Why private health insurance matters at tax time

Why private health insurance matters at tax time

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Tax time and private health insurance – what you need to know

Every year in June there's lots of talk about private health insurance. On the news, ads, breakfast TV – you name it. And it's all down to end of financial year.

Firstly, it's a time when younger Australians may be scrambling to take out hospital cover to avoid Lifetime Health Cover loading (paying more for their cover) in the future.

But the main reason for all the noise is that having, or not having, health cover can affect your tax return. Here's how.

Medicare Levy Surcharge

If you're a higher earner, hospital cover can save you money at tax time. That's because you'll either reduce or avoid paying the Medicare Levy Surcharge – an extra 1% to 1.5% in tax. And who wants that?

It applies to you if you're single with a taxable income over $90,000, or a family/couple with a combined taxable income over $180,000.

If you have a dependant child on your cover whose income is above the threshold, they're exempt from the surcharge. They need to enter your Teachers Health membership number and our health insurer ID on their tax return, along with the tax claim code F. Visit the ATO to learn more.

The Private Health Insurance Rebate

The other thing to consider is whether the government is contributing towards the cost of your hospital and/or extras cover through the Private Health Insurance Rebate.

How much you get, if anything, depends on your income, age and whether you're single or a family/couple. Single parents come under the family threshold, which increases by $1,500 for each child after the first.

Here are the current income thresholds for the surcharge and rebate.

Table: Rebate levels applicable from 1 April 2019 to 31 March 2020 - source privatehealth.gov.au

Claiming the rebate

If you're entitled to a rebate, you can claim it upfront (paying less for your cover) or get it as a lump sum at tax time. This is something you would have decided when you took out your cover, along with choosing your income tier.

If your situation has changed and you’re in the wrong tier you can update it in Online Member Services. There's no penalty for nominating the wrong tier, but if you underestimate your income and claim too much rebate you'll have to pay it back (which is probably not how you'd like to start the new financial year).

When do I get my annual tax statement?

In previous years, health funds were required to send a tax statement to every adult with health cover in July. The statement's used to calculate any rebate you're entitled to, and the Medicare Levy Surcharge (if applicable).

Due to changes in legislation, we no longer send them out. How you access that information now depends on how you lodge your tax return:

  • Online through myTax or a registered tax agent – by 20 July 2019 your health insurance details should be pre-filled on your tax return, so you shouldn’t need do anything. (If there's any issue with this, follow the instructions below)
  • Paper – available from 8 July 2019, log into Online Member Services and go to My Membership > Tax Statements. Or call us on 1300 727 538 and we'll email or post it to you.

Need help?

To learn more about completing your tax return visit the ATO.

If you have any questions about your cover, your rebate tier or claiming the rebate call us on 1300 727 538.