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A guide to health insurance at tax time

Updated 02 April, 2024
Written by Joshua Malin
Reviewed by Steven Spicer

Expert tips on private health insurance and tax time

Our health insurance expert, Steven Spicer, has some tips on how health insurance can help you save during tax time.

Steven Spicer
Executive General Manager – Health, Life & Energy

Hold hospital cover for the entire financial year to avoid the Medicare Levy Surcharge

If your income exceeds the tax threshold and you don’t hold an eligible private hospital insurance policy for the entire financial year, you’ll incur the Medicare Levy Surcharge for each day that you did not hold the active policy.

Be careful taking out cover only for tax reasons

It can be tempting to just get ‘the basics’ to avoid the Medicare Levy Surcharge. To ensure you don’t find yourself underinsured, consider any previous hospital admissions and your family’s medical history when looking at different levels of cover.

Keep your excess at $750 or below

If you’re taking out hospital cover for MLS purposes, make sure your excess doesn’t exceed $750 for singles or $1,500 for couples/families. This is the maximum permitted excess for private hospital insurance to avoid the MLS.

Lifetime Health Cover loading

Are you 31 years or older? Beware of the LHC

How does LHC loading affect you?

Example of LHC

What can you do to avoid LHC loading?

When won’t you need to pay LHC?

Medicare Levy Surcharge

Do you earn more than the income thresholds? You might need to pay the MLS

How could the Medicare Levy Surcharge (MLS) affect you?

Can you avoid the MLS?

Medicare Levy

How is the Medicare Levy different to the MLS?

How could the Medicare Levy affect you this tax time?

When won’t you need to pay the Levy?

Australian Government Rebate

Do you qualify for the health insurance rebate?

How could the rebate help you?

What is my private health insurance tax claim code?

Why switch health insurance before the end of financial year?

For some, it’s entirely possible the health insurance policy you’re currently on is the best available. If that’s true and none of the below points apply to you, stay with your current fund.

Before you decide to switch, consider the following:

  • A new product or health fund may have entered the market during the year. Such policies may offer better value than your existing policy, and you won’t know until you look.
  • Your circumstances may have changed. For example, perhaps you’re considering starting a family, or you’re eager to finally fix your teeth with a set of braces.
  • Waiting periods don’t have to be re-served when you move from an active policy to lesser or the same level of cover, you will only need to serve a waiting period for any upgrades to your policy.
  • The paperwork is handled for you. When you use our service, we organise all the paperwork with your new health fund. In addition, waiting periods you’ve already served will carry over, your LHC status remains unchanged, and any eligible rebates continue to apply.

Meet our health insurance expert, Steven Spicer

Steven Spicer
Executive General Manager – Health, Life & Energy

As the Executive General Manager of Health, Life and Energy, Steven Spicer is a strong believer in the benefits of private cover and knows just how valuable the peace of mind that comes with cover can be. He is passionate about demystifying the health insurance industry and advocates for the benefits of comparison when it comes to saving money on your premiums.

1 Australian Taxation Office: Medicare levy surcharge income, thresholds and rates. Accessed November 2023.
2 Australian Taxation Office: Medicare Levy. Accessed November 2023.
3 Australian Taxation Office: Medicare levy reduction for low-income earners. Accessed November 2023.
4 Australian Taxation Office: Private health insurance policy details 2023. Accessed November 2023.