Private Health Insurance Requirements to Offset Medicare Levy Surcharge

mkh1991 on 06/01/2021 - 11:54
Last edited 22/02/2021 - 18:55 by 1 other user

Hi All

I am after some advice regarding private health insurance.

We as couple earn more than $180K for this financial year and have 2 kids. I haven't had a private insurance yet. Based on our income, we will have Medicare levy of around $3K. So to avoid paying that levy, should I get hospital only cover for a value that will offset the value of $3k (i,e cover of around $250 per month) or any minimum cover should suffice the purpose to avoid paying levy?

Minimum cover I found is around $120 per month (Hospitals only). Also, I have heard that the cost of extras doesn't contribute towards offsetting the levy, although I would like to have some extras (dental generally).

Thoughts?

Health & Beauty Health Insurance Insurance

Comments

  • conan2000 on 06/01/2021 - 11:59
    +1

    You just need any basic hospital cover and you won't pay the additional levy. The extras are unlikely to be worth the money, we cancelled ours recently, as we realised it's highly unlikely we would ever get the money back in a given year (even with us and the kids doing 6 monthly dental check-ups, optical appointments and a bit of physio).

    • Jalif on 27/04/2021 - 11:21

      Shop around on your extras, I found two with possible net benefits, assuming regular dental and optical, factoring in third party ambulance cover as essential.

      • conan2000 on 27/04/2021 - 22:15

        Unfortunately it's not really an option. We have a corporate discount with Bupa which makes it significantly cheaper than any other option we have a looked at. My partner and I both used to qualify for this but both changed employers in the last year and won't be able to retain the discount if we change.

  • BensonP on 06/01/2021 - 12:05
    +2

    If you're trying to dodge the tax this year, you'll be out of luck, as you can only claim a 50% reduction, due to not having private health for 50% of the financial year. (approximately 6 months)

    You'll need to have cover for the whole financial year to not pay the surcharge.

    Ifyour income is less than $90,000 (singles) or $180,000 (couples, families and single parents), then you won’t need to pay the MLS at all.
    If your income is above these amounts, you can avoid paying the MLS by taking out a private health insurance policy that includes hospital cover. The excess on your hospital cover needs to be $750 or less for singles, or $1,500 or less for couples, families and single parents.

    I'm not an accountant, and I suggest speaking to one.

    • avoidfullprice on 06/01/2021 - 12:39

      You'll need to have cover for the whole financial year to not pay the surcharge.

      They don't pay surcharge on the days they are covered. Like you said prior - 50% reduction at best if they take it today. Maybe what you were alluding to is if OP wants to take out a cover on say 30 June and expected it to reduce the whole of levy surcharge, they are out of luck?

      https://www.ato.gov.au/Individuals/myTax/2020/In-detail/Medi…

    • mkh1991 on 06/01/2021 - 12:41

      The Intention is not to dodge the system. And If i have to pay levy for past 6 months, so be it. If I take cover for next 6 months, will my Levy be reduced or still i have to pay $3k, and if this is the case, no poin tof taking PHI.

      • arkie0 on 06/01/2021 - 13:30

        Will be reduced and you only pay 1.5k (6/12 months). If you take cover next month, levy will be (7/12 monthsx3000=1750).

  • avoidfullprice on 06/01/2021 - 12:18
    +5

    we will have medicare levy of around $3K.

    I think you meant Medicare levy surcharge, and a total of 3k between you two? Reverse calculating, you will have a combined income (including fringe benefit etc) of 240k at tier 2 rate?

    I haven't had a private insurance yet.

    This will impact LHC loading if you have not taken out PHI since turning 31. This adds to the premium.

    minimum cover i found is around $120 per month (Hospitals only)

    Levy surcharge applicable per person. If only you take it and your partner doesn't, your partner pays the levy surcharge at the 1.25% rate on the individual taxable+fringe income. But I guess you meant $120 /mth for the both of you?

    Check - you would choose cover which would cover your kids as well, yeah?

    I would like to have some extras (dental generally).

    You heard right - extra has no effect on, or affected by the levy surcharge

    Edit: your combined threshold would be $1500 higher because you have two kids. But in scheme of things, not applicable to your circumstances?

