO, ridiculous! When we take out other insurance, it wholly covers most things related - such as car insurance and accidents, theft, fire, damage, etc.
With PHI, there's a whole range of health/medical related items that aren't covered - like I mentioned in my earlier posts, things like specialists. From the cost of seeing specialist, I get more back from Medicare than I do from my PHI. How does that even make sense? How is it health cover if it doesn't even cover basic things like that?
Most other items that the "cover" isn't really "cover" as we would expect it. It only covers a "proportion".
Don't forget physio is 'extras' cover, taking that won't even get you any taxation benefits…
I wish Australia would go 100% socialized healthcare. At present we have a really dodgy public system (frequent misdiagnoses, long waits, nobody seems to care) and a good private healthcare system for cashed up middle/upper class citizens. The only way the public system can improve is if we abolish free market medicine. Poor people are treated like dirt in our society.
Thaal, I disagree. We have no doubt one of the best public healthcare systems in the world. There is no other public Healthcare system that is significantly better than ours.
The very nature of medicine is that will always be variations, unknowns, and human factors. The chance of misdiagnosis is always present, no matter how perfect your system is. If anything the system we have really keeps mistakes and human errors to a minimum. It doesn't look that flashy, but when you actually work in the system, and compare it to any of our Asia Pacific neighbours, you'd realize that we are far here than all of them (perhaps with exception of the Kiwis) - or let's say, if you were fun over by a truck, would you rather be in China, Hong Kong, Indonesia, Malaysia, India, or Australia?
With regards to long waits, that's due to cases being completely non urgent, non lifesaving. In fact, you can argue the only reason why people complain about it is due to unsubstantiated instant gratification ideas. Do you have any actual cases of long wait times for urgent life saving surgery? Certainly not on a daily basis.
Don't forget it's the higher income section of society actually paying for the book of the Medicare system.
Source - I work in the public Healthcare system.
Unjustified, and incorrect claims all over.
Our public health system is of high global standard, as detailed by deridas.
And the thought of complaining about free medical service baffles me. We have to wait because we don't have infinite resources to employ all the staff we could ever need - basic economics here.
Waiting time is actually extremely low, and meets very high international standards when it comes to things that matter - we have all round the clock stroke and heart attack teams that get people to full treatment within <1 hour. Because that matters. That saves lives. It saves people being disabled. It improves people's outcomes.
But you can wait if you have a non-urgent thing. Sounds cruel to write that, and sorry I don't mean to offend, but reality of running a public health service in a resource limited world, is you need to focus your dollar on where outcome matters most. Such is life.
Happy to pay and contribute to our public system then to give money to private Cos.
One small thing I'd add that's worth thinking about is that the surchage is done in a special way, so your total income on your tax return may be below 90k, but you'd still pay the surcharge. This only really applies to people doing negative gearing, but if you have other tax deductions it's worth taking note of:
This paragraph sums it up nicely:
"It's based on a measure of total income, regardless of the form in which it is paid, and regardless of fiddles such as negative gearing that are used to reduce it.
That's right. Negative gearing is disregarded when it comes to calculating income for the purpose of calculating the Medicare levy surcharge. High earners are entitled to lose as much as they want renting out properties, but they are unable to use those losses to cut the income used to calculate their Medicare levy surcharge."
hmmm.. any accountant here can confirm that?
If you pay attention to your tax return, you will see 2 levy. Those are medicare levy and medicare levy SURCHARGE.
Everybody pays medicare Levy, it is currently taxed at 1.5% of your income I think.
If you have appropriate private heath cover with hospital cover, you won't have to pay the surcharge. This is where you save on tax.
Say your income was 95k: