Without a doubt, private health funds are becoming more and more expensive, each year, out of all proportion to the general cost of living.
Another increase on private health insurance premiums is set to take effect on 1 April 2020, as a direct result of apparent increases in the cost of hospital charges, treatments, and medical supplies.
The rising medical premiums are a big concern to many of our clients. Should you cancel, or continue the payments out of fear of ‘something’ happening, but run the risk that after perhaps years of paying premiums, when you come to claim it might possibly be refused if you haven’t read or understood the fine print on your policy?
The decision on whether or not to keep private health cover is always up to you. Before you wish to cancel, you have the option to ask your existing insurance provider for cheaper alternatives or compare your existing insurer to the others to see which one would cost less. Before you change benefits, make sure you understand what you’re not getting after the premium is reduced.
If you do decide to keep it, make sure your whole immediate family is covered, not just you, or not just you and your partner. To avoid paying Medicare Levy Surcharge (MLS) for high-income earners, the whole family, including your children, must be covered under the policy.
Now, you know that the government always wants its “pound of flesh” with tax (with apologies to the metric system!). It’s not just your taxable income that MLS is calculated on, it’s taxable income plus negative gearing, plus reportable Super plus reportable Fringe Benefits, plus a couple of other items. It’s all worked out on your tax return each year. So you might think you are way under the limit for paying MLS looking at your year to date payslip earnings, but potentially if you have those extra income items, you could be facing a nasty unexpected tax result when your tax return is done.
Take note that if you cancel your policy, and your/and your partner’s taxable income for MLS purposes goes over the earnings threshold in future years, you will be subjected to MLS from 1% to 1.5%, depending on your income And don’t even get us started, on the 2% Lifetime Health Cover loading for those over 30…
