The private health insurance rebate

The private health insurance rebate and Medicare Levy Surcharge explained

From 1 July 2012, the Federal Government’s two key changes to private health insurance will take effect. These changes are:

1. The private health insurance rebate will be subject to an income test.
2. An increase to the Medicare Levy Surcharge (MLS) for high income earners if you don’t have an appropriate level of hospital cover.

Who will be affected by the rebate changes?

The Federal Government is introducing income testing of the rebate from 1 July 2012. This will mean that, for higher income earners, the percentage of rebate you will be entitled to will be reduced on a tiered basis depending on your level of adjusted taxable income and the age of the oldest person on the policy.

You won’t need to do anything if your adjusted taxable income in this financial year is likely to be:

• $84,000 or under for singles
• $168,000 or under for couples/families. This increases by $1,500 per child after your first child.

What are the rebate changes for singles?

What are the rebate changes for couples/families?

♦ Indicates changes for higher income earners.

The changes to the Medicare Levy Surcharge (MLS) may also have an effect on you

In addition to reducing the level of rebate for higher income earners, the Federal Government is increasing the Medicare Levy Surcharge for some high income earners.

For many, this increase to the MLS may be more than the cost of maintaining your hospital cover.

What do you need to do now?

If you believe your taxable income for the 2012/13 financial year is likely to fall into the thresholds that will be income tested, your options are:

• Do nothing – it’s okay to continue to claim the same amount of rebate as before, and let the adjustments take place when you lodge your tax return.
• Nominate a rebate tier – you can nominate your rebate tier online by logging into myBupa. Alternatively, you can advise us of your rebate tier by downloading this form and returning it to us by post (GPO Box 9809, Brisbane, QLD 4001) or by dropping it into your local Bupa centre.

Prepay your health insurance by 30 June 2012 and protect your current Rebate

Paying your annual premium for the financial tax year of 2012/13 in advance will delay the impact of the income testing of the Rebate until the 2013/2014 financial tax year. To find out more call us on 134 135 or visit your local Bupa centre.

3 reasons why you should keep your private health insurance

1. Choice - you can generally choose your own doctor and where you’re treated without worrying about unknown treatment costs.
2. Avoid long waiting lists - if you choose to be treated in a private hospital, you won’t have to worry about public hospital waiting lists.
3. Extras services - you can also enjoy cover for a wide range of extras services generally not covered by Medicare - dental, optical, physio, chiro, massage and more!

There are a number of good financial reasons for keeping your private health insurance. When it comes down to it, the peace of mind your health cover gives you and your family is just as important.

If you decide to drop your hospital cover, you may have to pay the Medicare Levy Surcharge. In some cases, the Medicare Levy Surcharge may end up costing you more than maintaining your hospital cover.

Also, keep in mind to avoid paying the Federal Government Lifetime Health Cover loading you need to maintain your hospital cover over age 31.