    Source: https://www.ato.gov.au/individuals/medicare-levy/medicare-le…

    • mkh1991 on 06/01/2021 - 12:39
      +1

      yes, around 230K combined income for both of us.

      I calculated levy surcharge on combined income for both of us and yes, I meant $120 for both of us.

      • 1parle on 06/01/2021 - 12:43
        +2

        can you please share the name of private health insurer who is giving hospital cover for just 120$ per month

        • watwatwat on 06/01/2021 - 15:47

          It costs under $100 per month with nib for income of $140k +. Just google it and enter fake details like I did.

          • 1parle on 06/01/2021 - 17:45

            @watwatwat: Hey I’m with NIB only and pays 84$ per fortnight for a couple for their cheapest plan. I think you checked the cost for a singles cover.

            • watwatwat on 06/01/2021 - 17:50
              +1

              @1parle: True. Sorry, I didn't recoginse the discussion was for couples.

              Even for singles, it is still a good deal for high income earners.

      • avoidfullprice on 06/01/2021 - 12:48

        If you find a cover that's $120/mth after rebates and LHC loading for the both of you, then your financial decision should be a no brainer…

        You should consider the needs of you two and your kids, and whether the covers are appropriate by calling that particular insurer. Consult your family GP for specific concerns.

        Ambulance cover varies between states, and waiting period varies between providers. Some cover provide unlimited ambo call out, while some only cover day one. Of course, I am not suggesting calling ambo out for sake of ROI ;)

      • CyberMurning on 06/01/2021 - 14:03

        yes, around 230K combined income for both of us.

        omg so jealous you guys are soooooooooooo rich

    • 1parle on 06/01/2021 - 12:42
      +1

      yeah, nice explanation. And I doubt there's any hospital cover available for 120$ per month for a couple or a family. So, OP needs to take family cover which I reckon starts from 150$ per month (at least) considering 16.706% govt rebate on Tier-1 income.

      • mkh1991 on 06/01/2021 - 12:48
        +1

        I had a quick look on finder and AHM essentials basic plus is $128/month for Family in WA

  • whitelie on 06/01/2021 - 12:58

    How old are you? 30 this year going by your username?
    Bear in mind if you're over 30 and haven't had private health, you'll also pay an additional 2% LHC per year.

    As a minimum, I'd get basic hospital with ambulance cover. Probably around $140-150/month at a guess with your rebate level.
    If you're paying the levy surcharge, you may as well get something for your money, plus you won't get stung with the LHC later on in life.

    • mkh1991 on 06/01/2021 - 13:08

      I am 33

      • whitelie on 06/01/2021 - 13:15

        My understanding is you'll pay an extra 6% on top for 3 years according to this

  • holdenmg on 06/01/2021 - 13:12

    If you get HIF Hospital and Saver Options Extras (or above) Ambulance is included.
    Use the code "2MW" https://www.hif.com.au/2mw and Join HIF Hospital & Extras before January 31, 2021 and they waive all 2-month Extras waiting periods. That means you can claim straight away on general dental, optical, chiro, physio, gym membership and much, much more!

  • The-Kremlin on 06/01/2021 - 14:45
    +1

    The scam that is health insurance…funded by who else but the government.

    • HardQuiz on 06/01/2021 - 15:29
      +4

      Who authorised this account ?

      • The-Kremlin on 06/01/2021 - 15:53
        +2

        There's only room for one supreme leader!

  • screensaver on 06/01/2021 - 15:38

    health partners has 6 weeks free right now and hcf has 400 gift card for familes via Fifty Up Club

    • CheapSticks on 06/01/2021 - 19:26

      Medibank has $400 Adidas voucher plus 2/6mnths waiver for extras

  • holdenmg on 06/01/2021 - 18:15
    +1

    "Lisa needs braces."

  • screensaver on 07/01/2021 - 00:30

    It would be wise to join now even on the cheapest hospital policy available such as health.com.au or your loading will blow out of control for the future. After 10 years paying now, you lose yout 2-4% loading. Heallth.com.au has a cheap one that covers eveyting but in a public hospital only. You can also pay 3 years in advance to save on annual increases

    • backupper1 on 07/01/2021 - 08:49

      You mean for the years without HI the payment can be made to avoid the 2% yearly loading?

