Private Health Insurance Explained

When it comes to buying health insurance, it can all get very ‘wordy’ and confusing. Wouldn’t it be great to have all these tricky terms explained in plain English? If you find looking into health insurance confusing, you are not alone. It may have even put you off organising it or buying it, because it seems too hard.

Well, please read on! All these weird terms and phrases are about to be explained for you.

Private Health Insurance Rebate

When you sign up for private health insurance, you will receive a rebate or ‘refund’ from the federal government. This rebate is the Governments way of helping you pay for your private health insurance. The amount of money in your rebate will depend on how much you earn per year and your age. The rebate ranges from 10 to 40%. There are a few ways you can claim your rebate. 1) Through your health insurance provider (your rebate is taken into account by your insurer and you pay a little less for your insurance). 2) You can claim the rebate at tax time. Tell your accountant that you will be claiming your health insurance rebate with your tax return (you will pay less tax at the end of the financial year). Many people like claiming their rebate this way. 3) You can claim via a Medicare office. You can go to Medicare to fill out the forms and you will need a receipt showing who you are insured with and how much you have paid. Just remember, you can only choose one way to claim this rebate and you need to have private health insurance to claim it.

Medicare Levy Surcharge

The Medicare Levy Surcharge is like a bill we might have to pay, similar to paying an electricity bill. Firstly, not everyone in Australia has to pay this bill/surcharge. Secondly, there are things you can do to avoid paying this surcharge. First of all, you have to be paying tax in Australia before you are eligible to pay this surcharge. Next, it’s a matter of how much you earn. If you are a single person earning less than $84 000 per year, you earn below the level that states you must pay the surcharge. If you and your spouse earn a combined total of less that $168 000 per year, you will not pay the surcharge either.

As a single person or as part of a relationship, if you earn more than these amounts, you will pay the surcharge. You will pay from 1 to 1.5% of your annual income to the government. However, there is a way you can avoid paying this surcharge all together. Basically, if you have private health insurance, the Government will not make you pay the surcharge. So, it’s a wise idea to get health insurance!

Lifetime Health Cover Loading

This loading is also like paying a bill. Some people have to pay this loading and there are ways of avoiding it. If you do not have private health insurance, you will not be charged the loading until you reach 31 years of age. If at age 31 you still don’t have private health insurance, you will be charged this loading. The longer you put off having private health insurance, the higher the loading you will be charged. The loading comes into effect when you eventually do take up private health insurance; the loading is added on top of your insurance payments. The loading starts at 2% and gets higher every year, reaching a maximum loading of 70%. If you take up health insurance before your 31st birthday, you will never have pay this loading. Another good reason to organise your health insurance as soon as possible.