Compare the Market is warning Australians without private health insurance that thresholds for the Medicare Levy Surcharge are changing on 1 July, but it doesn’t mean you won’t get hit this tax time.
In a nutshell, the Medicare Levy Surcharge is an additional tax for high-income earners who don’t hold an appropriate level of hospital cover. At present, if you earn more than $93,000 as a single or $186,000 as a couple in a financial year and don’t hold an eligible private hospital insurance policy throughout the entire financial year, you’ll incur a surcharge.
However, come 1 July, the thresholds will increase to $97,000 or more for singles and $194,000 for families. Depending on your annual taxable income for MLS purposes, you may incur a surcharge of 1%, 1.25% or 1.5%. The higher your income, the more MLS you pay if you don’t hold relevant hospital cover.
| Medicare Levy Surcharge – Income Thresholds from 1 July 2024 | ||||
| Surcharge | 0% | 1% | 1.25% | 1.5% |
| Singles | $97,000 or less | $97,001 – $113,000 | $113,001 – $151,000 | $151,001+ |
| Families^ | $194,000 or less | $194,001 – $226,000 | $226,001 – $302,000 | $302,001+ |
| Retrieved from the Australian Taxation Office on 27/6/24 ^For families with children, thresholds increase by $1,500 for each child after the first. Families include couples, de facto couples, and single parents. | ||||
According to Steven Spicer, Compare the Market’s Executive General Manager of Health, Life and Energy, anyone who’s pay increased past $93,000 this financial year will be subject to the MLS this tax time if they didn’t hold relevant hospital cover.
“What some Australians don’t realise is that you’ll be required to pay the MLS for any period during a financial year that you don’t hold suitable private hospital insurance if you earn above the threshold,” Mr Spicer said. “Some people may see that thresholds are increasing from 1 July and have put off taking out hospital cover, but you may still get hit at tax time if you surpassed this financial year’s thresholds.
“If you’ve received a pay increase or bonus this financial year, you may not even be aware that you’re now subject to the MLS if it pushes you over the current $93,000 threshold for singles or $186,000 for couples.”
According to Mr Spicer, you will be required to pay the MLS for any day you don’t have relevant hospital cover in a financial year.
“You can’t just wait until tax time to take out hospital cover; you would be required to pay the MLS for every day of the financial year that you did not hold a hospital insurance policy,” Mr Spicer said. “Our message is to be aware that you may be subject to the MLS if you didn’t hold hospital cover this year and earned over the thresholds, but to consider taking out cover as early as possible for next financial year if you currently earn over $97,000 as a single, more than $194,000 as a couple or if you think a pay increase or new job opportunity could push you over the thresholds from 1 July.”
When it comes to finding relevant health insurance, Mr Spicer said extras cover won’t prevent you from paying the MLS.
“While extras can be great for those medical treatments you receive out of hospital, like general dental, optical, physio and psychology, you’ll still need hospital cover or a combined hospital and extras policy to avoid paying the MLS for every day that the policy is active,” Mr Spicer said.
“There are some very basic policies available that can be cheaper than some of the more comprehensive options, but in some cases, these policies offer very limited cover – if any at all. Our advice to anyone looking for cover is to consider a Bronze policy at a minimum, but to opt for a level of cover that includes health services and treatments you’re likely to use.
“Standard Bronze policies include 18 unrestricted clinical categories relating to things like ear, nose and throat treatment, joint reconstructions and gynaecology, to name a few. However, Gold policies cover 38 unrestricted clinical categories.”
Mr Spicer’s top tips for paying less for health insurance.
- Look for rewards that can add value. As well as comparing policies with lower premiums, take note of other incentives and offers that are available to give you more bang for your buck. For example, you may be entitled to frequent flyer points, discounts on shopping and food and even free weeks of cover.
- Compare like for like. While policies may have different prices when you’re comparing, you want to ensure you are completing a like-for-like comparison. Read the policy brochure carefully and pay attention to the inclusions, exclusions, waiting periods, excess amounts, and more.
- Be aware that loyalty may not always pay. If you’ve been with the same health insurer for some time, be aware that other insurers may offer a similar level of cover for a smaller premium. Spend some time comparing to ensure you’re not paying more than you need to.
For more information, please contact:
Phillip Portman | 0437 384 471 | [email protected]
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