Private Health Cover and Your Tax

Protect your health and your back pocket.


One of the ways the government has made it more beneficial for people to get private health cover is the introduction of its 'lifetime health cover' provisions, which penalise people who don't take out private hospital cover until they turn 31.

So essentially, it rewards those who take out health insurance before they turn 31, and the longer you delay taking out health insurance, the more you are required to pay. People who delay taking out cover pay a 2 per cent loading on top of their premium for every year they are aged 31 or over, when they first take out hospital cover (up to the age of 65).

The loading remains for life. So if you're 40 when you first take out cover, you'll be charged 20 per cent more each year than a 40-year-old who took out their policy before they turned 31.

Lifetime health cover penalties only apply to hospital cover which means you can still get cover for other options (“extras”) such as dental, optical or any other optional therapies.

Check out this page for more information on lifetime health cover.

Spend your money on tax… or on health insurance

Another benefit is being able to save some serious money on tax. For most single people with a taxable income over $84,000 ($168,000 for couples, families and single parents) the government will charge an extra 1% in tax. This is called the Medicare Levy Surcharge (MLS) and occurs if you don't have private hospital cover. It goes up to 1.25% if you earn over $97,000 ($194,000 for couples, families and single parents) and 1.5% if you earn over $130,000 ($260,000 for couples, families and single parents).

So depending on your circumstances, you could very well get some basic hospital cover that is cheaper than the government surcharge and allows you access to hospital services ahead of the queue. So, look at it this way, you are basically spending the money anyway – you may as well spend it on health insurance and get the benefit, rather than spending it on tax.

Find more information on the Medicare Levy Surcharge.