What do I need to know?
The Australian Government uses a mix of incentives and penalties to encourage people to take out private hospital cover and reduce pressure on the public health system.
After discharge, you may be affected by these government policies designed to encourage participation in private health insurance. These can include:
- the Australian Government rebate on private health insurance
- the Medicare Levy Surcharge depending on your income
- Lifetime Health Cover loading if hospital cover is taken out later in life
Understanding these rules can help you avoid unexpected costs and make informed decisions.
What government rules apply?
These government rules, incentives and costs may affect your health care decisions after leaving the ADF.
The private health insurance rebate is a government contribution that helps reduce the cost of premiums.
The amount of rebate you may receive depends on:
- your income
- the age of the oldest person on the policy
- the type of cover you hold
You can claim the rebate as a reduction on your premium or as a tax offset when you lodge your tax return.
The government adjusts the rebate each year by an amount that is linked to the inflation rate. Check the rebate tiers and income thresholds at ato.gov.au
Most taxpayers pay a Medicare Levy, which helps fund the public health system. As a permanent ADF member, you would've likely been either fully exempt from paying the levy or only paid 1% if you had a family.
If you are a higher-income earner and do not hold eligible hospital cover, you may also pay the Medicare Levy Surcharge. This is an additional tax. Check out the income thresholds and tax rates at ato.gov.au to see if you're affected.
Taking out eligible hospital cover can help you avoid this surcharge. Paying the surcharge does not provide any extra health care benefits.
The government encourages people to take out private hospital cover early in life and to maintain it. Lifetime Health Cover adds a 2% loading to premiums for every year after age 30 that someone remains without private hospital cover.
Once you attract a loading, it can only be removed after 10 continuous years of hospital cover. Permanent members of the ADF while serving, are considered to have hospital cover.
So Lifetime Health Cover doesn’t affect you until you discharge. To cover small periods of time without cover, everyone is allowed 1094 days without cover.
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