If you’ve been considering health insurance, now might be the time to review policy options before another year goes by and your loading increases by another 2%.
If you want to take out a couples hospital policy, any applicable LHC loading will be averaged between you and your partner.
For example, if your partner has 6% LHC loading applicable and you have 2% loading applicable, you’d be charged 4% loading on your couples policy.
LHC loading won’t start accruing if you weren’t in Australia on 1 July following your 31st birthday. However, you typically need to purchase cover within a year of arriving back in Australia to prevent LHC loading from starting to accrue.
Furthermore, loading will not increase if you:
*‘Days of Absence’ refers to the number of days you can take a break from your private hospital cover before LHC loading will start accruing. So, if you have cancelled your policy and you are over 31, you will have a total period of 1,094 days in your lifetime before the loading kicks back in.
Similar to Australians who travel overseas, new migrants over 31 will also be given 12 months to purchase a policy from the time they become eligible for Medicare.
Since coverage is provided for the Australian Defence Force while serving, members are technically seen as having private insurance. People in this position have the Days of Absence period to register their private health policy without a loading being applied.
These cardholders are already determined to have a form of private health insurance, which will be taken into consideration if they’re looking to take out a private cover.
Those who fit this category are exempt from paying the loading.
In this case, your total MLS would be charged at 1% of your taxable income.
This means you may need to pay $950 at tax time.
Our table below outlines how the MLS may impact you this tax time.
|Medicare Levy Surcharge – Income Thresholds|
|$93,001 – $108,000|
(~$930 – $1,080 payable)
|$108,001 – $144,000|
($1,350 – $1,800 payable)
|$186,001 – $216,000|
(~$1,860 – $2,160 payable)
|$216,001 – $288,000|
($2,700 – $3,600 payable)
|Retrieved from Privatehealth.gov.au | Information current as of 1 July 2023. Dollar amounts payable are rounded up.|
^For families with dependant children, thresholds increase by $1,500 for each child after the first. Families include couples, de facto couples, and single parents.
Not unless you’re earning under the income threshold when MLS starts applying, have a hospital policy (or combined hospital and extras cover) or you fall into one of the exemption categories.
Worried about whether your health insurance can impact your tax return? Remember, having cover goes far beyond its tax benefits. While it can be tempting to take out the lowest level of hospital cover to avoid the MLS, there are some great benefits to higher level policies that you might want to take advantage of.
As such, it’s important you consider a competitive cover option that:
*Subject to availability.
Our comparison service makes it easy to find a policy that offers all this and more at a great price.
The Australian Taxation Office (ATO) says the Medicare Levy is charged as 2% of your taxable income.1 The levy is included in the total tax withheld from your employer.
You may be exempt from the levy if you’re a single and your taxable income is equal or less than the following thresholds for 2021-22:2
You’re only required to pay part of the Medicare Levy if your taxable income is between:
You may also be exempt if you’re a foreign resident, aren’t eligible to receive Medicare benefits or meet specific medical requirements.
When it comes time to lodge your tax return, you’ll need to provide the ATO with a tax claim code so they know what category you fall under to calculate your total rebate amount. This information is often prefilled on your tax return. However, if it isn’t, here is a private health insurance tax claim code list as of June 2022.
|Tax claim code||Circumstance|
|Tax claim code A||You’re single with no dependants.|
|Tax claim code B||You have a dependant child or paid for a dependant-child-only policy.|
|Tax claim code C||You’re married or in a de facto relationship and want to claim your share of your joint policy or you’re a parent claiming for a dependant-child-only policy|
You want to claim your share and your spouse’s share of the rebate for your joint policy, provided that you’re both covered under the same policy for the same period, are together on 30 June and your spouse agrees to the claim.
|Tax claim code D||If your spouse claims the rebate for your share of your joint policy, you will automatically fall under this claim code.|
|Tax claim code E||Your spouse is claiming your share of the rebate for your joint policy.|
|Tax claim code F||You were covered as a dependent child on a private health insurance policy.|
1 Australian Taxation Office: Medicare Levy. Last modified: 01 July 2022.
2 Australian Taxation Office: Medicare levy reduction for low-income earners. Last modified: 01 July 2022.