The $98 million paid annually to the Australian Tax Office in the form of the Medicare Surcharge Levy could be significantly reduced by a greater uptake of private health insurance among medium- to high-income earners.
This advice, from leading health insurer Medibank Private, comes as millions of Australians are preparing tax returns and considering ways of reducing their tax bill in the future.
Australian Taxation Office figures show taxpayers that are liable for the Medicare Surcharge Levy are paying, on average, over $600 each, which could be avoided by having appropriate private health insurance.
The Medicare Surcharge Levy, introduced in 1997, is an additional 1% surcharge of taxable income imposed on income earners that are not privately insured with a registered health fund. The Surcharge is additional to the 1.5% Medicare Levy.
The Surcharge applies to singles with an annual taxable income of $50,000 or $100,000 for a couple or family without private health insurance. The income threshold for the Surcharge increases by $1,500 for each child, after the first.
Medibank Private Managing Director George Savvides said many Australians are still unaware of the significant tax savings that being privately insured with a registered health fund can bring.
"People that fall into a higher income bracket and do not have private health insurance are not only at a greater financial risk if they require hospital services, but they are also exposing themselves to a higher tax bill," Mr Savvides said.
"All Medibank Private hospital products qualify taxpayers for an exemption from the Medicare Surcharge Levy, a claim many other health funds cannot make."
Mr Savvides said private hospital cover could save hundreds of dollars in tax.
"A single person earning $60,000 and paying $349 annually for a Medibank Private 'First Choice Hospital' policy is saving $251*, which they would otherwise have to pay as part of the Surcharge."
He went on to say that Medibank Private was committed to ensuring its members and the community are aware of the potential savings afforded by private health insurance.
"Changing circumstances such as a new job, marriage, or growing family can result in people suddenly falling into an income bracket for taxation purposes that exposes them to the Medicare Surcharge Levy. If people are aware of the boundaries they can protect their own, and their families, future health and save money," Mr Savvides said.
This table details the potential tax benefits of being insured with Medibank Private. It is based on an individual with a taxable income of $60,000 per annum. Savings increase by $100 for every $10,000 increase in income.
STATE
FIRST CHOICE SAVER HOSPITAL
Excess Level 2 - $250
FIRST CHOICE HOSPITAL
Excess Level 3 - $500
�
ANNUAL PREMIUM
SAVING**
ANNUAL PREMIUM
SAVING**
SA
$471.20
$128.80
$429.20
$170.80
VIC
$493.05
$106.95
$494.75
$105.25
NSW/ACT
$365.40
$234.60
$349.00
$251.00
QLD
$463.65
$136.35
$509.45
$90.55
TAS
$434.70
$165.30
$544.30
$55.70
NT
$248.20
$351.80
$255.75
$344.25
WA
$349.00
$251.00
$370.85
$229.15
** Saving reflects difference between not paying the Medicare 1% Surcharge less the cost of Private Health Insurance, after deduction of 30% Federal Government rebate.
For more information contact the Australian Taxation Office, or consult a tax professional. Australian Taxation Office (ATO) Helpline on 13 28 61 or visit www.ato.gov.au.
For further details contact:
Brian O'Neil - (A) Public Affairs Manager
PH: 03 8622 5161