Things you need to know about private health insurance

How Government incentives and surcharges affect your premium 

Take advantage of the government rebate

The government understands the value of private health insurance to the health sector. That’s why it helps to reduce the cost of private hospital and extras cover through the Australian Government Rebate on Private Health Insurance. The amount of rebate is determined by income and the age of the oldest person on the policy. The Government usually adjusts the rebate on 1 April each year.

Most people choose to receive the rebate in the form of a premium reduction. If you are a family with an annual income for surcharge purposes between $186,001 - $216,000 then your rebate will be 16.405% (if the oldest person on the policy is under 65 years old). So for every $100 of premiums, you save around $16.

Just apply for the rebate and nominate your income when you join and we’ll reduce the premium you pay by your rebate. Alternatively, you can claim the rebate as a tax offset when you lodge your annual tax return.

If your circumstances change, you can change your rebate at any time during the year and if you receive too much, or too little rebate, it will be reconciled by the Australian Taxation Office when you submit your tax return.

Avoid Lifetime Health Cover loading

Lifetime Health Cover adds to the cost of premiums for people who take out hospital cover after they’ve turned 31. To encourage people to take out private cover while they are young and healthy, the Government applies a loading to your premium if you take out cover later than 1 July following your 31st birthday. For each year you delay, the Government will add a 2% loading to your premium, to a maximum of 70% and it can only be removed once you have held hospital cover for 10 continuous years.

To cover small gaps in your hospital cover for any reason, you are permitted to be without hospital cover for up to 1094 days without incurring a loading.

If you are switching to Defence Health, your Lifetime Health Cover loading will move with you. We recommend you talk to us before cancelling the cover with your old fund to avoid using up any of the permitted days.

If you’re in the ADF, you are considered to have hospital cover while serving. If you discharge after the age of 31, you can take out hospital cover without a Lifetime Health Cover loading. But if you delay, you’ll begin using using your permitted days without cover.

Take out hospital cover when you're young to avoid paying a Lifetime Health Cover loading when you're older.

Save on your premium by joining before you turn 29

Join an eligible hospital cover before turning 30 and you’ll qualify for an ongoing  age-based discount  on your premium.

Join before age 26 and you could lock in a 10% discount until you turn 41

If you join at age 29, the discount drops to 2%

From age 41 the discount phases out by 2% each year.

Don’t pay the Medicare Levy Surcharge unnecessarily

The Medicare Levy Surcharge (MLS) is an additional tax paid by people on higher incomes who do not hold private hospital cover for themselves and their family.

The MLS kicks in for singles with ‘income for surcharge purposes’ of $93,000 (or $186,000 for families). It ranges from an additional 1% to 1.5% tax, depending on income. To check how this applies to you, visit the Australian Taxation Office Website.

Holding any level of Defence Health hospital cover means you can avoid the Medicare Levy Surcharge and also get the peace of mind, access to care and choice of care that comes with it

Sarah & David

Sarah and David both took out health insurance for the first time on the same day. Sarah was 30 years old and David was 40 years old. Because Sarah got covered before she turned 31, she does not have a Lifetime Health Cover loading. Because David waited until he was 40, he will pay a 20% loading on his premium. What costs Sarah $100 per month, costs David $120. And depending on David’s income, the Medicare Levy Surcharge could mean he was paying extra tax while he delayed taking out hospital cover.

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To find out more about Australian Government Rebate for private health insurance click here

To find out more about Lifetime Health Cover click here

To find out more about Medicare Levy Surcharge click here

To find out more about waiting periods click here

To find out more about Private Health Insurance Code of Conduct click here