Health Insurance Rebate How Does It Work?

godoftoast on 03/03/2018 - 15:02
Last edited 03/03/2018 - 15:32 by 1 other user

Hi I am applying for health insurance for the first time and would like your help understanding the rebate.

Details
26 Male Queensland
Income likely 95-105k depending on overtime
No dependents
No need for extras

I want to get the cheapest cover possible to avoid paying extra Medicare surcharge
I am using privatehealth.gov.au to compare policies,

I am looking at Budget Direct Public Hospital and Frank Basic Hospital. On the gov website Budget is listed at 86.66 per month and Frank at 88.33 (without including any rebates from the government)
If I go through the budget direct website it quotes me 870ish and Frank quotes me 1100. I'm guessing the Budget direct website is including the government rebate in their quote.

My question is how does this rebate work. If I pay for Budget Direct at 870ish then I'm guessing I don't have to do anything else but if I pay the Frank 1100 dollars I will get 200ish back from the government at tax time for the rebate? Is that how it works?

What if I miscalculate my earnings and I jump up into the next tier of rebate? Will I owe extra money to Budget Direct if my earning goes up to 110k and I dont qualify for the Tier 1 rebate?

I'm just confused on how the rebate works (is it applied at time of purchase of policy from a company (and the company then claims the rebate from the government) or do I pay more now and get the rebate myself from the government).

Your insights would be very appreciated

Regards,

• 

  Donaldhump on 03/03/2018 - 15:09

  +1

  you get a set amount off based on your earnings.

  if you ask for 30% rebate and only entitled to 20% due to earnings, you pay 10% more at tax time i'd imagine.

  if you ask for 20% rebate and entitled to 30% due to earnings, you get 10% back at tax time i'd imagine.

  surely your answer would be all over google.

• 

  [Deactivated] on 03/03/2018 - 16:44

  +1

  Yeah, it gets deducted from your tax refund if you get bumped into the next bracket. Remember to put your details into the tax form, otherwise you might get that nasty penalty, but it should be autofilled, unless you are doing it yourself.

  Similarly if you just had extras cover and no longer are eligible for highest rebate (earning over $90k), some people forget to put their health insurance details and can get a penalty if the ATO picks it up. I can't remember why some clients earning lots only had extras cover, maybe they though it would minimise their tax and were uninformed.

  At this price point, you won't be that better off buying public hospital only cover as it exceeds the amount you get back from not paying the medicare levy surcharge. At some point near $120k it becomes more worthwhile. The cover will also increase in April, so that might throw your calculations out a bit.

  Seriously, in your situation I wouldn't buy public hospital cover, it's a useless cover and your just paying an extra $100 or so.

  ---

  I just plugged in some numbers at budgetdirect, your quote would be $860.10 a year based on a Single, aged 19, earning between $90,000 - $105,000 living in QLD. This would be the baseline figure, anything older would probably cost more.

  I guess it might be worthwhile, but not by much. Just remember to choose a public hospital, and make sure they have a "not worse off as a private patient than a public patient clause", before you sign the hospital documentation, otherwise you'll be in some big trouble. i.e. It will cost you a lot in out of pocket costs.

  ---

  Oh and you also have to take into account lifetime health loading, if it is high, then your better off without it.

• 

  vinni9284 on 03/03/2018 - 17:32

  Don't get just basic cover just for tax avoidance.

  Get at least mid-tier cover as basic is rubbish.

  You want at least value for money.

  Many companies that are not even associated with Health Insurance are starting to jump on the additional insurance bandwagon.

  Therefore research their dependant company after a quote.

  E.g. Frank = GMHBA, AAMI - NIB, Kogan = AHM etc