Thursday, 26 July 2012

Private health insurance rebates have changed. Are you still entitled


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Private health insurance rebates have changed. Are you still entitled?


The government has introduced changes to the private health insurance rebate and the Medicare levy surcharge. From 1 July 2012, the private health insurance rebate and the Medicare levy surcharge will be income tested against three new income tier thresholds.
Higher income earners will receive less private health insurance rebate or, if they do not have the appropriate level of private patient hospital cover, the Medicare levy surcharge may increase.

The ATO will determine the amount of your private health insurance rebate entitlement when you lodge your income tax return.
This may result in a refund or a liability for you.
If you know that you will not be entitled to the rebate you can notify the Health Fund and request that no rebate be applied to your premiums from 1 July 2012.

Private Health Insurance Rebate Changes

Private Health Insurance Incentive Tiers with effect 1 July 2012:
Singles
<$84,000
$84,001-97,000
$97,001-130,000
>$130,001
Families <$168,000 $168,001-194,000 $194,001-260,000 >$260,001
Rebate
< age 65
30%
20%
10%
0%
Age 65-69
35%
25%
15%
0%
Age 70+
40%
30%
20%
0%
Medicare Levy Surcharge
All ages
0.0%
1.0%
1.25%
1.5%

Singles earning $84,000 or less and families earning $168,000 or less will continue to receive the existing 30, 35 and 40 per cent rebate, depending on age. As the income level rises, the rebate reduces, hence making private health insurance more expensive. 

Tip:  As the rebate reductions will only apply to premiums paid after 1 July 2012, health funds are allowing members to prepay their annual premium up to 12 months (some funds up to 18 months) before the end of June 2012, thereby benefiting from the existing rebate and avoiding the means test for another 12 months.
Some higher income earners may consider dropping their current cover due to the reduction in the rebate, however with the increase in the Medicare Levy surcharge, taxpayers may be financially worse off if they choose this option.

source: http://www.williambuck.com