Why have Private Health Cover?
Peace of mind
Protecting and ensuring the health of you and your family is most important. Private health insurance gives you financial peace of mind in knowing that you have guarded against large and unexpected hospital, medical and other health care bills. For those who are on high incomes, private health insurance also helps you avoid paying an additional Medicare Levy Surcharge.
Medicare covers you for hospital and medical costs in a public hospital as a public patient. You have no choice of doctor and will usually be treated in a shared ward. In many cases, especially for elective surgery, there may be a substantial waiting time for the type of treatment you need.
By taking out private health insurance with HCI, you can be sure that if you or your family require hospital treatment you will have greater control over who, where and when you are treated. In most cases, the waiting time for elective surgery will be significantly less than the public system. HCI provides access to over 500 private hospitals and day hospital facilities and more than 16,000 doctors.
Other health care treatments
Medicare does not cover the cost of treatment for dental, optical, physiotherapy, chiropractic and many other non-medical type services. HCI offers you extras cover options which are designed to help offset the costs of these non-medical health services.
Lifetime Health Cover (LHC) loading
The aim of the Federal Government’s Lifetime Health Cover (LHC) initiative is to encourage people to take out private health insurance hospital cover early in life. If you join earlier in life and continue private hospital cover, you will be rewarded with lower contributions than those who join later in life.
LHC is a financial loading that can be payable in addition to the base rate premium for your private health insurance hospital cover.
To avoid paying a LHC loading, you need to purchase hospital cover by 1 July following your 31st birthday. If you purchase hospital cover after this date you may be required to pay a LHC loading – 2% for each year you are over 30. For instance, if you wait until you are 40, you could be paying an extra 20% on the cost of your hospital cover. If you wait until you are 50, you could pay 40% more. And so on, up to a maximum of 70%.
Private Health Insurance Rebate
The Australian Government Rebate on Private Health Insurance was introduced as a financial incentive to help Australians afford private health cover.
The rebate depends on your age, is income-tested and applies to all Health Care Insurance products. The rebate isn't available for the Lifetime Health Cover loading portion of membership payments.
Your rebate amount is based on your age and assessable income*. Below are the thresholds set by the Australian Government for the 2016/17 financial year.
From 1 April 2014, the rebate is indexed each year by the difference between Consumer Price Index (CPI) and the industry average increase in premiums using a Government - calculated formula.
It's up to you to nominate a rebate tier (based on your age and assessable income*). If you don't tell us, or if you choose the wrong tier, don't worry because the Australian Taxation Office (ATO) will work out any differences when you put in your annual tax return.
If you aren't sure which rebate tier you should choose, please contact your tax agent, financial advisor or the ATO at www.ato.gov.au/privatehealthinsurance
Most people choose to take their rebate up front as a lower premium, but if you'd prefer to claim the rebate as a lump sum through your tax at the end of the financial year, you can just pay the full premium.
* For the calculation of assessable income which is known as income for Medicare Levy Surcharge puproses, please seek the advice of your tax agent, financial advisor or contact the ATO help line on 132 862 or visit their webiste at https://www.ato.gov.au/Calculators-and-tools/Host/?anchor=MedicareLevy&anchor=MedicareLevy#MedicareLevy/questions
How can I claim the rebate?
You can claim your rebate either:
- as a reduction in your contributions; or
- as an income tax offset on your income tax return
For your convenience and certainty that you receive your full rebate entitlement, we recommend you register to have your rebate taken off the contributions you pay to HCI.
Who is eligible for the Rebate?
Most Australians with private health insurance receive a rebate from the Australian Government to help cover the cost of their premiums. However, from July 1 2012 the private insurance rebate is income tested. The rebate applies to hospital, general treatment and ambulance policies.
Medicare Levy Surcharge
You may also be liable for the Medicare Levy Surcharge (MLS) in addition to the Medicare Levy. Individuals and families on incomes above the MLS thresholds, who do not have an appropriate level of private patient hosptial cover, pay MLS for any period during the year that they did not have this cover. If you become liable for MLS, your MLS rate can either be 1%, 1.25% or 1.5%.
If your income for MLS purposes is above the base income threshold the Australian Taxation Office (ATO) will apply the rate of MLS that corresponds with your income for MLS purposes. If you have a spouse (married or defacto) your combined income for MLS purposes will be used.
Income for MLS Purposes
The rate of MLS that you may have to pay depends on your income for surcharge purposes. This is referred to as your income for MLS purposes, which is the sum of your:
- Taxable income
- Reportable fringe benefits
- Total net investment loss
- Reportable super contributions
- Any amount on which your family trust distribution tax has been paid
Appropriate Level of Private Patient Hospital Cover
Private patient hospital cover is cover provided by an insurance policy issued by a registered health insurer for some or all hospital treatment provided in an Australian hosptial or day hospital facility. However, an insurance policy for hosptial cover taken out after 24 May 2000 that has an 'annual front-end deductable' amount or excess of more than $500 in the case of a policy covering only one person, or more that $1 000 for all other policies, does not provide private patient hospital cover for MLS purposes.
The income thresholds are varied each year by the ATO for the current income thresholds please refer to the ATO website http://www.ato.gov.au/Individuals/Medicare-levy/Medicare-levy-surcharge/ or your tax agent.
For more information on the MLS please visit the Australian Taxation Office website