Health insurance isn’t cheap so it’s a sensible idea to review your health insurance policy at least once a year. It’s crucial to know how to get the most value from your cover. Take a look at your private health cover to ensure you’re not spending more money than you need to especially as the end of the financial year approaches. Here are some tips to help you navigate the puzzling world of private health insurance at tax time.
1. Sticks And Carrots
To reduce the demand on the public system, the federal government encourages Australians to take up private health insurance through a “sticks and carrots” approach. The “carrot” is the Private Health Insurance Rebate, which makes private cover more affordable, while the “sticks” are the Medical Levy Surcharge (MLS) and Lifetime Health Cover (LHC) loading. MLS is an additional tax levied on those who don’t have private health insurance and earn more than $90,000 for singles or $180,000 for families and couples. LHC is a 2% loading payable on top of your premium for every year you’re aged over 31 and didn’t have private health insurance. LHC compounds, so better take out private health insurance before you reach 31 or you’ll pay at least 2% more if you’re 31 or older and wait until after tax time.
2. Only Hospital Cover Counts
The government only gives incentives to policy holders who have hospital cover. Which means that you will still be hit by the Medicare Levy Surcharge if you have an extras-only policy and earn more than $90,000 (singles) or $180,000 (families and couples).
3. Life Stage
Consult a private health insurance expert and discuss where you are in life and what your future plans are. Estimating your current and near-future requirements as well as your financial situation and budget will ensure you take out the right policy to cover your health needs at a price you can afford.
4. Cut The Fat
Think about the types of extras you’re likely to use. You don’t want to pay for something that you think you don’t require. If you’re not sure which extras to prioritise, it’s worth considering a flexible extras product that merge your separate extras limits into a single annual limit for you use across various services.
5. Get More Bang For Less Buck
Some insurance providers offer a discount for paying by direct-debit. You can also get a discount by paying a year’s worth of premiums upfront instead of monthly repayments. A number of providers also offer handsome introductory offers such as one month free or reduced waiting periods.
