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 dependent 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?
Previously, health funds were required to send a tax statement to every adult with health cover in July. The statement is 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 unless you’ve asked us to send one. How you access that information now depends on how you lodge your tax return:
through myTax or a registered tax agent – by 20 July 2020 your health insurance details should be pre-filled on your tax return, so you shouldn’t need to do anything. (If there's any issue with this, follow the instructions below)
log into Online Member Services and go to My Membership > Tax Statements. – available from 8 July 2020. Or call us on 1300 727 538 and we'll email or post it to you.