  • screensaver on 07/01/2021 - 09:03

    If you are 33 now you will be charged extra 2 or 4 percent for 10 years only, if you continue cover.non stop

  • OzHunterNSW on 07/01/2021 - 09:52
    -5

    Why haven't you done this before? What about your children? At 180k why are you such a scammer?

    • mkh1991 on 07/01/2021 - 09:57

      My partner started job only last year

  • Brendoo on 07/01/2021 - 20:11

    Be careful and get the advice of a tax accountant. I shopped around for the cheapest hospital cover and arrived at NIB. NIB also assured me that this would mean i don't have to pay the Medicare levy. It was about $50 per month that i was paying at the time about 6 years ago.

    Then about 2 years after taking out the policy I got a formal letter from the ATO saying "you are not paying enough in private health insurance to qualify for the Medicare level exemption, take out more expensive insurance". So i had to change the policy to about $80 a month and then the ATO were satisfied. The strange thing was, the ATO could not answer to tell me the dollar amount or other conditions I needed to satisfy that I already wasn't. Things may have changed since then, but just be careful the same doesn't happen to you.

    • watwatwat on 07/01/2021 - 21:54

      Isn't it medicare surcharge, not medicare levy? And the only thing you need to do is buy hospital cover?

      Not sure what you're referring to.

  • Joshaz on 17/02/2021 - 16:20
    +1

    Do we have to pay the medicare levy surcharge based on earning over 90k a year? What if one got their taxable income below 90k?

  • serapax on 22/02/2021 - 18:35
    Merged from Cheapest Junk Health Insurance to Avoid Medicare Surcharge & Loading?

    Hi all.

    So my junk health insurance provider just upped their rates, so now this despicable industry gets $3000 a year from me for absolutely nothing.
    Given the Medicare surcharge would only be $100 more, I'd rather give the money straight to the government but then there's the loading penalty punishment which would affect us if we ever decide to get 'real' insurance.

    Just turned 50, partner same age. Two dependent kids. Gross household income about $250K in a good year.

    Anyone have suggestions on what the cheapest 'just keep me from the loading punishment' plan is?

    Cheers!

    • pao2x on 22/02/2021 - 18:57

      Try HBF 6 weeks free running at the moment

    • His_Holiness on 22/02/2021 - 19:07
      +4

      https://www.privatehealth.gov.au/

      Get a hospital quote only, sort by price, buy the cheapest

      • avoidfullprice on 22/02/2021 - 19:10
        +1

        If only they show price after 1 Apr. I can't figure out how to

      • knasty on 22/02/2021 - 20:18

        When I run this I get about $200 per month as the cheapest for the OP's disclosed situation. A bit if a saving there from $3000 but I'd suggest looking to see if you can get something better than junk for not much more. I'm with Teachers Health and for $3k p.a. we get a basic but useful hospital/extras package.

    • Drakesy on 22/02/2021 - 19:17
      +2

      Following.

      I have seen ones as cheap as $9 a week in the past, but the coverage is literally crap, like you're better off not having it or letting the hospital know sort of crap.

      Gotta love lobbyists and their power to get the government to look after the Private health industry by penalising you for not donating to their overpriced crap. Doubling up on a perfectly good government system is just ridiculous.

    • chcse on 22/02/2021 - 19:36

      For me, a single, the cheapest was AHM at $860 a year, which is being upped to around $900 a year (so if you earn more than the minimum levy threshold of $90k, it is cheaper than levy). I searched through all other insurance companies for cheapest policy that qualify and almost gave up until I found AHM. Useless insurance that I would never use though (so basically just adding my money to the "pool" for others to use).

      • AussieDaddy on 22/02/2021 - 21:18

        I don't have a private health insurance, and now with an underlying health issue and being 41, do you think they'll charge me more if I want to have one with them? Sorry, I don't know anything about private health insurances, and only thought about them after I was diagnosed with a blood disorder last year (one which might force me to take medication for many years, if not for the rest of my life).

