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Acano Chartered Accountants Blog

Changes to the Private Health Insurance Rebate and Medicare Levy Surcharge

Clinton Ham - Monday, July 23, 2012

On budget night in May 2012 the federal government announced changes to the Private Health Insurance Rebate and the Medicare Levy Surcharge. These changes provide less carrot and more stick in encouraging taxpayers to take out private health insurance.

Medicate levy reduction

Previously the private health insurance rebate was not means tested and the medicare levy surcharge was fixed at 1% for those taxpayers earning over $80,000 who didnt hold appropriate hospital cover.

Starting from 1 July 2012 the rebate you receive or the surcharge you pay will depend on your income as follows:

 

Unchanged

Tier 1

Tier 2

Tier 3

Singles

$0 - $84,000

$84,001 - $97,000

$97,001 - $130,000

$130,001 plus

Families

$0 - $168,000

$168,001 - $194,000

$194,001 - $260,000

$260,001 plus

Rebate

30%

20%

10%

0%

MLS

0%

1%

1.25%

1.5%

What should I do if my income is expected to exceed the private health insurance rebate threshold?

Contact your private health insurer to advise them of your expected earnings and appropriate tier so they can reduce the level of your upfront rebate. Failure to notify your health insurer will result in the tax office recovering the overpayment of the rebate upon lodgement of your tax return.

Need more help?

Contact our office should you wish to discuss how these changes apply to you.

 


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