        • avoidfullprice on 22/02/2021 - 21:44
          +1

          Unlikely you will pay higher premium to someone of the same criteria (state, income, LHC loading etc) but without your health condition. This is different to life insurance or pet insurance where exisiting condition matters.

          I doubt any hospital only cover will provide you with any benefits on your blood disorder medication.

          Extra covers may give you rebates on medication depending whether it is on PBS. You will need to serve waiting period on new policy, and there is usually yearly cap on those rebates.

          OPs is just on private hospital cover to avoid MLS

          • AussieDaddy on 22/02/2021 - 22:14
            +1

            @avoidfullprice: Ta. I am on PBS prescription that costs me about $40 a month, and my condition is getting better, thanks to my GP referring me to a specialist as soon as he realised something was off, and the specialist diagnosed me fast enough. Will shop around and see what's out there.

            • avoidfullprice on 22/02/2021 - 22:17
              +1

              @AussieDaddy: Yup. Just ask if that specific medication can be claimed through your policy before you sign up, and how much. They don't need to know your identity to asnewr you that.

              • AussieDaddy on 22/02/2021 - 22:33

                @avoidfullprice: Will do. Cheers

                PS: Which PHI do you think is good for dental cover?

                • avoidfullprice on 23/02/2021 - 07:42
                  +1

                  @AussieDaddy: Depends on your needs and your location. If you value routine check up, you can get those policies with no gap check up at participating dentist near you. if you need major dental, then get a quote from your dentist on the surgery and then choose one with high limits and high rebates, so gives you highest return.

                  For myself I need ambo cover as well. I'm on Frank which is part of smile network (so dentist charges less) but they are going up by 8.7% in premium so I'm going to switch. Looking at HIF at the moment

        • Succulent on 22/02/2021 - 21:44
          +1

          I think you will be charged an additional 2% LHC loading on top of your standard premium, for every year you do not own private insurance after the age of 31. So in your scenario, lets say your original premium is calculated to be $2k a year. Then your payable premium would be $2000 + (2% * 10 Years) = $2400 per year.

          There would be waiting period with private insurance, so you are most likely wont be covered under the insurance straight away until the waiting period is served.

          • AussieDaddy on 22/02/2021 - 22:16

            @Succulent: Thanks for the detailed info. Getting better on my current PBS subsidised medication so will see what I have gotta do in the near future.

    • iNeed2Pee on 22/02/2021 - 20:00
      -4

      Does someone just sit there every night looking for duplicate posts to report?

      iNeed2Pee on 22/02/2021 - 20:00 (Collapsed - Offtopic. Show)
      • onetwothreefour on 22/02/2021 - 22:34
        +1

        Not sure why you got negged so bad for this comment?

        • SF3 on 22/02/2021 - 22:47
          +1

          must of offended the reporters.

          • iNeed2Pee on 22/02/2021 - 22:55

            @SF3: Im really not, It was a legit question. Sometimes I see forum posts reported as duplicate but there really isn't a duplicate.

            Not saying this post.

            • SF3 on 22/02/2021 - 22:57
              +1

              @iNeed2Pee: yeah I know, but this is OzB forums after all. Hard to sense the mood around here. Most people assume the worse in judging a question.

              • iNeed2Pee on 22/02/2021 - 22:59
                +1

                @SF3: Yeah and I just re read your comment 🤣

                Not fussed at getting negd, thats what its there for. I have you in my corner, so I'm all good.

        • iNeed2Pee on 22/02/2021 - 22:59

          Ne neither lol, but I'm not surprised 😂

    • miwahni on 22/02/2021 - 23:31
      +1

      Have a look at Qld Country Health Fund, they stack up pretty well - for 50yo with continuous cover your basic policy could cost around $1800pa.

      • sam123aus on 09/03/2021 - 14:27

        From checking Qld Country Health Fund products, they seem to be the best cost effective insurer.

        Anyone here has any experience with them in regards to claims and service?

    • leiiv on 23/02/2021 - 00:33

      I paid around $2300 per year with Bupa including the extras. But I joined through a corporate plan.

    • [Deactivated] on 23/02/2021 - 01:35
      +1

      (profanity) PHI, pay the surcharge and give those CEO's the middle finger. Maybe the government will finally realise the (profanity) scam that they're supporting.

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